Dominican Republic Investing FAQs

Answer: Yes! The developer has building plans (or you can custom build), permits, and builders lined up. In Sunset Valley Estates, you must build within 12 months of your purchase. In Vistas de Magante, you must start building within three years of your purchase.

Question: Do I have to wait unitl the infrastructure is finished in Vistas de Magante to build on my lot?

Answer: If you would like, you can start building now. There is already one small house being built in Vistas de Magante, which will be finished in three months.

Question: Are there homes already built in Sunset Valley Estates?

Answer: Yes.

Question: Are there building plans available?

Answer: Yes, the developer has building plans from which to choose. Or you can custom build. All buildings must be approved by the developer and you cannot block the view of someone in front of you. Overall, the developer is flexible and will consider multi-family dwellings in some areas.

Question: What are the building costs?

Answer: Approximately $50-55 per square foot for both Vistas de Magante and Sunset Valley Estates.

Question: Is there a minimum building size?

Answer: In Vistas de Magante, the minimum building size is 1100 square feet. In Sunset Valley Estates, the minimum building size is 1200 square feet.

Question: Is there a maximum building size?

Answer: The house needs to fit the lot. No over building is allowed.

Question: How many houses can I put on a lot?

Answer: One house per lot is allowed. The developer would have to approve a second house, and there would be an additional $10,000 - $12,000 utility connection fee. You can build one house on several lots but you can't put two houses on one lot.

Question: What is the typical time to build?

Answer: On average, 3 to 5 months.

Question: Is construction financing available?

Answer: Yes, financing is available through a few local banks.

Question: Is there someone who manages construction?

Answer: The builder can oversee construction.

Question: Can I build a pool on my lot?

Answer: Yes. The cost of a pool ranges from $8,000 to $12,000.

Property Rental

Question: Are there rental management companies?

Answer: Yes.

Question: What is the typical rental management fee?

Answer: The fees are approximately 10 to 20 percent of the rental amount, depending on how involved is the management company.

Question: What is the high season for rentals?

Answer: There is year round rental, with the high season being December 1 through May 15.

Question: Are there properties in Sunset Valley Estates that are currently being rented?

Answer: Yes. A two bedroom rents for $850 a month, or short term $500 a week. A three bedroom rents for $1000 a month or short term $700 a week.

Infrastructure

Question: What is the infrastructure like?

Answer: Sunset Valley Estates has all of its infrastructure: roads, water, electricity, etc. Vistas de Magante is serviced by rough roads, and in 2007 the remaining infrastructure will be put in.

Question: Sewer or septic?

Answer: Septic.

Question: Is there any cost to the buyer for infrastructure in Vistas de Magante?

Answer: Yes. Beginning in 2008, owners will be responsible for a $30/month maintenance fee.

Question: Is there any cost to the buyer for infrastructure in Sunset Valley Estates?

Answer: The buyer has one year of free maintenance; after that (or once the house is operational) the maintenance fee is $250 per month.

Question: What type of road separates Vistas de Magante from the beach?

Answer: The road is compacted hard rock.

Property Maintenance

Question: How do I maintain the property if I don't live in the Dominican Republic?

Answer: The developer can arrange to have the grass cut for $25 per cutting (once per week during the rainy season and every other week during the rest of the year). A full-time gardener is $50 per week.

Question: Besides grass mowing and the maintenance fee, are there any costs if someone wants to hold the land and then sell (vs. building)?

Answer: No.

Return on Investment

Question: What is the projected cash flow?

Answer: 7 to 12 percent per year (based on building a rental property).

Question: How much do you expect the land to appreciate?

Answer: In three years, the property is expected to double in value. If you build sooner the value will increase faster.

Financing

Question: Is financing available?

Answer: Yes, from the developer, with the following terms:

60 percent loan to value (60 percent financed, 40 percent down)
8 percent interest
20-year amortization
5-year balloon

The loan is calculated as if you were paying for 20 years, but after 5 years you would either pay off the balance or refinance. The loan is fully amortized (you are paying off some principal during the 5 years, not just interest).

Question: What would the monthly payments be with financing?

