By Hugo Espinal
One of my best friends is a romantic and believes in marriage; I believe in marriage too, but he's been married twice and I've been married none. He's rented in both marriages and was even my roommate in my apartment during his transition from one marriage to the other. He's always rented and never bought. Both he and his new wife, with whom he has a beautiful family, understand that mortgage interest rates in the Dominican Republic are very high, and you end up paying two or three times what you borrowed. Check your loan amortization schedules and you'll understand what they mean.
If you ask me, I wouldn't say one option is better than the other when it comes to buying or renting; each has its pros and cons. The income and financial structure of each person or family will determine what's best. Whether you're trying to save as much as possible to buy later or you're an investor looking to put your money to work, renting is the optimal option. There's a common misconception that if you buy a property and live in it, you're essentially "sitting" on that money and can't invest or reinvest it, so your money is just "tied up.".
Now, what I always advise is that even if you rent, you should buy real estate. If you think about it, whenever someone makes a good amount of money, whether as an athlete, musician, investor, or even a lottery winner, the first thing they do is buy real estate because of the security this sector has provided over the years. This is where Grant Cardone and his phrase, "Rent where you live, buy where you can rent to others,". Watch this video and you'll better understand this concept.
A practical example: Instead of buying one apartment for US$200,000, acquire two for US$100,000 each. Then, rent out a property with similar characteristics to the one you were going to buy, where you will pay an approximate rent of US$1,300. Then, you can rent out the two units you bought each for approximately US$800; in this way, you obtain US$1,600 per month, pay the rent you live in, and have a profit margin.
There's another phrase you often hear: " He who marries, wants a house." The security of owning your own home and being able to determine your future in terms of housing offers stability in many ways, in addition to the increased property value and savings you accumulate, since you're obligated to pay a mortgage, which are undoubtedly other benefits of buying when time passes and you look back.
If you're employed and your money isn't being invested to generate a higher internal rate of return than your mortgage payment, then buying a home to live in is what I recommend. This doesn't mean that someone who lives in their property can't invest to rent to others or buy to gain capital and resell at a profit, as I explained earlier.
As I mentioned at the beginning, neither option is inherently the best or worst. That's why I suggest we talk and see what best suits your current situation, your future, and your life plan. Let's chat, and I'll gladly do my best to help you navigate this wonderful world of real estate.
The author is:
Industrial Engineer from the Pontifical Catholic University Madre y Maestra (PUCMM), MBA in Financial Management from Antonio de Nebrija University (Madrid, Spain), Green Belt Training Certification Quality GB; with over 13 years of experience in the Dominican Republic real estate market. Specialist in sales and project management for both residential and investment construction. He has been with Plusval since 2009.
