Authored by the expert who managed and guided the team behind the Dominican Republic Property Pack
Everything you need to know before buying real estate is included in our The Dominican Republic Property Pack
Are you considering investing in the Dominican Republic’s real estate market? What are the legal steps, tax implications, and cultural differences you need to understand before diving in? What challenges do foreign investors typically face, and how can you overcome them?
These are the questions we hear most often from foreign investors because we’re actively connected to this market. We’ve spent time working with local agents, developers, and investors, so we know what works—and what doesn’t. That’s why we’ve written this article: to provide a clear guide that answers the questions we get asked daily.
Our goal is to help you, as a foreigner, to navigate the property buying process with confidence. If you think there’s something we missed or want more details, let us know (please do!). Your input helps us refine and improve our advice for everyone.
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1) Negotiate lawyer and notary fees with local sellers in the Dominican Republic, as they often expect buyers to cover these costs
When buying property in the Dominican Republic, local sellers often expect buyers to cover lawyer and notary fees.
These fees are part of the typical closing costs, which can range from 4% to 10% of the property's value. This includes transfer taxes, attorney fees, and notary fees. It's a common practice, so be ready to discuss these costs before sealing the deal.
In recent years, many expatriates and foreign buyers have shared that they were expected to pay these fees. Guides and articles consistently advise buyers to negotiate these costs before finalizing any purchase. Real estate agencies and legal experts in the Dominican Republic echo this advice.
Online forums and communities are buzzing with shared experiences, where buyers emphasize the importance of negotiating these fees. Cultural norms in the Dominican Republic highlight the need for transparency and negotiation, so understanding and discussing these costs upfront is crucial.
Many buyers have found that negotiating these fees can lead to significant savings. It's not uncommon for sellers to be open to discussions, especially if you show awareness of the local customs and practices.
Remember, the key is to be informed and proactive. Approaching the deal with knowledge and confidence can make a big difference in your buying experience.
Sources: International Living, Cana Law
2) Consider beach properties popular with international tourists for significant cash flow through short-term rentals like Airbnb
In the Dominican Republic, short-term rentals like Airbnb are booming, especially in popular beach destinations.
In 2023 and 2024, the country saw a record-breaking influx of over one million international tourists in just three months. This surge has driven up demand for accommodations, making short-term rentals a lucrative opportunity for property owners.
Take Santo Domingo, for example. Here, a typical Airbnb listing is booked for 197 nights a year with a median occupancy rate of 54%. Hosts earn an average of $62 per night, which adds up to a nice annual income.
Meanwhile, in Puerto Plata, the average nightly rate is higher at $132, though the occupancy rate is a bit lower at 33%. Still, these numbers show that short-term rentals can be quite profitable, especially during peak tourist seasons.
The tourism industry in the Dominican Republic is a big deal, fueling the local economy with jobs and foreign currency. Vacation rentals are becoming more popular than traditional hotels, with Airbnb capturing nearly 60% of the lodging room supply.
This shift in consumer preferences suggests that the short-term rental market has plenty of room for growth. It's an exciting time for property investors looking to tap into this trend.
Sources: Airbtics, Dominican Today, Dominican Today
We did some research and made this infographic to help you quickly compare rental yields of the major cities in the Dominican Republic versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you’re planning to invest there.
3) Target luxury golf communities in the Dominican Republic to attract wealthy seasonal visitors
Investing in niche markets like luxury golf communities can boost your success, especially in the Dominican Republic.
The luxury real estate market here is thriving, with an annual growth rate of 2.74% expected from 2024 to 2028. This boom is set to push the market to around $795.70 billion by 2028, showing a strong appetite for high-end properties.
Communities like the Coral Golf Resort in Punta Cana and Cap Cana are prime examples of this trend. They offer high-end amenities and draw in significant investments, appealing to wealthy buyers seeking exclusive experiences.
The Dominican Republic's tourism industry is also on the rise, thanks to economic stability and a welcoming investment climate. Golf tourism plays a big role here, with the global market expected to grow at a CAGR of 7.4% from 2024 to 2032.
This growth aligns with the spending habits of affluent tourists who are eager to invest in luxury amenities and experiences. The appeal of these golf communities is undeniable, attracting those who value exclusivity and high-end living.