Answer:

$15,000 property = $75.28/month
$30,000 property = $150.56/month
$50,000 property = $250.93/month

Question: If financing the purchase, when is the remaining 15 percent deposit due?

Answer: Upon closing. Closing can be arranged at a convenient time for the buyer, although the sooner the better (30 to 45 days).

Note: The original deposit is 25 percent; the remaining 15 percent makes up the 40 percent that is not being financed.

Question: Is there a penalty for paying off the loan early?

Answer: There is no prepayment penalty.

Closing/Title Insurance/Taxes

Question: When is closing?

Answer: Closing can be arranged at a convenient time for the buyer, although the sooner the better (30 to 45 days).

Question: What are the closing costs?

Answer: Approximately $750 for the attorney’s fee (title fee) plus 5 percent of the purchase price for the transfer fee (see question below related to setting up a Dominican Republic corporation).

Question: $750 for a title fee sounds to high, is there a reason for that?

Answer: That is the minimum price the lawyer will work for on small properties.

Question: Is title insurance available?

Answer: Yes, title insurance is available, either through the developer's attorney (turn-around time is 4 to 6 weeks) or through Stewart Title (turn-around time is about 6 months). The turn-around time with the developer is quicker as their attorney knows the project better.

Question: What are the annual property taxes?

Answer: Depending on the property, approximately $200 to $400 per year.

Views

Question: Which lots in Vistas de Magante have ocean views?

Answer:

Block A: none of the lots
Block B: all of the lots
Block C: all of the lots
Block D: lots 19, 20, 21, 22
Block F: none of the lots
Block G: all of the lots
Block H: all of the lots
Block I: all of the lots
Block J: none of the lots
Block K: none of the lots

Question: What is the view behind Vistas de Magante?

Answer: There is a gorgeous view of the mountains on the back side of Vistas de Magante.

Question: What is planned for Block E in Vistas de Magante?

Answer: Block E will be residential, with a planned clubhouse and small convenience store.

Question: What is the view from Sunset Valley Estates?

Answer: There is a spectacular view of the valley.

Setting Up a Dominican Republic Corporation

Question: What is the advantage to setting up a Dominican Republic Corporation?

Answer: Upon selling the property, the buyer avoids the transfer tax fee (5 percent of the purchase price), which is an incentive to the buyer. This is because the buyer is buying the shares in the company. The cost to set up a corporation is about $1500 for a property valued at $50,000 or less; and about $2500 for a property valued at $100,000. The cost to renew the corporation is $400 per year. The tax benefits to this corporation include allowing up to $85,000 per year in income not taxable.

Question: How do I get more information on setting up a Dominican Republic corporation?

Answer: The developer will put you in touch with an attorney who can set up the corporation for you.

Selling the Property

Question: Is there something in place to help sell a property?

Answer: Yes, the developer can help you sell your property.

Beach

Question: How far is the beach from Vistas de Magante?

Answer: About 1 and a half miles. Playa Grande, the best beach on the north coast, is about 8 miles away. The best golf course is 6 and a half miles away.

Question: How far is the beach from Sunset Valley Estates?

Answer: About 1 and a half miles.

Question: Regarding the road between Vistas de Magante and the beach, is this road only for the development or is it a main road going up and down the beach? How much traffic is on the beach?

Answer: That road is the main North Coast Highway. Right now there isn't much traffic to the beach.

Question: What is the latitude and longitude for each development?

Answer: Sunset Valley 44.45.61 N 30.52.71 W
Magante 36.31.15 N 09.17.82 W

Question: What is the white area on the plat map for Vistas de Magante above A5-7?

Answer: That is a green zone for plants.

Other

Question: Are there any problems with squatter's rights?

Answer: There are no problems in Vistas de Magante or Sunset Valley Estates with squatters.

Question: Is there a hospital nearby either development?

Answer: Yes. There are hospitals in Cabarete, Sosua and Puerto Plata.

Question: What is the approximate elevation of Vistas de Magante and Sunset Valley Estates?

Answer: Vistas de Magante is 55 feet above sea level. Sunset Valley Estates is 100 feet above sea level.