Apartment Building Dominican Republic

[Joel F.]

We currently own several rental properties in Florida (Miami, Jacksonville, and Tampa). We are looking to refi a few of our properties and to invest in building and operating an apartment building in the Dominican Republic (tourist area). We have great contacts in the country with builders, lawyers, and realtors to make the process easy. I am planning to retire in DR. I was offered to buy 500 m2  (5381 sqft) lot three blocks away from the beach for USD$65000 where we can build 12 apartments each apartment would be 90m2 for a total of 1080m2. Cost to build apartment building will be roughly (USD $300 per m2) for a grand total of USD 390000 "llave en mano" keys in your hand contract. Monthly rent per unit would be USD $500 a month. Property taxes will be 1% (not sure) of the value of the property and insurance should be USD 2k per year. Is it worth investing or we should just continue investing in the States. 

[Andrew Michael]

Hi @Joel F.

I don't know tons about foreign investments but I travel to the Dominican several times a year and build houses/ churches in several villages so I figured I would throw my opinion out there.   

My immediate concern with this project is the construction phase.  As I am sure you know, construction in the DR is almost never completed haha (think re-bar sticking out of the roofs EVERYWHERE).  Business is just so lax there so a project that would take a few months here can easily take over a year in the DR.  The fact that it is in a tourist area may encourage things to move a little fast but still the holding costs and assurance of completion would worry me. 

The second thing that worries me about out of country investing is you must accept the fact that your property can be taken overnight and there is nothing you can do about it.  Just ask all of the American companies and property owners who had investments in Cuba pre Castro.  They lost everything.  Yes this is unlikely but there is 0 recourse if this should occur so the question becomes; If this were to happen could I handle the loss financially?  

In the end, if you trust your contacts and the numbers work the reward sounds like its there.  I love the DR and the people there.  Even though I have spent months there I have never actually seen the beaches but I hear they are phenomenal.  It will be a great place to retire.