Is Punta Cana Oversaturated?

Welcome to the Grubernation Newsletter!

Your source for moving abroad, living your dream and EVERYTHING in between.

In this week’s edition:

• Punta Cana Real Estate Market Breakdown

• ‘Haiti-Cana’ - Fact or Fiction?

• It’s Time To Become a Dominican Citizen

I’d love for you to check out my YouTube channel for deeper dives into a ton of ‘living in Dominican Republic’ topics with SO much more to come! Subscribing, liking and commenting helps support the channel and means a ton to me.

Is the Punta Cana Market Oversaturated? 

There are two questions I get in my inbox CONSTANTLY .. and I plan to address both in this week’s newsletter.

“Do you think the Punta Cana market is overaturated?“

This is honestly asked daily, and I get why.

People thinking about putting their hard earned money into an investment don’t want to see that investment go bust!

There’s a ton of development, it seems like there’s an overabundance of Airbnb properties and there are plenty of stories of people not doing as well as they hoped on their short term rental.

Here’s the answer:

NO

The Punta Cana market is NOT oversaturated.

I’ll address how to look at this market and win in just a moment.

But first let me share a personal story that may help to make this point…

In 2007-2008, I worked for Progressive Insurance as a middle manager in upstate New York. I oversaw all claims operations for a specific territory.

Progressive was in 49 states at the time - the only holdout being Massachusetts.

They had heavy regulation and were extremely unfriendly to insurance companies .. until they changed and deregulated.

At that point, Massachusetts became a new frontier and even single-handedly fueled the company growth during that time.

I was promoted to a higher level position (my first 6 figure job!) and moved to Boston on November 3, 2008 (I remember the date very clearly because it was the first day I saw my wife as well and felt my breath leave my body .. but that’s another story 😉 )

At the same time that I took the promotion to Boston, 73 people in New York and thousands more nationwide were laid off. 

It was a ‘RIF’ or ‘reduction in force’ because of the crashing economy.

To recap ..

In the 2008 economic meltdown, THOUSANDS of my co-workers were laid off while I was promoted and given a full relocation package.

I was going to where the growth and demand were.

Even in the worst economic conditions any of us have experienced, there was a market going through a massive growth cycle and I was there for it .. ‘chowdah’ in one hand and a cold ‘bee-ah’ in the other.

Punta Cana has experienced a 215% growth in population in the last 10 years and is poised for a 100%+ increase again in the next 10. 

The Four Seasons, Marriott, W Hotel, Noval and many other massive multinational companies are pouring resource, money and energy into Punta Cana specifically.

These aren’t stupid people willy-nilly saying ‘it looks nice, I’ll bet we’ll do well’ - quite the contrary.

These are KILLERS who know the dynamics of the market, the prospects for growth and assess risk better than anyone.

Does that mean Punta Cana real estate will see no correction in the next 10 years? 

Not at all!!

But it does mean that there’s a long term committment to Punta Cana as a shiny star, a growth engine, a frontier market globally - and that means there’s upside, not oversaturation.

Now, that doesn’t mean Airbnb isn’t EXTREMELY competitive and it doesn’t mean certain areas, submarkets and projects won’t have issues.

Here are 3 ways to ensure you don’t lose in this market with a disclaimer ..

This is MY advice and MY personal thoughts - I am not an expert, I am not a financial advisor and you should do your own due diligence on any investment you make.

#1: Buy Long Term

The fear of losing in this market is only relevant if you buy high and sell low.

There WILL be a low! It could be 2 weeks after you or I buy a property. But if you don’t panic and have a long term mindset, you’ll be fine.

You think Cap Cana buyers from 2006 who saw the project go bankrupt in 2008 but still own their unit today are losing money on that investment?

Nope! They’re not.

We all SIGNIFICANTLY reduce our risk of loss if we have a long term mindset.

Which brings me to …

#2: Don’t Count On ANY Cash Flow

Punta Cana is an appreciation market first, cash flow second.

The same principles are present in the United States.

If I’m buying a property in Manhattan, there’s a good chance the objective is to buy and hold for 3-5 years and see the value increase dramatically and then sell or refinance to realize the gain.

It’s NOT to make a bunch of cash flow.

You’d look to break even, make a little cash flow, but that’s not the play.

It is in Indiana though - where your upside appreciation may be modest but you can get $1500 rents on $100,000/door properties.

With Punta Cana, it’s unique in that it’s a vacation property for you and an investment property when you’re not there.

