Vacation rental ROI in the Dominican Republic: run the numbers before you buy

How to read the result

Gross yield is the figure most brochures quote: annual revenue divided by what you paid. It ignores every cost, so it is always flattering. Net yield divides the net operating income, what is left after platform fees, management and running costs, by the total you invested, including furniture and closing costs. That second number is the one to compare with a bond, a rental in Florida or any other use of the same capital.

Monthly cash flow tells you whether the villa pays for itself or needs you every month. If you finance part of the purchase, the mortgage payment comes out of the net operating income; a positive result means the property covers its own debt.

What actually drives returns in Punta Cana, Samaná, Puerto Plata and Casa de Campo

Occupancy is the variable that decides everything, and it depends on location, reviews and season much more than on the finish of the kitchen. A two-bedroom near Bávaro beach with two hundred reviews rents in a way that a better villa in a closed community without services never will. Ask for the real booking history, not the projection.

Nightly rates in the Dominican Republic move with the season: December to April carries the high rates, September and October are the low months. A yearly average that assumes the high-season rate all year round is the most common trap in developer spreadsheets.

• Ask which platforms the building already performs on and what the professional managers in the area charge.
• Check whether the HOA allows short-term rental at all and what it charges for it.
• Compare the price per square meter with resale units in the same project, not only with pre-construction offers.

Costs that disappear from the brochure

Furnishing a villa for rental costs money before the first guest arrives, and closing costs in the Dominican Republic include the transfer tax of 3% of the property value unless the project holds a CONFOTUR tourism exemption. The calculator groups these as a percentage of the price so they are counted in your total investment.

Management is the other line that gets forgotten. A professional operator handles check-ins, cleaning, maintenance calls and pricing; the standard fee is a percentage of revenue. Managing from Florida by yourself is possible, but in practice it means WhatsApp at midnight, so price it in.

• Platform fees charged to the host by the booking sites.
• HOA dues, which in resort communities include security, pools and gardens.
• Electricity, water, internet and cable, usually paid by the owner in short-term rental.
• Insurance, pool and air-conditioning maintenance, and a reserve for replacing furniture and appliances.

Taxes to ask about before you sign

Property tax in the Dominican Republic, known as IPI, is charged annually at 1% of the assessed value above an exempt threshold that is updated every year. Projects approved under the tourism incentive law can be exempt from IPI and from the transfer tax for a period; that exemption changes the return materially, so I ask for the CONFOTUR resolution, not the sales pitch.

Rental income is taxable, and the treatment depends on whether you rent as an individual or through a company and on your tax residence. This is a question for a Dominican accountant before you buy, and I can introduce you to one; the calculator leaves it out on purpose so you do not compare an after-tax number with a pre-tax one.

How I use these numbers with my clients

Before I show you a single villa, we agree on the budget, the use, whether you will stay in it part of the year, and the minimum net yield that makes sense for you. Then I bring options with real rental data, the HOA rules and the cost of the manager, and we run this same model together. Buying from Florida without that step is how investors end up with a beautiful unit that rents fifteen weeks a year.

Frequently asked questions