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Take control of your financial future!
Hello Rogue Investors,
Do you want to take a ride to real estate investing paradise with me?
 I think you know I spend a lot of time performing research on the best places to invest in real estate. I still believe heavily that liens and deeds will be a great place to invest your money over the next three to five years. This is because contrary to what you might think, when the U.S. real estate market weakens, lien and deed investing gets better, not worse. This is because as foreclosure rates rise, more quality properties make it to the tax sale and bidding competition weakens.
But I also see another trend confirming what I have been preaching for several years. International investing and international markets are heating up for what could be 5 to 10 years of excellent investing opportunities.
I already profiled ocean properties in southwestern France, but since June 2006 I have been working on a new international market, the Dominican Republic. A country poorly understood by most people, the Dominican Republic has some of the most undervalued and beautiful ocean real estate in the world.
1. Featured Article - Dominican Republic
“I think most Americans have discovered what Columbus discovered a long time ago, particularly on the North Coast, its unspoiled pristine paradise. It’s not over-invested, not over-developed.” -
MSNBC, 8/3/2006
In addition to over 300 miles of beaches, the island has major mountain peaks. The tallest peak in the Dominican Republic is over 10,000 feet and it is the tallest point in the Caribbean. The capital, Santo Domingo, has nearly 4 million people. The second largest city, Santiago, is nestled among the mountains. It has about 1 million people and is slightly more affluent in nature than Santo Domingo.
MSNBC recently ran a special called "Small Island Big Investment Potential." Visit
http://msnbc.msn.com/id/13941226/.
People
One of the amazing things about the Dominican Republic is how friendly the people are to foreigners. Considering the status of the United States with many other parts of the world, the Dominican Republic welcomes American tourists with their arms open. They recognize the huge potential that Americans, Canadians, Europeans and others have to offer.
With its close proximity to the United States, you would think that Americans would have settled here long ago. In truth, Europeans (French, German, Dutch and Spanish) have been coming to the Dominican Republic for many years. In some locations, such as the east side of the island, French have been active in buying hotels, condos and other property. On the north side of the island, the tourist areas like Sosua were originally Jewish settlements, then later Germans and in the last two to three years North Americans have made their presence felt. According to the tourism minister, in the past year or so most tourists have been from Canada, United States, England and Italy. Although Spanish is the native language, most hotels have individuals who speak English.
Weather
Weather is mild throughout the year, with minimum daily temperatures near 20 degrees Celsius (C) and maximum temperatures at approximately 30 C. Average annual rainfall is variable because of the mountains. In Santiago, the annual rainfall amounts to roughly 40 inches of annual rainfall. Hurricanes seem to avoid the Dominican Republic, especially the North Coast, tending instead to track through the Bahamas or pass to the south side of the island. In fact, Luperon, on the North Coast is known as a Hurricane hole, during Hurricane season some boaters like to wait out inclement weather in its protected bays. According to National Weather Service data, only two Hurricanes have struck the North Coast in the last 100 years. One hurricane was a category one and the other a category three.
Politics
The president of the Dominican Republic, Leonel Fernandez was born in Santo Domingo, but spent his formative years in New York City. Therefore, the country is pro-western and under his leadership they are aggressively opening up the tourism market. Dominican Republic also has a free trade agreement with the United States called CAFTA. In general, Dominican Republic encourages foreign ownership of real estate and many Europeans and Americans own primary or secondary residences on the island.
Infrastructure and Airports
The Dominican Republic is building airports at a feverish rate and this is resulting in increased demand in real estate. The major resort cities of Santo Domingo, Santiago, Punta Cana and Puerto Plata have direct flights from the United States. New International airports are being funded by a progressive government that is actively encouraging tourism and foreign development of real estate throughout the island. In November of 2006, a new international airport is scheduled to be open on the northeast side
of the island in the area know as Samana.
Fun and Play
From the world class kite surfing capital of Cabarete to the Caribbean’s best golf courses, the Dominican Republic offers more fun than you can handle. Of course, with any Caribbean destination, you get your fair share of snorkeling, scuba diving and ocean sports. Now, throw in nearby mountains for climbing, national parks and mineral resources, such as its world-renown amber featured in the movie Jurassic Park. At night, you can enjoy Salsa and Merengue at the local discotheque.
