Time to buy a hotel?

[CaribeDigital]

In two years swarms of tourists, all vaccinated against the corona virus, will fly to the D.R. to enjoy the blue skies and 27C warm waters. They will all need a place to stay.

Many hotels do not have the financial backup to wait until the crisis is over. They'd be eager to sell.
Wouldn't that be an opportunity? If they own the land, or maybe just the building, the banks are already happily preparing the forfeiture papers. I know them. Wouldn't it be better to sell at half price than going through the embargo hell?

I still have my doubts. There might be vaccine, but still no tourism because the crisis might continue and there will be not enough middle class people in the world able to afford a Caribbean vacation.

What do you guys think?

 

[johne]

Best advise I have is forget this plan you have because it is terribly flawed. I'll leave the 109 reasons why to some other wise posters as I am finishing up on episode 11 of a Netflix and need to go back to it. Just forget it.

 

[ctrob]

If that's your goal, sure. Always better to buy low. Not everybody is going to slash the asking price though. It's cheap to carry empty property here. You'll have to look at quite a few to find a deal

 

[Manzana]

In two years swarms of tourists, all vaccinated against the corona virus, will fly to the D.R. to enjoy the blue skies and 27C warm waters. They will all need a place to stay.

Many hotels do not have the financial backup to wait until the crisis is over. They'd be eager to sell.
Wouldn't that be an opportunity? If they own the land, or maybe just the building, the banks are already happily preparing the forfeiture papers. I know them. Wouldn't it be better to sell at half price than going through the embargo hell?

I still have my doubts. There might be vaccine, but still no tourism because the crisis might continue and there will be not enough middle class people in the world able to afford a Caribbean vacation.

What do you guys think?

Why a hotel? The market for condos is much larger and especially since Air BnB, is overlapping. You’re much more likely to find very good deals on particular condos as owners who counted on rental income dump them in a market with few buyers. When the market recovers your aggregate investment is more liquid and you have more choices. You may not be able to call the absolute bottom but it’s a reasonable bet tourism in the DR will be dead for awhile which will drive down real estate prices and then eventually it will all come back. This also obviously applies to easier things to buy and hold like an S&P index fund.

 

[Celt202]

Buy a cruise ship. You can use it as a floating hotel. You can rent it out as a prison if everything goes in the dumpster.

 

[austriaco]

In two years swarms of tourists, all vaccinated against the corona virus, will fly to the D.R. to enjoy the blue skies and 27C warm waters. They will all need a place to stay.

What do you guys think?

I agree with the timeframe. However the next virus is just around the curve and that will be in the mind of the tourists.

I did have a hotel. It was quite an expensive hobby. I won't write how much money I lost. (however I first rented it before buying and paid only for the investments and the rent before buying, - the buying never happened - therefore I lost only 5 digit and not 6 or 7 digit USD)

However I did not loose my life like the poor guy who owned a hotel and was killed by his administratora and here friend (story can be found here on DR1). I guess my administratora was OK with giving here the hotel for almost free. no need to kill me.

Other advice from a friend of mine after 15 year: After about 7 years of having an negocio in DR you may begin to stop loosing money. Maybe after that timeframe you know all the tigerajes. I doubt it, these people have much more fantasy in going after your money then you may think.

But if you think having a hotel for fun, it can be fun really. If you do not depend in earning money it can be a great hobby. You get to know a lot of people (including the local mafia types...), lot of chicas being interested (well more in a job or your money, but that you will find out later). But you get to know tourists from all over the world and some will be friends. And your friends from before will all come and want to stay for free...no one more popular like the friend with the caribean hotel...

 

[Celt202]

I agree with the timeframe. However the next virus is just around the curve and that will be in the mind of the tourists.

I did have a hotel. It was quite an expensive hobby. I won't write how much money I lost. (however I first rented it before buying and paid only for the investments and the rent before buying, - the buying never happened - therefore I lost only 5 digit and not 6 or 7 digit USD)

However I did not loose my life like the poor guy who owned a hotel and was killed by his administratora and here friend (story can be found here on DR1). I guess my administratora was OK with giving here the hotel for almost free. no need to kill me.

