Posted by: D. M. | June 15, 2011

Dominican Republic’s Housing Market

Some people here just don’t understand that homes in the DR never lose their value like they do in the states (at least not in the big cities). Banks will never have a foreclosure crisis here as long as they require anywhere from 30 to 40% down and a have properties appraised for 70% of their value before they approve a loan.

That alone takes out of the equation most people who cannot afford the property to begin with and contrary to banks elsewhere, banks in the DR are praying that you default on your payments so that they can foreclose on you, pocket your 40% down and all payments you have made so far, while the property itself has most likely gone up in value.

Since you don’t pay property taxes unless the property’s value is more than 5 million (even if it’s more, most people are not forced to pay them until they resell it), property owners don’t give a rat’s ass whether the house sells quickly or not,they can easily rent the property,Even if they decide not to rent the property while it sells (forcing people out of a lease in the DR is not an easy task, even if the lease expires), most Dominicans would rather let the property just sit there and rot before they come down on the price.

Because of high interest rates, middle upper class Dominicans don’t carry 30 or 50 year mortgages like people do in the states but rather 5 years max and on new projects they pay it all off while the project is being built and maybe finance a small porcentage once the project is completed. All of these factors, coupled with the thorough approval process by dominican banks make it next to impossible for them to lose money on any deal, minimizing the risk exposure and making mortgage loans a solid investment.


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