The BEST Way To Make Money With Real Estate in DR 🇩🇴

Welcome to the Grubernation Weekly Newsletter!

I share information, tactics and tips on moving abroad, living your dream and EVERYTHING in between.

In this week’s edition:

• The BEST Way to Make Money with Real Estate in DR

• Let’s Give Back to Dominican Republic Together!

• What They Don’t Tell You About Investing in Abroad

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The BEST Way To Make Money on DR Real Estate 🇩🇴

Let me show you something really sexy! This image gets me SO excited about real estate in the Dominican Republic.

OMG that standing water (bites knuckle). The investor in me is SUPER turned on!!

Now check this one out…

Oooofa!! The giant patch of missing road is getting me HOT!! 🥵 

One more .. but this time I’m going to show you a property I purchased a few years back that is SO beautiful and in PERFECT CONDITION!!

The half painted front porch that’s falling down, the rotten siding and broken windows - beautiful right?

You can only imagine how gorgeous it is inside!!

At this point most of you are confused, some of you may be disturbed by my sensual description of roads and properties (rightfully so), and a small percentage of you are right with me!

There are two types of investors:

• Retail Investors buy what they can see right in front of them and depend on time and the market to drive up the value of the asset they’re investing in. Typically they’ll see a nominal annual return (3-5% perhaps) and they won’t need to put too much effort into the asset.

• Value Add Investors buy what they can see in the future and know they can double dip both with the market driving up value of the asset AND they can force appreciation with a great value add strategy. They’ll see an outsized return (10-50%) and understand and value the amount of effort it will take to reposition the asset.

I’m a value add investor.

While most see a broken down gray box, I see this…

What I also see is the $500/month rents in each of the two units inside that house being pushed to $1000/mo each with the $20,000 in improvements made to the inside and outside of the home.

I see that the market says this little house in a sleepy upstate NY college town is worth $120,000 and I bought it at $75,000.

I once bought retail and it burned me.

Here are the details:

• Elmira NY in 2005

• Purchase price $142,000 - top of the market in that neighborhood

• Borrowed 100% of the purchase price (20 something pre-2008 mistake)

• Moved to Boston in 2008 during the financial crisis

I couldn’t sell the home for what I owed. And even though Progressive provided me with a $25,000 loss on sale provision, I couldn’t sell the home for even $25,000 less than what I owed.

Renting it was the only option and we did fine. Broke even mostly because a sewer pipe backed up into the house, the siding needed to be repainted years later, and other capital expenses that popped up over the years.

In October 2019, we sold the house 14 years after I purchased it at $142,000 for $100,000! Even with the improvements and updates made.

I bought retail and counted on the market to climb. It never did. In fact, it regressed due to some issues locally.

Full disclosure I wanted to be done with the house. I could’ve held out for $20,000 but I was investing in other things, no one was left that I knew in this town and there was really no promise of improvement in that area.

What’s crazy is, I could see it!

The decline was clear but I didn’t read it right and bought because I was 26, climbing the corporate ladder and my ego wanted a good looking house - even if it was affordable because the area it was in was once nice but was obviously not going to be in the future.

The photos of the missing road and standing water is Cortecito. A beach town to the north of Punta Cana where I purchased a condo with Boardwalk Developments.

Those images are right in front of the property and there’s more needed than road improvements and better drainage.

Other things that need to change are:

• Additional roads to relieve traffic

• Removal of panhandlers in the area

• Beach erosion needs to be reversed

• The road in front of the beach should be for walking traffic only

• It would be nice to reduce some of the noise

After I purchased the retail property in Elmira for $142,000 and sold it at a loss, here’s what the portfolio looked like:

• Purchased 2 duplexes for $170,000 total (the one above plus another) - $40,000 in total improvements - sold them both together for $260,000

• Purchased a 16 unit for $755,000 in Michigan with partners - $100,000 in improvements - sold for $1,250,000 3 years later

• Purcahsed a 22 unit in Cleveland for $650,000 - $150,000 in improvements - sold for $1,400,000 (I was a 10% partner - no cash, just sponsored the loan)

All purchased distressed, all with value add strategies, all exited for more. In addition, all debt terms were much more conservative (no more 100% loans!)

When you’re a value add investor, the risk is obviously the cost to reposition. There’s always something you couldn’t see, cost overruns, permitting issues, sewer pipes, etc etc.

The benefits of being a value add investor fit my very conservative style of investing:

• I buy below market value for the area

• I get to force appreciation on the asset with ‘sweat equity’

• My loan to value (LTV) remains very low

• I dramatically increase my chances of being unharmed in a downturn

Here’s an example:

• I buy a property for $150,000 that has an after repair value of $250,000

• I take a loan at 80% LTV which means I owe $120,000

• The reposition will cost $30,000 making my total investment $180,000

After it’s repositioned, I can go to the bank and tell them I want a loan for $180,000 on what is now a $250,000 asset, get all of my money back for rehab and down payment and my LTV is only 72%.

That means if there’s a downturn or I need to liquidate for some reason, I can sustain a 25% drop in value and still not be out any money.

I know we’re in the weeds - but I want to be clear about the power of value add investing before I pivot to the key point of this newsletter.

Why did I invest in Cortecito?

