Should I Invest in Dominican Republic?

[Fernando Gomez]

Hello!

I'm a new investor and I have some to little experience in real estate. I've a few properties in the US I'm currently managing and I'm thinking about purchasing my next property in Punta Cana, Dominican Republic to put it on Airbnb. This will be a brand new property, I have plans to hire an interior designer to make it irresistible for tourism. It's very close to the beach/airport and I am getting a great price for it. However, I have a concern; I don't live there, I will be managing it from Texas. My parents live in Punta Cana so that will make things a bit easier. 

I'd like to get some input from experienced investors. Any advise on long-distance real estate investing? Anyone that has invested in Dominican Republic that may have some info/lessons learnt/experiences to share?

Thank you!

Fernando

[Mike Lambert]

The Dominican Republic can be a great place to invest but, personally, I'd avoid Punta Cana.

Two years ago, during a meeting I had at the Ministry of Tourism in Santo Domingo, one of the head honchos there clearly told me "If I were you, I wouldn't invest in Punta Cana". Now, he's responsible to bring tourism and investment into the country so why would he say that? Punta Cana accounts for 66% of the country's tourism. This is very unhealthy so the government is now investing elsewhere now and Punta Cana is pretty much done anyway, as the path of progress pretty much has run its course there.

That's not my main problem with Punta Cana though. Punta Cana is first and foremost an all-inclusive destination and there's no way an Airbnb can compete against those. There is nothing much to do in there apart from the beach and partying and therefore there's no drawbacks to be in an all-inclusive and no advantages to be in an Airbnb. Many people go there in (large) groups, which most short-term rentals can't accommodate. Finally, most people I've met in the country (and elsewhere) who love to stay in short-term rentals and dislike all-inclusive generally dislike Punta Cana.

If you buy an expensive luxury villa, it's another ballgame as you might escape the competition from the resorts. In such a villa, a nice interior design could make a difference. But in a condo, unless it's a very expensive luxury condo, I doubt that your typical renter would care too much about and pay a large premium for a beautiful design. In that category, a "special" design might be counter-productive as some people might like it. Moreover, many people say that a more neutral design is appropriate.

I'm not so sure the location is such a great deal, wherever it is. Any property in Punta Cana is close enough to the airport and when it comes to the beach, what makes the most difference is whether it's beachfront or not. Yes, barring being beachfront, being close to the beach is great but Punta Cana isn't a big city and most short-term rentals are close to the beach too. Whether you're one block away rather than two blocks away won't make much of a difference and won't justify a significant premium.

If you want to go ahead, having your parents on the ground is definite a positive if they can help with the management.