By focusing on these niche markets, you tap into a lucrative segment that caters to the desires of wealthy seasonal visitors. The combination of luxury and leisure in these communities makes them a magnet for investment.
Sources: The Agency DR, Dominican Today, Globe Newswire
4) Bring your own capital when buying in the Dominican Republic, as local banks offer limited financing options for foreign buyers
Buying property in the Dominican Republic as a foreigner can be tricky, especially when it comes to financing.
Back in 2023 and 2024, foreign buyers often struggled to get loans from local banks. The main issue was that only a few banks offered mortgages to foreigners, making it tough to find good financing options.
Interest rates for foreigners were also a hurdle, as they were higher than those for locals, ranging from 8% to 13%. This meant borrowing money was more expensive for non-residents. Plus, banks had stricter lending criteria for foreigners, demanding large down payments and lots of paperwork, which was a challenge for many.
Another obstacle was the loan-to-value ratios, which were lower for foreign buyers, typically between 50% to 70%. This required foreigners to put down more money upfront. Real estate agents and expat communities often highlighted these issues, stressing the importance of bringing your own capital.
In the Dominican Republic, it's common knowledge that foreign buyers have fewer financing options from local banks. This makes having your own funds crucial for purchasing property.
Sources: DR Properties, Dominican Today, Kredium
5) Consider condos in new developments for better ROI, as they often come with tax exemptions despite higher costs
The real estate market in the Dominican Republic is buzzing with excitement, especially in 2023 and 2024.
Investors are eyeing new development condos, which, although pricier, offer enticing benefits. Thanks to the Confotur Law, these properties come with tax perks that can boost your returns. Imagine skipping the annual 1% Real Estate Property Tax (IPI) for 15 years—it's a game-changer.
Let's break it down: if you were supposed to pay $5,000 annually in property tax, the Confotur Law saves you a whopping $75,000 over 15 years. That's a lot of extra cash in your pocket, making these condos a smart investment.
These tax breaks don't just save money; they can also enhance your ROI. Experts say that with these exemptions, your returns could jump by 2-3 percentage points. So, not only do you get a swanky new condo, but you also make a financially sound decision.
Beyond the tax savings, there's the potential for property appreciation. The combination of these factors means that investing in new developments could lead to higher returns than you might expect.
In the Dominican Republic, the real estate scene is evolving, and savvy investors are taking note. With the right property, you could see your investment grow significantly, thanks to these strategic tax advantages.
Sources: Understanding the CONFOTUR Law and its Benefits for Foreign and Non-Resident Real Estate Investors, Confotur Property List, Dominican Republic: Executive Branch Introduces Draft Tax Reform
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6) Focus on areas with expanding infrastructure, as better roads and airports will draw more tenants
Focusing on areas with growing infrastructure projects can be a smart move for attracting more tenants.
In recent years, the Dominican Republic has been pouring money into infrastructure, with CAD 2.14 billion invested in 2022. This hefty investment shows the government's dedication to improving the country's infrastructure, which is crucial for economic growth. The construction of new roads and airports is not just about convenience; it's about boosting property values and making areas more appealing to potential tenants.
Take Pedernales, for example. The government plans to build an international airport there, aiming to turn it into a major tourist hotspot. This kind of development can significantly increase property values and attract more tourists, which means more people looking to rent. It's a win-win for property investors.
Transportation is another big factor. The National Road Infrastructure Connectivity and Transformation Plan is set to make a real difference by reducing traffic congestion and improving access. Better roads mean easier commutes, and that's something tenants really value. Surveys show that people prefer properties with good transportation links, so areas with upgraded infrastructure are likely to see a rise in rental demand.
Improved infrastructure doesn't just make life easier; it makes properties more attractive. When roads and airports get a facelift, it draws in more tenants and tourists, boosting the local economy. This is especially true in areas where the government is actively investing in infrastructure projects.
So, if you're thinking about buying property in the Dominican Republic, keep an eye on areas with ongoing infrastructure projects. These are the places where you'll likely see the most growth and demand. The government's commitment to these projects is a clear signal that they're serious about making the country more accessible and appealing.
Sources: Trade Commissioner Service, World Bank, GlobeNewswire
7) Understand currency exchange rate fluctuations, as they can significantly affect your investment costs
Investing in the Dominican Republic means keeping a close eye on currency exchange rates.
