One of the most common questions I get here from potential partners and investors is: CAN INVESTORS FINANCE A DOMINICAN REPUBLIC PROPERTY? It’s a great question. As real estate investors we understand the power of financial leverage!

Financial leverage has 2 great benefits:

• It allows us to purchase more real estate. Simple example: if you have funds to buy a property cash (so no financing), in the event you can get financing with 20% down (meaning 80% LTV – loan to value), then you can buy 5 identical properties with the same amount of money
• It allows us to “leverage” the return of our OWN invested capital. Simple example: If you can find a property that delivers a 10% cash on cash ROI (so that’s the return of the asset itself, regardless if it’s financed or not). Let’s say you can get someone to finance 80% of the property price, and charges you 5% interest rate. Then the return on your OWN capital would be 30%. Yes! You can propel your return substantially if you can get financing at a rate that is substantially lower than the expected return on the asset itself!

So now back to the Dominican Republic. Financing is nowhere as easy, and the terms are nowhere as convenient, as you can find in the US or Canada. Most people think it’s impossible to get any financing at all! HOWEVER, that’s not case! FINANCING HERE IS POSSIBLE! Let’s elaborate on the existing options:

1. LOCAL BANKS: There are a few programs for foreigners to finance a purchase of a “vacation rental”. These programs are still relatively new and small but we see evidence of significant growth. This will make it easier for many foreigners, and from countries like the US, UK  and Canada. The rationale is that the banks will assess you as someone that will continue to live in the US, UK  and Canada and is purchasing a property as a vacation rental exclusively. So they will qualify you based on your income, credit score and debt service ratios in your home country. US, UK  and Canada
   • Most Common Terms / Requirements for this option:
     • 30% Down Payment
     • Loan in USD, rates in the 7-8% range
     • -20 to 25 year amortization most common
   • For more information about requirements/fees/terms, please click here to our Mortgage Financing page.
2. SELLER FINANCING:  Not very common but still doable! Some property owners would agree to keep a 1st mortgage, usually for a relatively short timing, such as 6 months or 1 year. Maybe 5 years the most. Terms and conditions would be whatever is agreed among parties. Since many sellers here would own the properties free and clear, they would be open to this option as a way of getting their property sold and/or at a convenience price for them.

3. PRIVATE LENDERS: Private lending is an option here too, and it works pretty much as we are used to in the US and Canada. They would likely be more conservative. I have seen such deals only as a 1st mortgage, LTV of no more than 60%, loans in USD with rates of around.