I dont know how that came across but I was saying that about me. yours was a very clear comparison of the two options and pretty much put the argument to bed
- Thread starter guayaba79
- Start date
Buying a house financing
Interesting... The math is actually easy given that it isn’t taught in any of the economic courses, either you previously learned them or you didn’t. What confuses many people are the graphs. I never understood what exactly was confusing about them since they all make sense.
Then again, I remember that during freshman year I took a philosophy course. Apparently, I was the one answering most of the professor’s questions and having most of the discussions of what so-and-so from who-knows-when before Christ meant to say. The point is I was clueless a class with more than 25 students, most apparently were lost and were dependent entirely on the text book and not on what was said by the professor to pass the course. Until one day after class right before leaving a classmate asked me with all the seriousness in the world: “You actually understand what he is saying?” It was an epiphany. After that is when I realized most of the back-and-forth convos with the professor was him and me while most of the rest was entirely lost with no clue what was being said. lol
Agreed. And also in all the previous calculations, the compounded interest is being calculated in USD though the CD rates are (I assume) in pesos. So you're not making 10%/year USD because those CD's, priced in pesos, are devaluing against the dollar in parallel. May not be hugely significant (no one knows what the USD/DOP exchange rate will be 2, 3, 4 or 5 years from now) but still, it lowers the yield once normalized to one currency.
I have a $us dollars CD and the interest is nowhere near 10 percent.
Deposit Interest Rate in Dominican Republic
Deposit Interest Rate in Dominican Republic decreased to 8.57 percent in February from 8.85 percent in January of 2025. This page includes a chart with historical data for Deposit Interest Rate in Dominican Republic.
tradingeconomics.com
yes if you put 50% down they'll lend you the money but also be aware that they're going to make you take life insurance for the duration of the loan and the amount of the loan and also property insurance and all those rates for the insurances will probably be 40% higher it's another legal scam
Thanks bob, but that's only statistics. But I'm interested what Bank payed this interest on CD in dollar? Have you a name?Deposit Interest Rate in Dominican Republic
Deposit Interest Rate in Dominican Republic decreased to 8.57 percent in February from 8.85 percent in January of 2025. This page includes a chart with historical data for Deposit Interest Rate in Dominican Republic.
After a short search, I only found rates around 4% at Banreservas, I think that was in pesos, Banco Popular has rates around 6.6% in pesos, but only 2% for dollars. It did not say the maturity. I am not sure where people are finding rates of 8-10% in dollars or pesos.
I don't have any property in the DR (disclaimer) but it would seem that to summarize this thread;
1. As a buyer, if the owner is sitting on a property they haven't been able to move, it doesn't hurt to bring up the topic of owner-financing and at some low (or zero) percent rate. You never know how motivated someone is unless you bring it up.
2. For the seller, it's not going to be financially advantageous than an all-cash deal. Regardless of the rates in DOP or USD or type of investment (CD, equities, other real estate etc.) if the financing rate they offer the buyer is below what they could get elsewhere with the cash, they're loosing some potential gain. That number may be a little or a lot but again, to a seller sitting on something they want to get rid of, it may be worth it. Goes back to the 'never hurts to bring the topic up' conversation.
3. For the buyer, having the seller offer low/no-interest seller-financing will almost always be a financial "win". The operative word being financial since you will still have a 'relationship' with the seller long after the initial transaction is done which may/may not be off-putting. Each person has their own comfort level on this type of thing.
4. For both parties, watch out, do your homework and design a mechanism which provides protections against; (a) the buyer not getting the title after paying the seller in-full and (b) the seller getting stiffed by a deadbeat buyer who occupies the premises and then at some point stops paying. You're going to probably want a neutral 3rd party/escrow-type arrangement to handle how to address unforeseen issues if one side doesn't perform their obligations. And remember, you're going outside the traditional institutional (bank) arrangement of sale/financing/re-payment/title transfer so any protections that come with that arrangement probably won't exist. So being absolutely sure you're dealing with a reliable individual (if such a thing exists ;-) . We all know, dealing with 'personalities' in this world can be hard...
1. As a buyer, if the owner is sitting on a property they haven't been able to move, it doesn't hurt to bring up the topic of owner-financing and at some low (or zero) percent rate. You never know how motivated someone is unless you bring it up.
2. For the seller, it's not going to be financially advantageous than an all-cash deal. Regardless of the rates in DOP or USD or type of investment (CD, equities, other real estate etc.) if the financing rate they offer the buyer is below what they could get elsewhere with the cash, they're loosing some potential gain. That number may be a little or a lot but again, to a seller sitting on something they want to get rid of, it may be worth it. Goes back to the 'never hurts to bring the topic up' conversation.
3. For the buyer, having the seller offer low/no-interest seller-financing will almost always be a financial "win". The operative word being financial since you will still have a 'relationship' with the seller long after the initial transaction is done which may/may not be off-putting. Each person has their own comfort level on this type of thing.
4. For both parties, watch out, do your homework and design a mechanism which provides protections against; (a) the buyer not getting the title after paying the seller in-full and (b) the seller getting stiffed by a deadbeat buyer who occupies the premises and then at some point stops paying. You're going to probably want a neutral 3rd party/escrow-type arrangement to handle how to address unforeseen issues if one side doesn't perform their obligations. And remember, you're going outside the traditional institutional (bank) arrangement of sale/financing/re-payment/title transfer so any protections that come with that arrangement probably won't exist. So being absolutely sure you're dealing with a reliable individual (if such a thing exists ;-) . We all know, dealing with 'personalities' in this world can be hard...
The rate is much higher for deposits in Dominican pesos, it's 10% for a 3 month deposit at the moment in Lopez de Haro for example.
I agree with everything apart from "That number may be a little or a lot". If you are seller financing, you are losing the interest on all of the money you are financing (unless of course you bake interest into the deal). That interest will usually be a lot, in the examples I gave it was 50% of the sale price over just 5 years. And you're taking risk that the seller won't pay you. And there is also the issue of whose name is on the title. My conclusion is Don't Do This Unless You're Really Really Despearate, and even then you'd be better to drop the price by say 30% and get a cash buyer.
let me see if I'm understanding this correctly so if I put a million pesos in a bank after 3 months they're going to give me $100,000 pesos so my total investment at the end would be 1 million 100,000 pesos. is that tax free?
Thanks @JD Jones !
Question... do you have the URL/Link for this? I don't know Spanish but my wife (originally from the DR) mentioned to me about 6 months ago the deal that was being offered on CD's. I'd like to learn more about it but need to run the sheet above through a translation app to convert to English. Thx!
Got it, thx. The resolution must get knocked down a bit through the DR1 attachment system. Just seeing if there was a more high-res version. Thx.