In 2024, the exchange rate between the US Dollar and the Dominican Peso saw some wild swings, with the highest rate hitting 60.751 DOP and the lowest at 58.894 DOP. This kind of fluctuation can really shake up the cost of buying property. Imagine a property priced at 10 million DOP in 2023; if the peso strengthens, that same property could cost you more in 2024.
On the flip side, if the peso weakens, it might make Dominican products more appealing on the global stage, which is great news for investors in manufacturing or agriculture. The Dominican Peso is a free-floating currency, meaning its value can shift due to factors like inflation and interest rates.
This introduces some risk for foreign investors, as these economic changes can affect the value of their investments. The Central Bank of the Dominican Republic is actively trying to manage this by tweaking its monetary policy and stepping in when needed to stabilize the market.
For anyone looking to invest, understanding these dynamics is key. You’ll need to stay informed about how these fluctuations might impact your investment, especially if you’re eyeing property in the country.
Sources: Exchange Rates, One Money Way, IMF eLibrary
8) Consider pre-construction deals in Punta Cana for better returns than completed units
Investing in pre-construction properties in tourist hotspots like Punta Cana can often yield better returns than buying completed units.
In recent years, Punta Cana's real estate market has been buzzing with activity. In 2023 and 2024, housing prices saw a notable increase, with apartments rising by 7% and houses by 5%. This surge is largely due to the rising property values and the strong demand for new developments in the area.
Looking ahead to 2025, the trend is expected to continue. Property prices are projected to rise by 3% to 7%, driven by the allure of luxury resorts and prime properties near the airport. Pre-construction properties often come with perks like tax exemptions and other incentives, which can significantly boost their value once completed.
Investors eyeing pre-construction developments in Punta Cana can anticipate a projected ROI of 11%, which is higher than the average ROI for completed units. This is largely due to the potential for capital gains and rental income from properties located in prime tourist areas.
The demand for new developments remains strong, fueled by the need for modern amenities and sustainable living options. Punta Cana's appeal as a tourist destination ensures a steady influx of visitors, making it an attractive spot for real estate investment.
Sources: BiggerPockets, Live and Invest Overseas, The Agency DR
We have made this infographic to give you a quick and clear snapshot of the property market in the Dominican Republic. It highlights key facts like rental prices, yields, and property costs both in city centers and outside, so you can easily compare opportunities. We’ve done some research and also included useful insights about the country’s economy, like GDP, population, and interest rates, to help you understand the bigger picture.
9) Renovate older properties in the Dominican Republic for better returns, as labor and materials are cheaper than in neighboring countries
Renovating older properties in the Dominican Republic is a smart move because labor costs are lower than in many neighboring countries.
In the Dominican Republic, labor costs range from $4 to $6 per hour, which is cheaper than in places like Jamaica and the Bahamas. This means you can stretch your renovation budget further, allowing for more extensive or higher-quality improvements.
Construction materials are also more affordable here. For instance, concrete costs between $90 and $100 per cubic meter, making it easier to manage your renovation expenses. This affordability allows for flexibility in design choices and finishes.
Overall, construction costs per square meter range from $800 to $1,200 in the Dominican Republic. This is significantly less than in other Caribbean regions, making renovations more financially viable and attractive for investors.
With these cost advantages, you can likely get better returns by renovating older properties. The combination of lower labor and material costs means you can enhance property value without breaking the bank.
These factors make the Dominican Republic an appealing option for property buyers looking to invest in renovations, offering a unique opportunity to maximize returns.
Sources: Cost Comparison Studies, Branded Private Residences
10) Beachfront homes offer high tourist rents but need more maintenance due to saltwater corrosion
Beachfront homes in the Dominican Republic are incredibly popular among tourists these days.
Imagine waking up to the sound of waves and having direct access to the beach—it's no wonder these properties are in high demand, leading to premium rental prices. With the recent surge in tourism, more people are flocking to the Dominican Republic, making these homes even more sought after.
Investors are particularly interested because of the high rental yields these properties offer. In places like Playa Nueva Romana and Las Terrenas, annual yields can range from 6.2% to 8.9%, making them a lucrative option. This means property owners can earn substantial income, which is a big draw for those looking to tap into the booming tourism industry.
