By Hugo Espinal
A friend (whom I've known my whole life) has always been toying with the idea of buying an apartment. She currently rents, and when she sees the prices of properties for sale, she practically has a heart attack. She understands that prices are sky-high and that she can't afford a modern, well-located unit with nice common areas and the potential to resell if she wants to in the future. She thinks her income isn't enough to cover her routine expenses plus a mortgage if it's a completed unit, or monthly payments on a project under construction. Hence the question: what's better, buying a completed unit or one under construction?
Under construction
Buying off-plan has numerous advantages, such as purchasing at pre-sale prices with significant discounts. Remember that at this stage, all you have is the land and a design that will become a reality in the future. This is the perfect time to seek the help of a real estate advisor, as their experience and curated inventory of projects will help you reduce the potential risks inherent in this type of transaction.
At Plusval Inmobiliaria, we have a wide portfolio of projects with a variety of prices and features that could suit your needs, taking into account that the company has previously carried out a vetting process for the builders, to reduce risks, with knowledge of the origin of funds of the construction company for the execution of the projects.
Another advantage is that you can pay in installments, as the most common payment plan involves signing with 10% down, completing 40% during construction, and the remaining 50% upon delivery, which is when the mortgage is typically secured. The possibility of making changes to the property's layout and/or improving/customizing the finishes adds to the advantages of buying at this stage. You should also factor in the 3% transfer tax payable to the Dominican Republic 's Internal Revenue Service (DGII).
Ready
The standard payment structure for buying a property is 80-20. The financial institution provides 80% of the appraised value, while the buyer pays the remaining 20%. I recommend having at least 20% of the purchase price available, plus 3% of the property value for the transfer tax to the Dominican Republic's Internal Revenue Service (DGII).
To determine your mortgage capacity, we provide you with the contacts of our mortgage partners in different banking entities nationwide, who, through an analysis of income and expenses, can pre-approve a certain amount for your purchase.
I advise you to get this pre-approval before scheduling visits to see properties, although it may seem unreal, you can't imagine the number of people who do it out of ignorance, only managing to waste time in the search.
Buying a finished property or one under construction requires completely different approaches, and both the buyer's needs and their financial structure will determine what suits them best.
In the case of my friend (whom I mentioned at the beginning of the article), we proceeded to review her financial capacity according to her income and monthly budget, and thanks to the fact that she had no significant debts and had good savings, we concluded that she could perfectly well pay 10% for the signing of the contract, fulfill the initial 40% in the construction process for 24 months and then the remaining 50% upon delivery.
With a spreadsheet of precise data that I provided, it was more than clear that my friend could afford a property under construction, exceeding what she thought was her budget, and she even wanted two units. And the numbers don't lie; I have a friend who's an industrial engineer who says he falls in love with a project when he "sees" the numbers.
Call me and let's explore your options. The least that can happen is that you'll establish a savings plan and call me back in about six months or a year to tell me you're ready to select your property, whether it's ready or under construction.
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. Contact him at hugoespinal@plusval.
