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The
Dominican Republic Property Market
By Jerald
Ritter
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| Want
to live the Caribbean life? Would you like to own a tropical hideaway that
could return a nice income? Thinking of investing in the islands? Where
are the best values now?
The Caribbean
islands continue to attract visitors and residents from around the world
because of the idyllic climate, warm translucent waters, inviting white
sand beaches, exotic delicacies and relaxed lifestyle. But paradise comes
with a high price tag in most of the Caribbean. Does there exist a Caribbean
island with reasonably priced housing and living expenses? Yes!
Have you been
to the Dominican Republic? The “D.R.” as its commonly called is a pleasant
surprise to many first time visitors. The people are friendly, hard-working
and live life to a warm Latin beat.
The "D.R."
currently has the best buyers market in the Caribbean. It wont last forever.
The new government
has made some positive changes. The infrastructure problems are receiving
top priority. Land ownership restrictions have been eliminated. Now anyone
can own property virtually anywhere in the "D.R." and there are no real
estate taxes. For the first time in twenty years the government has allocated
millions to promote this beautiful country. “International Living” has
started a series of articles entitled, "Affordable Caribbean" and is promoting
tours there. The “D.R.” economy is booming. Its only a matter of time before
prices increase to parity with other Caribbean isles.
On my last
"D.R." visit I was accompanied by a friend, Robert Fordi, who wrote an
article that also appears in this edition of “Escape From America”.
Bob and I generally agree on places that we like which have good fundamentals
for above average property appreciation, ie; Panama, Nicaragua and Belize.
But it was clear from our conversations that Bob and the editors of
"International Living" had written off the Caribbean as "overpriced".
I sent Bob recent issues of my publication, "The Caribbean Property
List" and pointed out some good buys right in the heart of the Caribbean,
on it's largest island nation, the Dominican Republic. Soon afterwards
I received an enthusiastic call from Bob saying that he was going to check
it out. We arranged to travel together. I accompanied Bob on his scheduled
interviews with government and embassy officials and found Bob to be a
first-rate professional journalist. |
| Jerald
Ritter has lived in and invested in the Caribbean and Latin America
for much of the past thirty years. He publishes the Caribbean Property
List Magazine, the largest online directory of Caribbean and Latin
Americans properties on the Internet. The 1999 edition lists over 500 properties
and may be ordered online for $20.00 at: http://www.caribpro.com |
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On the ride
into Santo Domingo from the airport I asked the taxi driver my favorite
question, which I ask all taxi drivers everywhere; "what are the three
biggest problems in your country". Without hesitation the driver replied;
"la electricidad, la agua y la basura" - the electricity, the water and
the garbage. Bob did a good job of reporting on this in his article. As
is typical in third world big cities, the answer applies mostly to the
capitol, where most of the people and problems are. As strange as it sounds,
most Santo Domingo residents have never been to the North Coast. But, if
you head over the mountains, as we did, in a new, comfortable, air-conditioned
Metrobus (tel. 809-566-7126), you will arrive in a couple hours to another,
more peaceful world, the North Coast, with only traces of the big 3 problems
that bother the big metro area on the South Coast.
On the North
Coast we stayed in Sosua, a pre-war European village that has bistros,
clean beaches and property bargains! We visited several Realtors there.
We saw a 4,000
sq. ft., 3 level, 4 bedroom villa with big view overlooking Sosua selling
for $195,000 that would bring $500,000 on most other Caribbean islands.
We saw a nice 1 bedroom condo in a peaceful tropical garden near
the beach going for $39,500 and a nice little studio just steps from the
beach for $20,000. When I asked Lynn Ostermann, an agent with West Indies
Realty, why they don’t advertise these deals her reply was; "In many cases
the listing price is much higher. Sellers are very negotiable now. Many
times I'm in shock when a low offer is accepted. I sometimes wonder, why
didn't I buy that".
A realtor there
on the North Coast that I feel comfortable recommending is Jim Belair,
owner of American Realty in Sosua. Jim has lived in the Dominican Republic
since moving from Canada in 1985.
Jim provided
us with some answers to frequently asked questions about the “D.R.”.
Cost of living?
Although some things cost more such as vehicles and appliances, the overall
cost is definitely less with no costs for winter heating and clothing,
etc. There is no property tax. With few malls and constant good weather
one is not overly enticed to spend money on unneeded things. There are
better ways to use one's time, like just reading or snoozing in a hammock
or sitting poolside with friends.
What are some
of the differences about life in the DR as compared to N. America? Phone
service here is almost as good as in North America and internet hookup
is easy to get. Most North American children attend private schools taught
by Americans and Europeans. They have classmates from different countries,
cultures and languages. Classes are small with more teacher time per student.
Here I feel my 9 year-old daughter is safe waiting on the roadside near
her school, or anywhere in fact, because of a different cultural attitude.
It is easier here to spend more time with family as there are less distractions.
Life here, as music, tends to be at a higher volume and people are not
as tidy. But there is no racial discrimination.
What are prices
of homes/condos on the beach? Near beach? Construction costs?
Large villas
on beach go from $249,000. A short distance from the beach homes are $50,000
and up. Two bedroom condos on the beach go for $135,000, but a short distance
away they are from $20,000 for a studio and $39,900 for a one bedroom garden
condo with pool and security. Construction costs from US$35/sqft.
What precautions
must a buyer take in the Dominican Republic?
Buyers should
ask around about the agency they are working with. Ask the people who live
here, in the hotels, restaurants, business people. These are small communities.
