Real Estate

check also
THE 10 MOST INTERESTING REAL ESTATE
DEVELOPMENTS RIGHT NOW IN PUNTA CANA

THINGS TO CONSIDER BEFORE PURCHASING A PROPERTY IN PUNTA CANA

There are many reasons that may prompt the decision to buy a home in the Dominican Republic and specifically in Punta Cana. The tropical climate of the Caribbean region has always been alluring thousands of people escaping from the cold in their home countries. Thus, the Caribbean nations constantly appear in international ratings of the best places to retire and buy real estate. In the Dominican Republic the process of acquiring land or building property has been reduced to its simplest form to encourage real estate purchases. Indeed, the country is in strong economic growth favoring an atmosphere conducive to business affecting all sectors, including real estate. But the most important reason is economic. Punta Cana is definitely the hottest spot in the DR in terms of real estate investments and growth at the moment with many Real Estate developments taking place or starting soon. The market is fulled by many expats who invested and keep investing, looking for a piece of paradise at an affordable price which they use a few months and rent out the rest of the year for profitable returns.

 

 

How to buy a property in Punta Cana?

In the Dominican Republic, foreigners can easily acquire real estate. Whether for individual use during the holidays, or as a secondary home, or for a lucrative use, the purchase of a property in the Dominican Republic requires a minimum of knowledge. After agreeing on the price of the property, a compromise of sale is signed between the two parties with a down payment of around 5-10 % of the total amount. Generally, the funds required to acquire the property are deposited by the buyer by bank transfer or by check. After the remittance of the funds, the title is transferred in the name of the buyer or the company and then registered in the Dominican title register. Financing as well is a common discipline when buying a property. No matter if you buy a villa, an apartment, a piece of land in Punta Cana, you will always find a list of developers that offer direct owner financing. You will only need to put the down payment and he rest is financed under a fixed interest rate for 5-20 years. While you are paying, the developer holds the title which you get after the final payment is made and the Closing Contract is signed.

 

Buying as lifestyle or investment?

LIFESTYLE

The beaches of the Dominican Republic will delight you. For those who can afford it, the construction of a holiday home in the Dominican residential neighborhoods guarantees a dream accommodation. While having a great time in the sun by the sea, some would have been considered buying a holiday home or apartment. “You only live once so enjoy it if you can afford it!”. There is nothing wrong with buying a holiday home for personal reasons, just as long as you have realistic financial expectations. Usually the main purposes of these properties are about 75% emotional and 25% for investment. Most people fall in love with the idea of owning a holiday apartment and few pay much attention to the investment fundamentals. Make sure you are purchasing with your head and not just your heart.

 

BUYING AS AN INVESTMENT

If you are looking at buying a holiday home, either to let out for part of the year or as a permanent rental, let’s take a look at the pros and cons of investing in holiday properties. Part of the attraction of holiday homes is the potential for strong returns and high occupancy rates, making them a consideration for many looking to take an investment loan, but it’s a decision one shouldn’t take too hastily. Now can a holiday home in Punta Cana be a good investment or is it always an emotional luxury? Consider the following before making any decision.

 

How good is the location?

A top holiday home choice is usually in close proximity to features such as restaurants, shopping centers, tourist spots and, of course, a beautiful view or two. You might also want to choose an area that’s an approximate two-hour drive from a major town or city, or one that’s close to an airport. In this case Punta Cana satisfies all these major needs as a location.
With that said, buying in Punta Cana can still be a risky investment strategy. If the tourism industry suffers a downturn (like we had this year due to the “mysterious” hotel deaths), everything in that area will be affected and it’s probably the one time that even bricks and mortar can be worth nothing. If you’re buying property you need to focus on the average house and unit prices in the area and the yields you can expect for both. Buyers should calculate the holiday home’s total rental return for a whole year – not just its maximum rent for peak periods. Normal residential long-term rentals get around 4%-6% per year while holiday rentals would ideally get closer to 5%-10% based on the fact that income might be more volatile and it costs more to furnish the property, manage and maintain it.

 

How long is the peak holiday period?

The high season in Punta Cana is quite long compared to other destinations and other countries where people vacation. In fact all in all you can count approximately 6 months of high season (from December till March and again from May till July-August) where rental prices rise by 20 to 50% percent boosting further you chances of profit. The really big question is: how much of the peak season will you actually be there? To maximize the rental return you ideally want it rented out during as much of the peak season as possible. Now you have to ask yourself, will it be a great holiday home if you can only be there in the off season?

It really be your holiday home?

Having your own holiday home is certainly a romantic idea with many families going to the same destination for generations. But if you decorate your holiday home to your taste, how will that suit singles, families or couples when you’re not there? How comfortable are you with strangers sleeping in your bed, and will you be able to fill the house with valuables and family heirlooms?

 

Who will manage the property?

The property management of a holiday home is very different to a standard 12-month residential rental because it demands more work. Every time holidaymakers vacate, its contents must be rearranged, cleaned, and checked for damage and theft. It will usually cost more to oversee and the performance of your holiday home as an investment is very much dependent on how good the property managers are and how they advertise and attract new potential tenants.

 

WHAT YOU SHOULD CHECK WHEN YOU BUY A PROPERTY

 

1.Translate the Promise of Sale agreement
Before signing the Promise of Sale agreement you or your representative should have the document translated into English or your native language. Please do not take your real estate agent or salesperson ́s word that everything is ok with the agreement. Most Promise of Sale agreements are drafted to protect the construction company or developer instead of the purchaser.

 

2.If in doubt hire a reputable real estate attorney
An attorney (preferably fluent in English or your native language) should be able to review the agreement and answer the questions posed above. If there is a clause in the contract that you do not agree with then it should be corrected until both sides are satisfied.

 

3.If buying for investment purposes, ask for the projected ROI (Return of the Investment)
Before buying a vacation property, make sure it has the capacity to attract enough holidaymakers to make the investment viable. Ask local agents about the average rental yield in the area, average rents for similar properties and occupancy rates, which can often be lower and more volatile in holiday locations.

 

4.Know the costs
It’s important to be aware of the costs associated with owning such a property, including rental agents, garden services, general maintenance and levies. Some properties require more maintenance than others. Beach properties for example often take a pounding from the sea air and may need more regular maintenance than would a property situated further inland.

 

5.Rent before buying
If you’re buying with the intention of living there we would highly suggest renting and staying for several months first to see how you like the lifestyle and way of living. No matter how much you love a country there is a wide difference between vacationing at a hotel and actually having to live day to day. Besides, it will prepare you for the very relaxed Dominican lifestyle. Understanding that things are different and showing certain flexibility while adapting to a new reality will save you stressing out.

 

check also
THE 10 MOST INTERESTING REAL ESTATE
DEVELOPMENTS RIGHT NOW IN PUNTA CANA