But owning a beachfront property isn't all sunshine and rainbows. The ocean's proximity means these homes face constant exposure to saltwater, which can be quite corrosive. Saltwater contains elements like magnesium chloride and sulfate ions that can damage concrete and metal structures, leading to frequent repairs.
Local real estate agents and property management companies often emphasize the importance of regular maintenance to combat saltwater corrosion. They know that keeping up with repairs is crucial to maintaining the property's value over time.
So, while beachfront homes can be a great investment, it's essential to be aware of the upkeep involved. The allure of premium tourist rents is undeniable, but the need for regular maintenance is a reality that comes with the territory.
Sources: Travel Daily News, Pond Armor, The Agency DR
11) Conduct extra due diligence on agricultural land deals, as older titles may be incomplete or contested
In the Dominican Republic, land ownership in rural areas has been a tangled issue for years.
Back in the mid-1980s, peasants began seizing land, leading to a situation where many land titles are incomplete or contested. Fast forward to 2012, and only about a quarter of rural land was officially registered, leaving a lot of agricultural land with murky ownership. This lack of clarity has resulted in numerous legal battles, with many locals lacking formal rights to their land.
The State Lands Titling Commission was set up to tackle these issues, but by 2012, they had only managed to title a small fraction of properties. This shows the ongoing challenges in sorting out land ownership. Real estate experts and local lawyers stress the need for thorough due diligence when buying agricultural land. They advise potential buyers to check the legitimacy and completeness of land titles to avoid future disputes.
Media reports and studies on historical land reforms highlight the complexity and contested nature of land ownership in the region. This is especially true for agricultural land deals, where older titles can be incomplete or contested. Buyers need to be extra cautious and ensure they have all the necessary information before making a purchase.
In the Dominican Republic, the process of acquiring land can be tricky, especially in rural areas. It's crucial to work with knowledgeable professionals who understand the local landscape and can guide you through the process. This insider knowledge can be invaluable in navigating the complexities of land ownership in the country.
For those considering buying property in the Dominican Republic, understanding the historical context of land ownership is essential. The challenges faced in the past continue to impact the present, making it important to approach land deals with caution and due diligence.
Sources: Land Links, USDA
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12) Consider the Confotur program for tax breaks on tourism-related real estate investments
Thinking about investing in the Dominican Republic? The Confotur program could be your golden ticket.
This program has been a game-changer, especially for luxury tourism and residential projects. Since 2023, there's been a noticeable uptick in approved projects, drawing in international clients and speeding up large-scale developments.
One of the biggest perks? Tax savings. You could dodge real estate property tax for up to 10 years, skip customs duties, and avoid transfer tax. Plus, rental income might be tax-free for a decade, potentially saving you up to 20% on taxable income.
The Confotur program isn't just about tax breaks; it's also a major economic booster. It's helped the Dominican Republic become the seventh-largest economy in Latin America, fueling growth in the tourism sector and creating jobs.
Real estate experts love Confotur for its streamlined investment process and the way it enhances profitability. It's a win-win for investors looking to make a smart move in the Caribbean.
Sources: ICLG, Dominican Today, Realtor DR
13) Be ready to walk away from deals to gain negotiating power, as sellers often start with inflated prices
The real estate market in the Dominican Republic has slowed down in recent years, especially in 2023 and 2024.
With sales dropping, sellers are now more open to negotiations. The pace of sales decreased from 1.9% to 0.5% in the first half of 2023 compared to the same period in 2022, making it a buyer's market.
Many sellers start with inflated prices, with apartment prices up by 7% and house prices by 5% over the past year. This means there's often room to negotiate a better deal.
Real estate agents say that buyers willing to walk away often get better prices. Properties under 3 million pesos are particularly popular, suggesting sellers might be more flexible to close a deal.
Being prepared to walk away can give you more negotiating power, as sellers often start with high prices but are willing to come down.
Sources: Dominican Today, Simply Dominican
While this article provides thoughtful analysis and insights based on credible and carefully selected sources, it is not, and should never be considered, financial advice. We put significant effort into researching, aggregating, and analyzing data to present you with an informed perspective. However, every analysis reflects subjective choices, such as the selection of sources and methodologies, and no single piece can encompass the full complexity of the market. Always conduct your own research, seek professional advice, and make decisions based on your own judgment. Any financial risks or losses remain your responsibility.
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