Buying preconstruction real estate in the Dominican Republic is a viable investment play. The allure of preconstruction investments is lower initial cash outlay, developer financing throughout the construction period, and the huge capital appreciation upside. I’ve seen cases where investors were able to double their investment.
That said, this is a high-risk, high-reward strategy, as you’re banking on the developer completing the project and delivering your unit.
There are ways that you can mitigate your risk, however.
Research The Developer
Do your due diligence on the developer. Does the developer have a track record in the country? Do they have a history of completed projects? Are they financially stable? Check reviews from previous buyers.
I recommend you deal only with established developers with a solid reputation and track record.
Verify Ownership and Permits
You or your attorney need to verify whether the developer owns the land and has clear title. You’ll also need to confirm whether the developer has the necessary permits and approvals to start construction.
Developer Loans or Universal Loans
As part of your due diligence, you need to confirm if the developer has taken out a loan on the project. If so, you need to know the loan terms. Is it a universal loan? The developer cannot release titles once your unit is complete if the universal loan has not been fully paid. And without title, you’ve got nothing.
Get on the Ground
The developers will give you glossy brochures, digital renderings, and videos of what the project will look like and the location. That’s great, but in order for you to get a clearer picture of the project, you’ve got to physically get on the ground and inspect the construction site firsthand. Most reputable developers will offer you a tour of their new projects or developments.
At the upcoming Retire & Invest DR conference in Santo Domingo, May 3 – 4, you’ll learn about the real estate buying process in the Dominican Republic in depth. Plus, you’ll be able to consult with attorneys who specialize in real estate in the DR.
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Maria Abreu is the CEO and Managing Attorney of Abreu & Associates, a law firm practicing exclusively in Dominican Republic Immigration and Nationality law. She is also the founder of Retire and Invest DR. This organization hosts conference events for foreigners interested in living, retiring, and investing in the DR. You can contact Maria at: mabreu@abreuimmigration.com.