Other advice from a friend of mine after 15 year: After about 7 years of having an negocio in DR you may begin to stop loosing money. Maybe after that timeframe you know all the tigerajes. I doubt it, these people have much more fantasy in going after your money then you may think.

But if you think having a hotel for fun, it can be fun really. If you do not depend in earning money it can be a great hobby. You get to know a lot of people (including the local mafia types...), lot of chicas being interested (well more in a job or your money, but that you will find out later). But you get to know tourists from all over the world and some will be friends. And your friends from before will all come and want to stay for free...no one more popular like the friend with the caribean hotel...

Did you own a hotel in Boca Chica? Is your nickname Dick?

 

[SNH]

In two years swarms of tourists, all vaccinated against the corona virus, will fly to the D.R. to enjoy the blue skies and 27C warm waters. They will all need a place to stay.

Many hotels do not have the financial backup to wait until the crisis is over. They'd be eager to sell.
Wouldn't that be an opportunity? If they own the land, or maybe just the building, the banks are already happily preparing the forfeiture papers.I know them. Wouldn't it be better to sell at half price than going through the embargo hell?

I still have my doubts. There might be vaccine, but still no tourism because the crisis might continue and there will be not enough middle class people in the world able to afford a Caribbean vacation.

What do you guys think?

"the banks are already happily preparing the forfeiture papers. I know them."

No offense but that comment shows you might have no idea how the banks work here.

As I mentioned in another thread its pretty much impossible to get an mortgage on home, let alone a hotel (if i am not mistaken) as foreigner.

Most of the people I know that own hotels used cash from equity in home country or maxed out a zillion credit cards to buy here cash, built it themselves, or is owner financed by previous owner with the same dream. It's a pain to open a bank account can't imagine the disaster it is to even apply for a mortgage.

Like ctrob mentioned is cheap to carry property here, especially with no mortgages.

There are about 275+ more reasons in addition to the 109 johne has on why that is a bad idea. The only business probably worst is the same dream many gringos have of opening a bar.

Not to mention all the "tax collectors" that will show up at your property making you a offer you't cant refuse.

Condos and apartments might be better option as someone mentioned with the flooded AirBNB market but hotels NUNCA NUNCA. Do a search of the hotel owners killed by their employees over stupidness because the thought the owner had unlimited money with a $35 a night hotel.

 

[RDKNIGHT]

the world will never be normal again as we knew it to be those days are gone....Dsifferent world now ..... I have friends who brought many apts in Santo Domingo and used air bnb to rent them and payoff the bank loans .... guess what they are now scamble for money Air BnB is in the tank

 

[texan]

In two years swarms of tourists, all vaccinated against the corona virus, will fly to the D.R. to enjoy the blue skies and 27C warm waters. They will all need a place to stay.

Many hotels do not have the financial backup to wait until the crisis is over. They'd be eager to sell.
Wouldn't that be an opportunity? If they own the land, or maybe just the building, the banks are already happily preparing the forfeiture papers. I know them. Wouldn't it be better to sell at half price than going through the embargo hell?

I still have my doubts. There might be vaccine, but still no tourism because the crisis might continue and there will be not enough middle class people in the world able to afford a Caribbean vacation.

What do you guys think?

I think the problems are you compete with Airbnb and also All Inclusive hotels. Most places you compete with Airbnb but most places you are not also competing with All Inclusive hotels. Then there is the high cost of electricity. Even with trying to control how much AC a guest tries to use the cost of electricity is high.

 

[cobraboy]

If you have never owned a hotel successfully elsewhere before, all you'd be doing is flushing $$$ down the drain.

 

[USA DOC]

Buy a cruise ship. You can use it as a floating hotel. You can rent it out as a prison if everything goes in the dumpster.

Or the worlds largest Cabana...……..

 

[austriaco]

Did you own a hotel in Boca Chica? Is your nickname Dick?

No, Santo Domingo Zona Colonial


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[PeterInHigüey]

I knew a guy who bought a single rental condo in Sosua 20 years ago. Under $10K down,$100/month payments plus $150/month condo fees. He rolled his revenue into more condos. Now he has over a million in his portfolio and can sell off his condos one by one as turnkey investments.

