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9 Ways to Buy Property in the Dominican
Republic:
It is always advised to secure the
assistance of a knowledgeable, reputable and local real estate
agency in order to secure a fully executed contract and title.
OPTION 1) Use your own money… Using your own
cash or liquidating assets in your own country is of course the
best and easiest way to not only secure property here quickly,
but also buyers have the best chance to negotiate a better price
and terms & conditions. An offer could be structured
as such… (Example only) 40-50% down upon acceptance of the
offer, and the balance due approximately 30-45 days after the contracts
have been legally signed and are in motion for expediting the transfer
of title in the buyers name. It is always advised to secure the
assistance of a knowledgeable, reputable and local real estate
agency in order to secure a fully executed contract and title.
NOTE: If you are American considering
refinancing your home or obtaining an equity loan, our agency does
work directly with a U.S. Mortgage Broker currently licensed in
23 states (see list below) soon to be licensed in 30 States. This
broker has been in the mortgage business for ten years with an
A+ rating agency registered with the Better business Bureau. She
is also married to a Dominican from this area and can eliminate
the stress of explaining why you want to use the money to secure
property here.
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Please CONTACT
US for more information.
OPTION
2) For a resale property (property originally purchased by another
and sold by the individual seller). Depending
on the motivation of the seller, the same principals as outlined
in option 1 could be applied. The seller may even take less
for the initial deposit and stretch the payment terms out for 6
mos. to up to 2 years – Once the final payment is made, the
title transfer can be applied for. The seller may or may
not grant keys prior to the final payment.
OPTION 3) Lease Purchase: Similar to option 2, where a buyer, through the creative assistance
and representation of a reputable agency, can formulate a lease
purchase agreement with the seller, similar to a mortgage with
a bank, but instead the terms of the lease purchase are made directly
between the buyer and the seller. The terms of a lease purchase
agreement changes on a case by case basis. An ideal lease purchase
agreement would outline that with a small initial deposit (usually
5% – 10% of the agreed selling price,
plus a % of the agency commissions and legal costs); the remaining
payments would be set up on a monthly or sometimes quarterly basis.
At the end of the probationary period (the time where both the
buyer and seller have the option to ( a) proceed with a lease purchase
arrangement- (b) go into a standard rental agreement, or (c) go
into a more formalized “purchase agreement. The probationary
period is typically 1 year. Should the buyer default with the obligations
set forth, the buyer moves on and the seller retains the deposit.
Should the buyer decide not to purchase, the deposit is either
retained by the seller, or divided between the buyer & the
seller as agreed in the probationary contract.
OPTION 4) Finance with a bank in the
Dominican Republic - Although we know even U.S. banks can fail, overall banks
in the DR have had excellent financial stability because they are
affiliated with the world bank and not primarily dependent upon
1 or just a few countries. Popular
Bank is the largest branch
in the DR. Other strong banks are: Scotia
Bank (also
in Canada), and BHD Bank. As you know Mortgage bank rates
are directly tied into the real estate market and since most properties
in the DR are purchased with majority cash, there are not many
short sales or foreclosures in the DR, thus the bank rates remain
more consistent. Real estate throughout the DR is still very
affordable compared to most Caribbean destinations and values are
holding steady. 2010 once again reflected appreciated values, with
modest increases compared to 2009. Thus, bank interest rates are
higher than in the U.S. or other countries that need low mortgage
incentives to stimulate the market.
Since the banks mirror the U.S.
qualification process, requirements will be much the same (credit
score, two years income tax records, debt to income ratios, etc). The
banks in the DR also require proof of title – and typically
between 30% – 40% down.
Titles for new or pre-construction properties, may take up to 18
months to obtain due to the high volume of sales over the past
5 years. Therefore, if you are planning to buy pre-construction,
under-construction or brand new, properties, please check with
Reliable Realty to see where the developer is in the title process,
and if he is offering direct financing as an alternative option.
Bank
rates in the DR have come down considerably over the past 2 years.
For example, in 2007 bank rates in the DR were still around 12%. An
indicator the DR government is recognizing the need for financing
incentives for foreign investors in order to continue stimulating
the DR economy. If you are interested in bank
financing options, please click on the following attachment for
more information and direct bank representative contact information.
Even after applying for a loan, you will need a responsive and
reliable real estate broker here to coordinate the many details
of the sale directly with the bank representative and other professionals
in order to keep the process moving within a reasonable time frame.
CLICK HERE FOR MORE INFORMATION AND SPECIFIC BANK REQUIREMENTS
OPTION 5) For brand new completed or
near completed properties. Some developers are in a
strong financial positions to accept payment terms: i.e.
Palm Suites offers 7.5% financing with 25% down stretched out
over 8 years. Or Santa Maria
del Mar I and II is offering 6.5% interest with as little as 25%
down, stretched out over 20 years! Of course both these communities
are almost sold out… so if you are interested in financing
with either of these communities, please contact me ASAP to verify
the inventory. If you are interested in a different community/
development, check with RELIABLE REALTY DR to see if the developer
is willing to accept creative terms.
