Real Estate investment in Puerto Plata

12 september 2022

Many people are living on the rental income they receive by buying and renting out a house or apartment in Puerto Plata . It can be attractive to use your savings to buy a house or apartment in Puerto Plata and rent it out but you have to be very careful when buying an apartment or a house, because not every property is profitable. You can only earn something from renting out a property if the return is a positive cashflow. If you want to live off the rent, the return must be high and you must invest a lot of your own money. It is therefore smart to compare the costs and benefits. Below I explain what costs and benefits are involved when buying a house or apartment in Puerto Plata to rent out. You can always contact one of our real estate advisors in the Puerto Plata without any obligations. Based on your personal situation, a professional advisor will show you how a property can be making money for you or not.

Return on investment off a property (ROI)

The cashflow of a rental property means what the difference is between revenues and the costs. In the beginning you need money to buy a property, but in the long run, renting out a property can generate a lot of money. You should check beforehand whether it is profitable in your situation to buy a property to rent it out. The rent must be able to cover the costs of the property each month, otherwise you will have a negative return on investment. When buying and renting out a property, the aim is to achieve a return of 9% or higher. This allows you to pay the monthly costs and you can set aside money to pay off the mortgage and to cover maintenance. If you have your eye on a property in Puerto Plata , you can calculate in advance if this property is profitable when you rent it out. You do this by comparing all costs and benefits of your future investment.

Cost

If you already bought a property in Puerto Plata , you know how much costs must be paid. When buying a second home to rent out, it is even more expensive. The costs seem a lot at the beginning, but in the long run the costs and debts decrease.

Buy a cashflow property

First, you would have to buy a property in order to rent it out. Buying a property must be done with a lot of money. If you can buy the property without a mortgage, you do not have to take the interest and taxes of a mortgage into account. Not too many people are buying a property without a mortgage and even when they can, they will still use a mortgage to create leverage. When buying a property to rent out, you must take a different mortgage than you use for your own house. With a second home you have to take a real estate mortgage with probably a higher interest than you are used to, and you have to invest more of your own money. The interest on a real estate mortgage is determined by the interest period and the interest rates in Puerto Plata are between 8% and 10%. Buying a property to rent out has more risk than a normal house that is inhabited. That is why with a real estate mortgage, between 70% and 80% is reimbursed of the house and that means that in the beginning you will need a lot of your own money to pay for the house or to get a mortgage.

Maintenance

You must also take into account any renovation and maintenance of the house. You can call an expert who can tell you what needs to be done with the property in the short and long term. You don’t need to remodel if the tenants can live normally in the property. You are more likely to find tenants if the house has, for example, a new bathroom and kitchen. In addition, the property also needs to be maintained. You can think of painting, a new central heating boiler and refurbishing.

Benefit

The benefits of buying and renting a property in Puerto Plata is of course in the rental income, but also the value of the property. You can enjoy the monthly cash flow and if in a few years you sell your property to cash out, it will probably be already paid off by your tenant and property prices in general went up.

Are you interested in buying a rental property in Puerto Plata ? Feel free to contact us for more or assistance with making the right choice.

Adriaan Smit ( Real Estate and financial advisor)

info@dominican.luxury +18299757925

Real Estate investment in Puerto Plata

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