But if you can budget and afford to pay for the property without EVER having an Airbnb guest book .. then you’ll be able to stay in the market long term and maximize your gain!

That said, cash flow is possible if you …

#3: Treat Your Property Like a Business

There’s a strategy you can deploy to cash flow that has a lot of demand but not enough supply. More on that in a moment.

If you want to cash flow as a short term rental, then you have to list the property with the best managers, then oversee those managers closely from afar, listen to your guests and provide the amenties they need,

It doesn’t hurt to spend a little more and get something on or close to the beach either.

But go back to rule #2 .. only if you can afford it! 

Short term rental is the typical play, but given the 215% growth in the past 10 years and the 100%+ growth coming, and the fact that there are tons of people moving to Punta Cana across sectors from Santo Domingo, the United States, Europe, etc - one strategy in short supply is LONG TERM RENTING your property.

The challenge is you won’t be able to use it - but if you tap into the long term market, test it for your unit and see if you can use that cash flow to pay off your property while you vacation at a hotel or other Airbnb when you visit, it may be the best strategy to acquire, afford and eventually move to a paid off unit simply by sacraficing the plan to use it as a vacation spot for yourself!

My personal conclusion - Punta Cana is my 2008 Massachusetts, not your 2009 Miami!

How Real is “Haiti-Cana”?

The second question I get constantly asked is ‘Jamie, I’m told that Haitians are taking over Punta Cana and it’s not safe’

Internally, my response is ‘yes .. I am intentionally placing my kids and wife in a situation where it’s unsafe. These Haitians could kill us any day now .. but man, those beaches are worth it!’

Extrenally, I say this ..

Whoever is telling you that Haitians are overunning and destabilizing Punta Cana … don’t live in Punta Cana!

That’s a FACT!

Look, relations between the two cultures and countries is touchy - and I know plenty of people who have a sense of ‘distrust’ for Haitians, or are mildly on guard around groups of Haitians.

But emphasis on ‘mildly’

By and large, Haitians here (whether legally or not) are working hard, building condos, maintaining lawns and gardens, speaking Spanish, working in low wage jobs, providing for their families - they just want to live a good life.

I see immigration trucks all the time rounding them up .. typically on pay day .. and releasing some that can pay for that privilege.

Sad .. but true.

Punta Cana is less dangerous today than a large portion of the United States (with the exception of driving) due to the political and random violence that exists in the US.

This is usually when someone feels the need to give me historic perspective and let me know how uneducated or irresponsible I’m being

No need .. I’m very clear on what I’m saying.

Do I go to Friusa (where there are 10’s of 1000’s of Haitians) at night to hang out?

NO!

It’s not because Haitians are there .. but it’s because it’s a lower income higher crime neighborhood.

Same reason I wouldn’t go to the south side of Chicago .. not because of the race of the people there, but because it’s lower income and higher crime.

In the Dominican Republic, you can largely and easily avoid being impacted by criminal activity if you’re smart. 

Talking to expats, locals and friends that have been here from 5-50 years - this is their truth.

None of us in Punta Cana are sitting around saying ‘can we address the elephant in the room? anyone else feel like we’re about to be taken over by Haitains?’

It’s just not the discussion we’re having.

El Calvito as a Dominican Citizen!

A year ago, I hired an attorney to start the process of getting residency and eventually citizenship.

Then she said I had to go get fingerprints and I said ‘ok .. I’ll do that later’

Well .. it’s MUCH later and it’s time for me to actually go get it done!

Helps that she called me today and went off on me about delaying the process! Yikes!!

Her exact words ‘you are married to a Dominican woman, I’m making this super easy for you .. and you’re dragging your feet’.

God bless her 😅 

So here’s my next steps:

• Complete the application form

• Get finger printed at a local police station

• The finger prints go to the FBI for a background search

• I’m granted residency

The VERY next day I’m able to start the process of citizenship which gets me down the path of joining my family as Dominican citizens and getting us all that second passport I want so much!

It’s not because DR gives me access to other places - but in a doomsday scenario where China overtakes the US as the world superpower (not unlikely and could be in the next 6 years!) I can travel as a Dominican vs. an American .. which I’d prefer in those times!

Stay tuned to the YouTube channel for more on this process. Excited to get re-engaged!

Thanks for tuning in to this week’s edition. I hope it was helpful! Feel free to share this with friends and hopefully they see enough value to become part of Grubernation!!