OPTION 6) For Preconstruction
properties. Many preconstruction developers offer the
best pricing and payment terms; sometimes 50% less than when
the condo or community is finished – which
makes for an excellent turn-over resale investment (i.e. 2BR condo
in a beachfront community preconstruction price $250,000 V.S. completed
sale price of $375,000). Many developers will agree to stretch
the payment terms over a 1-2 year period of time until the condo
is finished. I.e. upon accepted offer, 30% down, then 20%
six months later, another 20% after 1 year – 18 mos. and
the final 30% upon completion and turnover of the keys. There
is always some inherent risk in pre-construction, however, RELIABLE
REALTY DR is in constant correspondence with most developers here
and in most cases, able to recommend which projects hold deposits
in escrow (Stewart Title), which projects are on target for completion
as scheduled, those developers who are financially strong, and
those will not provide status reports (which is typically an indicator
there may be financial concerns).
OPTION 7) - Convert
your traditional IRA into a Truly Self Directed IRA (Roth) then
use this money as you wish NOW – This
option is perfect for those who have IRA’s AND who plan to
buy a business here or a property they plan to use as a rental
investment and who DO NOT plan to live in the purchased property
until later (i.e. after retirement - time depends on your situation) – please
consult with a financial consultant versed in Truly Self Directed
IRA’s). More information and link provided here “TRULY
SELF DIRECTED IRA”
OPTION 8) Rent out your property to
cover loan payments and other cost of ownership. An
established and reputable real estate agency will also provide
property management services so although you are living abroad,
you can convert your property into a Vacation rental investment,
or rent out on a mid to long term basis. Then use this money
to pay your mortgage/ loan or other payment (as expressed above). There
are no guarantees the investment will totally cover your payment
(ROI), but chances are it will cover a good portion of the payment,
and or all your cost of ownership expenses (maintenance fees,
electric, gas, cable TV, homeowners insurance, property management
fees, general maint. / repair costs) and may even provide enough
income for you and / or your friends to use it 2-3 times a year
as your 2nd Caribbean home. For example, you could purchase
a 2BR/ 2BA condo within walking distance to the beach for around
$150,000 (yes we have several of these in this price range). Your
expected rent for sleeping an average of 5 people would be around
$600.00 a week/ or $1500 a month (more during high season – late
Nov. – early
Apr.). Or a 2BR Beachfront community priced around $295,000
you can expect to nearly double the rate with increased occupancy
rates. Of course it won’t rent out every week… but
so far occupancy rates for properties managed and maintained by
RELIABLE
PROPERTY MANAGEMENT SERVICES have averaged 38%. I know
of “NO” success stories from people living abroad who
try to rent and maintain their own properties from abroad. It is
mandatory to seek local, trustworthy and reputable property managers
to assure your property investment is well maintained and secured,
and that your vacation guests or tenants are happy.
Option 9) – Consider
Fractional Ownership:
Can't afford property now, but feel time is ticking away? Maybe
Fractional Ownership is right for you.
Fractional real estate ownership
is a well established concept that is commonly confused with time
shares. With most time shares the investor never actually “owns” a
portion of the property; they simply “rent” time, which
is no different than staying in a resort or hotel. With fractional
real estate, or “Shared Ownership” you actually own
the asset, take part in its appreciation, can rent out your unused
weeks or months, trade up, inherit to your heirs, and are able
to sell your portion of the property at anytime, should you decide
to do so later.
Fractional ownership is the fastest growing segment of the real
estate market today. Fractional Ownership is an ideal investment
because it allows investors to (partially) own high-end, luxury
properties in some of the most desirable areas in the world, for
a “fraction of the cost” and without any personal maintenance
responsibilities.
Fractional ownership can consist of as
little as 4 owners per property or up to 12. Owners buy shares
(or months) for as little as $27,000* for a fully furnished ocean
view luxury property and can divide or rotate their time (months
or weeks) with other owners, all coordinated by your Fractional
Management Company,
WHO BENEFITS THE MOST FROM FRACTIONAL OWNERSHIP?
Anyone really…
- Those who thought they could never afford
a 2nd home in the Caribbean
- Those who prefer to Own V.S. Rent – or
stay at a resort “pride
of ownership”
- Those who only plan to visit the Dominican
Republic for a couple weeks, one month, or a few months over
the course of a year
- Those who don’t have the time or desire
to manage property overseas
- Those who have considered buying property
with trusted friends, investors, or relatives, but didn’t
have time to research the legal ins and outs of this type of
ownership?
- Investors who want to spread their risk
- Those who love
various areas in the Dominican Republic or around the world and
would like to own fractions of multiple properties overseas
* Cost of fractions depends
on the property purchased. $27,000 is just an example of the minimum investment
for a 2 bedroom Beachfront condo in Punta Cana shared between 12
owners. Please contact Maria Williams for an inventory and
pricing of all Fractional Properties Reliable Realty represents.
YouTube: Fractional
Shares Ownership / Benefits
Fractional Ownership in Punta Cana
was recently featured on HGTV House Hunter International (Sept.
2010)
See Video episode and story here
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