This case study documents the acquisition of a short-term rental apartment in Bávaro, Punta Cana, a market that had been monitored over an extended period due to strong tourism demand and improving rental fundamentals.
The acquired asset is a two-bedroom apartment located approximately two minutes’ walk from El Cortecito Beach, positioned for short-term rental use. The full acquisition process took approximately 120 days, from initial evaluation to final handover.
1. Defining the Buying Criteria
The process began with a detailed review of the Dominican Republic real estate market, focusing on short-term rental performance, property typology (apartments versus villas), and income stability across established tourism-driven locations.
Several coastal markets were evaluated, including Las Terrenas, Puerto Plata, Samaná, Cap Cana, and Bávaro, each assessed based on infrastructure quality, tourism profile, and occupancy dynamics.
A flexible budget range was defined, spanning from approximately $150,000 for apartments to $1,500,000 for villas, allowing for comparison across different asset classes. The primary objective was to achieve a minimum pre-tax net yield of 7%, with immediate cash flow as a non-negotiable requirement.
As a result, pre-construction projects were excluded, and the focus was placed exclusively on properties with verifiable operating history and existing short-term rental performance.
Target parameters included:
- Minimum Price: $150,000
- Maximum Price: $1,500,000 (including closing costs)
- Cap Rate: ≥7% pre-tax
2. Property Search and Tax Analysis
The initial property search relied on AirDNA to identify listings with strong reported performance and professional management. During this phase, it became clear that many performance figures—particularly for villas—were either inconsistent or overly optimistic.
As a result, the focus shifted toward apartments, where income data appeared more reliable and easier to verify.
After approximately one week of analysis, three apartments and one villa were shortlisted. All were actively operating as short-term rentals and available for sale.
Based on the data, the strongest-performing locations for short-term rentals were identified as Cap Cana, Bávaro, Puerto Plata, and Las Terrenas, with Bávaro offering the most compelling combination of yield stability and liquidity.
Local agents were contacted to validate reported rental income and operating expenses directly with property owners. In parallel, a local lawyer in Punta Cana reviewed the applicable tax framework to calculate precise tax obligations related to short-term rental operations. These assumptions were incorporated into the yield model to ensure the investment would meet the target return threshold.
3. Property Viewings
Property inspections were conducted during an extended stay in the Dominican Republic, allowing for multiple viewings across different locations.
On-site inspections proved essential. Beyond verifying condition and layout, in-person visits provided insights into neighborhood dynamics, building quality, and factors affecting guest experience that are not visible through online listings or data platforms.
Meetings with local real estate professionals also provided practical, experience-based insights regarding rental demand, maintenance considerations, and regulatory nuances. All third-party input was evaluated critically and cross-checked against independent data to account for potential conflicts of interest.
4. Offer, Negotiation and Due Diligence
After reviewing multiple properties, one apartment emerged as the strongest candidate. The unit was listed at $295,000 and offered a combination of proven rental performance, modern specifications, and close proximity to the beach.
The negotiation process unfolded as follows:
- Initial Offer: $257,000 (rejected)
- Second Offer: $280,000 (accepted, subject to conditions)
Upon acceptance, a $20,000 reservation deposit was placed in escrow to secure the property. Formal due diligence then commenced, including verification of rental income, review of profit and loss statements, and confirmation that the title deed was free of liens or legal encumbrances.
The agreed purchase terms included:
- Reservation deposit: $20,000 held in escrow with our legal representative until the property documentation was verified.
- Final payment: $260,000 to be paid upon signing the Final Purchase and Sale Contract, no later than May 21, 2024, after which the title and keys would be transferred.
- If any legal issues were found with the property documents, the reservation amount would be refunded within seven calendar days.
- Conversely, if we failed to complete the final payment despite clear documentation, the deposit would be forfeited. Should the seller withdraw from the sale, all amounts paid would be refunded in full.
This structure provided a balanced risk framework for both parties while allowing sufficient time for verification.
5. Purchase and Notary Process
The property was acquired through an established local corporate entity, enabling eligibility for a 15-year tax exemption under Confotur (Law 158-01), a government incentive aimed at promoting tourism-related real estate investments.
A new corporate bank account was opened, and standard KYC procedures were completed, including submission of notarized income documentation, ownership structure details, and shareholder information.
All notarial procedures and contract executions were completed remotely via Power of Attorney (POA) through local legal counsel, allowing the transaction to be finalized without physical presence in the Dominican Republic.
6. Rental Management and Ongoing Operations
Following acquisition, the existing property management company was retained. The operator had a strong track record, maintaining an average rating above 4.85 across more than 2,000 guest reviews.
The management scope includes guest communication, check-ins and check-outs, cleaning, and routine maintenance. The management fee is set at 20% of gross rental revenue, reflecting a full-service operational model.
A local accountant was engaged at a cost of $150 per month to handle tax filings, profit distributions, and compliance obligations. A transition to a more cost-efficient accounting provider is planned for 2026 as part of longer-term optimization.
This setup allows the property to operate as a largely hands-off investment while remaining scalable for future acquisitions.
Rental Performance Update (Last 12 Months)
Since closing in June 2024, with full rental operations commencing in August 2024, the property has generated approximately $28,500 in net profit over a 16-month operating period.
Based on the average annualised net profit of roughly $21,400, this corresponds to an average pre-tax net yield of approximately 7.4%, calculated on a $290,000 acquisition price.
Monthly net profit after all operating costs:
- August 2024: $2,105
- September 2024: $2,095
- October 2024: $1,135
- November 2024: $1,435
- December 2024: $2,095
- January 2025: $2,145
- February 2025: $2,675
- March 2025: $2,845
- April 2025: $2,905
- May 2025: $794
- June 2025: $1,735
- July 2025: $1,615
- August 2025: $1,419
- September 2025: $1,065
- October 2025: $1,200
- November 2025: $1,255
- December 2025: $2,875
- January 2026: $3,372
- February 2026: $829
- March 2026: $3,146
- April 2026: $2,579
Below is the sample report from the rental manager:
Interested in Buying Real Estate in Dominican Republic?
When evaluating real estate opportunities in Dominican Republic (or anywhere in the Caribbean), access to reliable market data and structured due diligence can materially reduce risk. This typically involves identifying suitable properties, reviewing historical performance, and verifying legal and tax considerations before proceeding.
Where needed, Global Property Guide can also assist with property sourcing, acquisition support, and independent due diligence, working alongside local professionals to help investors navigate the process more efficiently.