We’ve established that I’m a value add guy, I see the future and I have experience selecting the wrong location where there were clear signs of decline.

When I stand in Cortecito and look one way, I see Corrales.

In Corrales there’s Castaways Bistro and Terra Negra - both owned by experienced American restauranteurs.

Next to Terra Negra is La Bruja Chupadora which is a concept in the Noah Group of restaurants - a Dominican owned restaurant group with concepts around the country (Noah, Taberna de Pepe, KGB in Santiao, Trattoria de Claudio, etc).

Add in Citrus and other concepts along with the buildings and apartments being developed.

I look the other way while in Cortecito and I see the Grand Palladium Resort - 4 resorts in one on Cortecito beach owned by a multinational resort conglomerate.

Then standing in front of Maple Suites where I’m investing…

This is a Boardwalk Properties development which is owned by Cheryl Henderson - widely known as the most reputable and established realtor in Dominican Republic.

In additoin to Boardwalk, she owns the Veterans Clinics in Bavaro/Punta Cana, she owns multiple properties in the area and she owns all Keller Williams operations in the Dominican Republic.

This is me projecting the future.

There are two bets to take:

Bet 1 - Cortecito doesn’t get the funding or infrastructure upgrades and falls into the water. All of the investment there goes away and people lose their shirts.

Bet 2 - Cortecito is in the path of progress and, while slower perhaps, it will continue to see the investments it needs over time to create value to all who invested there.

I’m taking bet 2!

But there are 2 other variables:

In the above examples, I forced appreciation on distressed assets in good market.

With this investment I’m buying a new asset in a ‘distressed’ location where I don’t control the upgrades.

For me, I go back to the bet I’m taking above.

I now see David Collado announcing a 500m pesos investment in Cortecito to improve infrastructure (so far, my bet is paying off).

But there’s the second variable - which is diversification.

Dominican Republic overall is a speculative investment. I would not put all of my eggs in this basket any more than I would crypto or a penny stock.

I invest what I can lose in a market like this. So the investment I made is a risk I can afford to take without it taking my entire financial future down if Bet 1 becomes the reality for Cortecito.

Quick summary for all those ‘yeah buts’ out there:

• I do not buy retail ($170,000 for a 1 bed a block from the beach doesn’t exist elsewhere)

• I do not invest more than I can lose

• I leverage my experience in choosing markets and assets

• I see Cortecito as a good bet for future devleopment and I’m as close to ground floor as it will ever be there

If you can’t see it, it’s ok! I’d suggest buying Proctor and Gamble, Apple and Amazon. Safe, secure, low but certain growth stocks.

But if you’re like me and you see the beauty in the distress, you see the future, you value the value add .. then hopefully this outline gives you an investment strategy you can use.

If you’re interested in this particular asset, click here and you’ll get connected to a representative of Boardwalk. Of course I will see a referral fee if you decide to use them.

If looking more broadly at real estate, click here and I’ll refer you to a realtor I trust who also will pay me a referral fee if you decide to close with them.

Which one are you?

Value add or retail? It takes some stones to be value add haha - so no judgment either way!

But if your goal is to make the MOST money you can on your real estate purchase, value add is EASILY the right choice!

Let’s Give Back to Dominican Republic Together!!

For the last 6 years I’ve been a member of this men’s entrepreneur community. The group aligns around a few pillars for improving our lives - one of which is contribution.

What I’ve learned is I can give money, I can give time, but my superpower is bringing people together to maximize what can be given.

Since moving here, I’ve been friends with a gentleman that sits on the board of 2nd Mile Missions which seeks to end poverty and human trafficking in Dominican Republic.

What I love is that they start with educating kids which is an investment in the future. Specifically by paying for tuition and books to a school that will provide them excellent opportunities.

On January 22, I’m hosting a networking mixer in Santo Domingo at 8pm AST  Anyone who donates $50 to this amazing cause can attend.

The value to those attending will be meeting other english speaking expats and locals, meeting me and some friends I’m bringing that you’ll love getting to know and being part of an event that will put kids through school.

It costs $500 USD to put one kid through school for an entire year. My goal is $5000 raised to help 10 kids get a good education.

I want to emphasize because this matters to some, this is for any legal resident of DR - they could be Dominican, Haitian or other. Just wanted to offer that full disclosure.

If you can’t attend but want to donate, feel free.

Also consider donating for someone else to attend in your place - if you don’t have someone just let me know and I’ll find someone that will benefit from meeting new people locally.

I appreciate all of your support and I hope to continue to help as many kids as I can with the little bit of influence I’ve created here.

I truly love this country and feel blessed to be spending a part of my life here. I hope we blow the $5000 goal away!!

What They Don’t Tell You About Buying Property Abroad

I learned that 88% of construction projects are delayed in this ONE location!

Wondering where?

Hot off the presses is my newest YouTube video outlining some insane stats that will absolutely shock you!!

Like subscribe and comment if you would be so kind - helps grow the channel and I hope it adds value to your life!

Thanks for your continued support of this newsletter and the content I put out. I’d truly appreciate you clicking and checking out the sponsor Mood Gummies at the beginning of the newsletter. Your click goes a long way if you can spare the 2-3 seconds 😁