If you or your kids like to play with the dolphins, then you won’t be disappointed in OceanWorld, one of the world’s largest ocean theme parks located in Puerto Plata. In this theme park you can actually sign up for a live dolphin encounter, including being towed in the water (http://www.oceanworld.net/index.asp).
Investment Potential
The “D.R.” is best known as the best bargain in the Caribbean.
Source: MSNBC, Kerry Sanders, 2006
The North Coast includes the areas from Monte Cristi to Samana. This area represents some of the best potential for appreciation. In some of the touristy locations such as Sosua and Caberete, real estate values have escalated dramatically. In Sosua, beach-front property ranges from a low of $85 per square meter to as high as $300 per square meter. Ironically, the beach in this area is only average. As for developed property in the mountains, expect to pay around $35 to $55 per square meter.
Factors responsible for the recent Dominican Republic fever are varied. They range from a series of Dominican baseball stars, a democratic government encouraging foreign dollars, a number of new direct flights from the United States and a lot of recent good press. These reasons coupled with bargain land prices and cheap labor have helped put the Dominican on the map like never before. In some of the beach location outside of the growth belt, we have been able to negotiate prices below $15/m2 for raw undeveloped land with some of the most spectacular ocean view that we’ve ever seen. According to realtors on the north coast, small houses or villas can be rented easily for around $1,000 per month and the occupancy is roughly 60 percent, but rising. When you consider that construction costs range from about $50 to $75 per square foot that’s less than half of what it costs to build a comparable house in the United States.
Comparing Property Values
Land in the Dominican Republic is priced in dollars per square meter rather than a cost per acre or hectare. For comparison, one square meter equals 10.76 square feet and one acre is roughly 4,048 square meters.
Residency
Obtaining residency is straightforward and relatively hassle-free. According to our U.S. friend who lives in the area, you now must own property to obtain permanent residency, but hey isn’t that the point anyway.
Taxes
Property taxes are charged on any property worth more than 5 million pesos, which is about US$167,000. The first 5 million pesos is exempt, and the balance is taxed at 1%. When you are ready to sell, expect to pay between 6% to 10% to the real estate broker or agent who sells your house. There is also a transfer fee of 5% and notary or legal fees can cost an additional 1%.
Dominican Corporations
Dominican Republic corporations are fairly easy to set up; the process takes about four to six weeks. The advantage to using them to hold your property in the country is that company shares come with no inheritance tax liability. The cost to set up a corporation is typically around $1,500 to $2,500. Also, the first $85,000 of earnings in the corporation is tax free.
Summary
Why Should You Buy Real Estate in the Dominican Republic
- Location and Beauty – Hey it’s the Caribbean!
- Building Costs – 50% lower cost to build and all supplies are available.
- Infrastructure – new roads, utilities and airports.
- Rental Potential – strong and growing.
- Opportunity is now - don’t wait until it is overpriced like the Bahamas.
- People – friendly – they love Americans, Canadians and Europeans.
- Stability – many large corporations are now moving in, movie stars are looking.
- Hurricanes – nearly absent.
2. Tax Liens & Real Estate Investing
A few tax deed sales are coming up in Washington, Kansas and California. Coming up in February – tax lien sales throughout the month. If you would like to prepare for the sales, including the online sale in Yavapai County, be sure to join us in Prescott, Arizona on February 10 & 11, 2007. For more details call us at 913-381-4520 or visit this web page:
Tax Lien Course
http://www.rogueinvestor.com/tax_lien_course.html
3. International Investing
Take a trip to the Dominican Republic and find out about some of the most beautiful and undervalued land in the Caribbean.
Dominican Republic Real Estate Investing Tours
http://www.realestateindominicanrepublic.com/DR_real_estate_tours.html
Great Investment Opportunity
Own your own slice of Europe on the Meditteranean. For more information visit:
European Real Estate Investment Opportunity
(http://www.rogueinvestor.com/european_real_estate.html)
4. Investing Opportunities
From time to time I find companies worth investing in that no one has probably heard of, Mesa Labs (MLAB), fits this description. This little company, market (cap only about 60 million total) that manufactures medical and industrial testing equipment does something few other businesses can do. Mesa Labs consistently raises its earnings, sales and dividend payments and still manages to make a special dividend payment every year.
The management is exceptional and one of my picks for a company that should rise in value by 5 times or more over the next decade while paying a nice dividend for a small company.
Happy Holidays,
Bryan Rundell
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