People know and will tell you who has a bad reputation. We who are here
for the long-haul would prefer newcomers not get started wrong. It's bad
for business. The same goes for a local lawyer who can help immensely if
he is independent and not working for one agency. You can also check with
your own consular officials.
What are the
requirements of residency in the Dominican Republic?
Residency
requirements here are very easy. Usually a lawyer will do the legwork and
you must supply copies of passport, personal information, photos, have
a medical exam, and a little patience. Meanwhile you can stay at least
2 months on a tourist card and more if you pay a very small fee at the
airport. If you are planning on operating a business you must have residency.
You don't have to invest to qualify, just being here is OK.
Why should
one consider buying now in Sosua or the Dominican Republic?
Property prices
have been flat for several years. We now have a progressive young president
and a new team. The ad campaign in North America means that many Americans
will soon hear about the Dominican Republic. Thousands of Europeans have
moved here from far away. North Americans have been missing the boat on
this place. This country has a democratic tradition of land ownership and
government.
What are the
best buys that American Realty is offering at this time?
Great buys
right now include: 1) A duplex with two 2br apartments with ocean view
in a good rental area only 3 minutes to town at $98,000. 2) A 4-plex only
4 minutes to the beach for $135,000. 3) A hillside 3br villa with separate
guest apartment with a great view to the ocean, large lot with room for
expansion in a quiet area for $138,000. 4) Two 650 sqft one bedroom condos
in an American-built project popular with foreign residents at $39,900
and $42,900. 5) A small studio condo for $20,000.
When launching
your quest for your piece of paradise keep some simple rules in mind if
you wish to ensure a future profit on your property investment: 1) Acquire
current data. 2) Study your market. 3) Buy in the right location. 4) At
the right price. 5) At the right time. The time for the "D.R." is right
now.
Organize your
search. After deciding your price range and search areas, make a
list of amenities that your property must have, ie; view(sunrise/set),
waterfront, beachfront,
boatdock,
pool, golfcourse, etc. Evaluate your choices. Keep track with a ledger
or computer database. Create fields such as- a) your inquiry date, b) date
of their reply, c) vendors name, d) tel # e) fax, f) address, g) location,
h) size of land, i) building size, j) price, k) description, l) furnished,
m) terms, n) taxes, o)value, p) price to offer, etc. Organize your data.
Code each property for easy on-site ID. You will need this info at your
destination.
Compile your
data, make your plans and go. Stay at the property or nearby. Many sellers
will happily offer a rental discount if they know you are a prospective
buyer. They may also deduct the rental cost if you do buy. While there
check out the local situation. Talk with neighbors, ex-pats and fellow
countrymen who live in the area. Attend social and sporting events, get
a feel for what it would be like to live there. Before making an offer,
get a contractor's estimate of repair costs. Check out the vendor. Get
impartial advice on local lawyers and get their fee schedule. Ask about
transfer taxes, duties and other buying and closing costs.
Though not
the norm in many locales, try to get the seller to provide title insurance
that will refund your investment if a title problem appears later. Even
if you have to pay for title insurance, your peace of mind is worth its
cost. We've found a reputable US-based company that offers title insurance
throughout the English-speaking Caribbean. Contact: Intl. Data Mgmt.; Tel.(561)798-6645,
Fax 798-8386.
Devise your
own valuation formula. Example: Estimate value of the land. Consider location,
view, etc. (seaview lot) $ 70,000. Estimate value of buildings and improvements.
(3br, 1200 sqft home) +125,000. Estimate cost of repairs and needed improvements.
(roof, terrace, paint, etc) - 20,000. Allow for buyer's/seller's market
and your criteria. (+) or (-). Estimate current condition and market valuation.
$175,000
Determine
price you will offer, $________; and maximum you would pay $________.
What about
financing in the Caribbean? Although bank financing is not available to
foreigners in most offshore locations, terms are possible from sellers,
especially in buyers markets.
How about rental
management? Much depends on how much time and effort you contribute to:
advertising, correspondence, bookings, maintenance, etc.
1) Owner on
site: If you will be living on or near your rental property you will be
able to oversee more management details and maintenance, thereby maximizing
your return.
2) Owner away
but handles rentals: If your property is maintained by contract or an owners
association, you may be able to advertise it and handle the rentals remotely.
3) Owner away
with no involvement: If you are too busy or just cant be bothered with
any management responsibility then your most important task will be to
find a good, reliable management company. Many resort areas have excellent
rental management companies. Check out the company thoroughly before you
entrust your property to them. Fees range from 10%-50% depending upon their
involvement. Fees escalate with services provided, ie; a) hand the keys
over, b) collect the rent, c) book rentals, d) advertise your property,
e) maintain your property, f) pick up your guests at the airport, g) host
your guests for get acquainted briefings or dinner, h) transport your guests
around and, i) highest fees of all include manager hearing your guest's
life story and seeing their grandkid's photos while listening to how much
better things work back in Ohio.
The time, effort
and expense required to find and purchase your ideal offshore property
can be a formidable task. Data must be acquired, sorted, analyzed and familiarization
trips made. It can become a lot of work before the fun begins. Is there
an easier way?
The Caribbean
Property List has organized data by country and includes kind of property,
prices and the direct contacts to the seller’s. Check out the DataBank
lists online. This property data can greatly accelerate your quest to acquire,
enjoy and profit from your Caribbean investments.
In the past
four years, after presenting over 5,000 Caribbean and Latin American properties
for sale, I have not seen a better example of a classic buyers market about
to turn around than the "D.R." - Jerald Ritter |
