Is it difficult to rent your investment property?

MOMOS22 Member

11POSTS

4 years ago

Has anyone purchased a real estate investment property and tried to lease it out?

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ddmcghee Dominican Republic Expert

1950POSTS

4 years ago

If you search the forums, you will see lots of opinions, experiences, and warnings about rental investments.

The answer to your topic question, is it difficult to rent your investment property, is a resounding "It depends!".

1) The location is important, not just what city/town it's in, but specifically where in that town the property is located.
2) The property itself - apartment vs. villa, the size, how many it sleeps, and the way it's appointed and maintained make a huge difference.
3) Rental rate - you have to advertize a competitive rental rate.
4) Marketing - how are you going to advertize your property? AirBnB? VRBO?
5) Management - are your renters supported if the water heater goes out at 10:00 at night? How quickly can you respond if they lock themselves out?聽 If renters have issues that they do not feel you have handled well, they will write a bad review! Especially early on, you need good, strong, positive reviews to drive future business.

We owned an apartment here in Las Terrenas for 3.5 years. We had it on AirBnB, where we were a SuperHost and had a 4.94-star rating. We made a little money, but not nearly what we could have if that money had been invested elsewhere. Even with an onsite property manager who handled all the pesky little details for us, it was a PITA and not something we would do again.

6 members reacted to this post

nanthompson715 New member

6POSTS

4 years ago

Thank you for this insight.聽 When you say should of invested elsewhere, do you mean property in another location or not buying a property to rent at all.聽 A different type of investment totally?

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ddmcghee Dominican Republic Expert

1950POSTS

4 years ago

We would have left our money in the stock market. We would have had a better return and a lot fewer headaches!

As far as the location goes, I think we were in one of the best developments for rentals in Las Terrenas. And because LT is a prime vacation spot for Dominicans, we were full during the pandemic when international travel was down. Our best rental history was from September '20 to July '21.

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nanthompson715 New member

6POSTS

4 years ago

I may have to start to rethink my plans.聽 Thanks again for sharing your experience.

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DominicanadaMike ViP

1051POSTS

4 years ago

What ddmcghee said!

1 member reacted to this post

lauraelid Member

2POSTS

4 years ago

@ddmcghee聽Hi ddmcghee,

We are looking to buy in Punta Cana to live part time and rent out as Airbnb when we aren't there. I don't know if that would make the investment more worth it in your opinion. But what I would really like to know is what is the taxation situation for airbnb in the Dominican. I read somewhere that it was 27% after earning a certain amount for non-residents. Any information would be helpful. Thank you

sberger50 Active member

89POSTS

4 years ago

OK, Airbnb does have it's place for getting rental business, but be very careful of the problems involved.聽 Profits are greater on short term rentals, but the headaches of party folks are MUCH greater.聽 If you are living off island and can not monitor the unit, it will be a problem.聽 Rent property in your own city is a mess, but just imagine what this can turn into.聽 Be careful.

RoCamilo Active member

37POSTS

4 years ago

@ddmcghee...based on your experience, what is a reasonable yearly profit to be expected from a 2/2 in last Terrenas?

windeguy Serial expat

714POSTS

4 years ago

#10

@ddmcghee...based on your experience, what is a reasonable yearly profit to be expected from a 2/2 in last Terrenas?
- @RoCamilo

聽There is no real way to estimate a profit. Any responses would simply be guesses.聽

Keep in mind that things have been very different during the pandemic. We had far more demand than in recent years because it was easy to come to the DR. Probably the same is true for most places in the DR. I would not use the past couple of years to help estimate the future with respect to rentals nor real estate prices and sales.聽

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RoCamilo Active member

37POSTS

4 years ago

#11

@windeguy...thanks for your response. Precisely because of what you stated is why I started my question with "based on your experience." Income/expenses depend on a very long list of factors and the pandemic has made that list even longer.

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ddmcghee Dominican Republic Expert

1950POSTS

4 years ago

#12

@ddmcghee...based on your experience, what is a reasonable yearly profit to be expected from a 2/2 in last Terrenas?
- @RoCamilo

After all expenses - legal fees (for purchase, sale, and Dominican tax filing), management fees, commissions, maintenance, HOA fees, utilities, taxes (US and DR), cleaning fees - our profit was less than we would have made if we had that put the money in a high-yield savings account or CD for the 4.5 years we owned it.聽

This does not take into consideration any savings we had from our personal use of the apartment rather than having to rent a place here, which was a total of about 4 months during the time we owned it, always in the off-season.

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Jwoddis Active member

68POSTS

4 years ago

#13

I think it depends on how you think about it. 聽If you want to have your own vacation home and have it subsidized by others it鈥檚 a reasonable thing to do. I鈥檝e had a Villa in las terrenas for over 11 years. 聽As Denise said, made a little money and quite a few headaches but I also get to come and hang out once or twice a year. When I sell I鈥檒l have made a nice little profit.聽

If you want it to be a money e making enterprise you need to think of it like a business. What is the best return on investment? 聽Probably a 20 sleeper on a beach. It will be rented out every weekend to people from the capital and you鈥檒l be dealing with noise complaints from neighbours - so I would put in a noise meter and state in the contract that they lose their deposit. 聽You probably won鈥檛 get good reviews but this will be mostly rented out through local sources not Airbnb. There is very little supply in this category and you can rent out for $1200 a night most of the year and way more than that at Easter, Christmas and new year. 聽 However a 20 sleeper is a decent chunk of change.聽

On the other end of the spectrum is an apartment - cheap, but lots of supply and difficult to differentiate. But the guests will be less demanding as they don鈥檛 feel they鈥檙e entitled, since they didn鈥檛 spend so much.聽

My preferred segment is higher end which is hard to do in DR - you can have a 6 -8 sleeper and price it at high end but people from SD will rent it and bring 12 and the cost won鈥檛 put them off because they are dividing by more people. 聽And they have higher expectations because they are paying a lot so they鈥檒l be contacting you in another country because there isn鈥檛 any more toilet paper for example. 聽It鈥檚 not like renting out in, day, NYC where you hand over the keys and they are on their own until they give the keys back. 聽In villas the guests expect services of some kind even when it鈥檚 not advertised. 聽If I were to do it again I鈥檇 actually include concierge services and price it in.聽

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