 

[House]

I "know a guy" that bought a majority of the condos in a complex, has some nice units, all have been for sale for years now and he has sold very few. I'm sure there are reasons, like price, but he's even offered, in the past if not currently, to hold a mortgage. If you're biying it is heading towards a potentially excellent time to buy, not that 'd recommend it to the uninitiated. If you're selling...LOL LOL LOL

 

[TropicalPaul]

Well I have owned a hotel in the Colonial Zone for a number of years. It's always been profitable, I never had any problems with mafia, nor police. We have always paid all of our taxes, all the propina legal, all the wages on time, and all the suppliers on time. I guess this makes a difference. I think any business is difficult to run in DR, and the paperwork and procedures are complicated. But hotels can be profitable. I ran several companies before coming to DR so I guess I know how to make a profit and how to manage money. The Colonial Zone is a good place to watch if you're thinking of investing as they are almost certainly going to outlaw AirBnB there sometime soon (this was coming before the crisis) and there is a lot of investment coming into the public realm. It's not all doom and gloom, that's my message.

 

[cobraboy]

Well I have owned a hotel in the Colonial Zone for a number of years. It's always been profitable, I never had any problems with mafia, nor police. We have always paid all of our taxes, all the propina legal, all the wages on time, and all the suppliers on time. I guess this makes a difference. I think any business is difficult to run in DR, and the paperwork and procedures are complicated. But hotels can be profitable. I ran several companies before coming to DR so I guess I know how to make a profit and how to manage money. The Colonial Zone is a good place to watch if you're thinking of investing as they are almost certainly going to outlaw AirBnB there sometime soon (this was coming before the crisis) and there is a lot of investment coming into the public realm. It's not all doom and gloom, that's my message.

Boom!

THIS is the main reason you've been successful: real-world experience in the trenches.

The DR is the last place I'd try to learn how to run a business...yet many do, with failure as a result.

 

[NanSanPedro]

Well I have owned a hotel in the Colonial Zone for a number of years. It's always been profitable, I never had any problems with mafia, nor police. We have always paid all of our taxes, all the propina legal, all the wages on time, and all the suppliers on time. I guess this makes a difference. I think any business is difficult to run in DR, and the paperwork and procedures are complicated. But hotels can be profitable. I ran several companies before coming to DR so I guess I know how to make a profit and how to manage money. The Colonial Zone is a good place to watch if you're thinking of investing as they are almost certainly going to outlaw AirBnB there sometime soon (this was coming before the crisis) and there is a lot of investment coming into the public realm. It's not all doom and gloom, that's my message.

Why are they making AirBnB illegal? I don't ever use them, but am curious.

 

[CaribeDigital]

Well I have owned a hotel in the Colonial Zone for a number of years. It's always been profitable, I never had any problems with mafia, nor police. We have always paid all of our taxes, all the propina legal, all the wages on time, and all the suppliers on time. I guess this makes a difference. I think any business is difficult to run in DR, and the paperwork and procedures are complicated. But hotels can be profitable. I ran several companies before coming to DR so I guess I know how to make a profit and how to manage money. The Colonial Zone is a good place to watch if you're thinking of investing as they are almost certainly going to outlaw AirBnB there sometime soon (this was coming before the crisis) and there is a lot of investment coming into the public realm. It's not all doom and gloom, that's my message.

I also think that the guys are exaggerating with mafia/police/killing. Unless you are part of the mafia yourself.
Having said that, buying just the walls ist not the best option, no matter the price. Two things to be considered:
1: is there a customer base (agencies) and proven publicity record you'd be buying along with the walls.
2: offer the seller some form of a partnership for one year first. See how he reacts.

 

[TropicalPaul]

Why are they making AirBnB illegal? I don't ever use them, but am curious.

Because hotels have to charge and pay 18% ITBIS to the government, plus the 10% propina legal. Airbnb's don't charge nor pay this, so the government is losing a lot of tax. And in addition, since the scandals in 2019 about people dying, the Ministry of Tourism is seriously clamping down on where tourists can stay, so are insisting that all hotels are registered, have insurance, have fire extinguishers, pay their taxes etc. The last thing Dom Rep needs right now is a scandal where a lot of tourists die in a hotel fire or similar. And most AirBnB's don't have insurance, no fire certification, no hygiene protocols.