The 7 Important Questions To Consider BEFORE
You Buy REAL ESTATE In The DOMINICAN REPUBLIC
Are you thinking about buying REAL ESTATE in the DOMINICAN REPUBLIC? It’s normal to have many questions about where to start, what are the best strategies, or where to find the best deals when buying real estate in the DOMINICAN REPUBLIC.
If you’re looking for real estate advice before purchasing real estate properties in the DOMINICAN REPUBLIC, this guide will point you in the right direction. Here are 7 important questions to ask and get started on the right foot:
1. CAN A FOREIGNER BUY REAL ESTATE IN THE DOMINICAN REPUBLIC?
YES, foreigners can buy real estate properties in the DOMINICAN REPUBLIC, and in fact:
As a foreigner, you have the same rights and privileges as Dominicans with regard to buying & owning real estate in the DOMINICAN REPUBLIC, including the benefits of tax incentives such as the CONFOTUR LAW.
As a foreigner, the title of the properties will be in your name for life i.e. until you chose to sell the properties or to pass them on to your heirs.
As a foreigner, all you need to buy property in the DOMINICAN REPUBLIC is a valid passport and driver's license.
2. HOW MANY REAL ESTATE AGENTS SHOULD A BUYER WORK WITH?
People frequently erroneously believe that working with multiple realtors simultaneously will provide them with access to more properties and options. Nothing could be farther from the truth in the DOMINICAN REPUBLIC! Here, all agents have access to essentially the same listings, what makes the difference is the professionalism of the agent to understand exactly what their client is looking for, and their resourcefulness to enable them to provide a complete service i.e. not just make a sale, and effectiveness in getting their client a good deal and actually close on the property.
For those reasons, it is highly recommended that buyers CAREFULLY SELECT the agent they work with and that they only work with one—but the right one!
3. HOW TO SELECT THE RIGHT REALTOR IN THE DR?
Here are the 5 indicators to follow in order to choose the right real estate agent in DOMINICAN REPUBLIC:
Choose a real estate agent you feel comfortable with.
Select a realtor who speaks your language fluently.
Pick a real estate agent who understands your needs.
Make sure the agent is affiliated with a real estate company.
Work with a realtor who is knowledgeable and resourceful.
Keep in mind that nearly everyone you will meet on the streets of the DR will insist that they are a professional realtor and the best person to assist you in buying real estate properties in the DR.
A professional real estate agent should begin by carrying a professional business card and presenting themselves in a professional manner. To effectively serve the international market, the ideal agent must speak at least Spanish and English fluently. In the DOMINICAN REPUBLIC, it is generally preferable to work with a local agency that is resourceful and capable of ensuring a seamless transaction, as opposed to an international real estate franchise representative who operates under the rules of a foreign company and culture.
4. WHAT IS THE BEST PLACE TO BUY PROPERTY IN DOMINICAN REPUBLIC?
There are several areas throughout the DOMINICAN REPUBLIC that offer great opportunities to buy excellent properties—the best place to buy a property depends on the buyer's needs, wants, and plans.
For example, if the plan is to buy a nice vacation home close to the beach in town close to an international airport and with good hospitals, then PUNTA CANA, LAS TERRENAS, PUERTO PLATA, SOSUA, CABARETE are the best places to buy property; if the plan is to come to retire and live in the mountains enjoying a nice garden with beautiful flowers, but yet be close to a major city with good hospitals and an international airport, than JARABACOA will be the best place to buy property. However, if the objective is to be in a major city in the middle of the action, then SANTO DOMINGO and SANTIAGO are the best places to buy property.
Nevertheless, if the goal is to purchase an investment property for short-term rentals such as AIRBNB, the best location to buy is where there are the most visitors, which in the DOMINICAN REPUBLIC is PUNTA CANA. If it is commercial properties such as gas stations, supermarkets, shopping plazas, or stores, then any of the above-mentioned cities will be a good place to purchase property; however, the success of such businesses depends greatly on their location, and we will gladly find you a commercial property in the ideal location for your type of business.
5. CAN A FOREIGNER GET A MORTGAGE FROM A DOMINICAN BANK?
Yes, foreigners can obtain a loan or mortgage in the Dominican Republic, but it is difficult if it is not a new construction. Experience suggests that Americans, Canadians, and Europeans have an easier time obtaining mortgage loans from banks such as BHD LEON, SCOTIA BANK, and ASOCIACIN CIBAO DE AHORROS Y PRÉSTÉNTES.
Keep in mind, however, that interest rates in the DOMINICAN REPUBLIC are frequently much higher than those in the United States, where the annual interest rate on a 10-year loan is typically around 12% and more. In addition, the utmost loan amount is typically 70% of the purchase price.
Prior to searching for properties, it is a good idea to get pre-approved for a mortgage, but the final approval of a bank mortgage will depend on the specific property being financed.
What are the required documents to get a mortgage in the DR?
Copy of passport
Copy of driver's license
Copy of previous two years tax returns
Copy of past three to six months bank statements
Employment letter (if applicable)
6. IS IT BETTER TO BUY PROPERTIES UNDER A COMPANY NAME OR AN INDIVIDUAL?
Purchasing a property under a company name does provide some protection for the property, but it comes at a price! First, if the company has not yet been formed, there is a fee ranging between $1,000 and $2,000. Then, if the business is profitable there will be a 27% tax payment on the profit at year-end, and regardless if the business is profitable companies are required to file and pay taxes monthly.
Individually-owned properties are subject to an annual property tax of 1 percent of the value of the property in excess of 7.7 million pesos (about $147,000 US$)—there are exceptions for undeveloped sites, farms outside city limits, and properties whose proprietors are at least 65 years old, have owned them for at least 15 years, and have no other properties.
7. IS IT REQUIRED TO HAVE AN ATTORNEY TO BUY REAL ESTATE IN THE DR?
Having an attorney is NOT required in order to buy in the DR, but it is highly recommended in order to avoid costly mistakes! In the DR title companies are NOT used, so the title research is typically done by the attorney who makes sure that all the related papers of the property are in order.
Typically the attorney fees vary between 1% and 1.5% of the purchase price.
DISCLAIMER: We are NOT accountants or attorneys, and we are NOT in any way providing professional advice on tax or legal—for such advice or counseling, we recommend that you consult with Licensed accountants and/or attorneys. If you need a referral, please contact us and we will gladly refer you to a reputable professional in the matter.
FOR INFORMATION ABOUT THE REAL ESTATE BUYING PROCESS IN THE DOMINICAN REPUBLIC CLICK HERE.