At the crossroads of contemporary real estate decisions, Dominican property owners face a dilemma that has revolutionized the sector: dedicate their properties to short-term rentals through platforms like Airbnb, or maintain the traditional residential leasing model. This decision, which initially seemed obvious post-pandemic, has evolved into a complex analysis involving profitability, regulations, operational management, and long-term sustainability.
The numbers reveal the truth
Financial analysis reveals significant differences that go beyond initial perceptions. In premium areas like Piantini, a two-bedroom apartment can generate between RD$45,000 and RD$65,000 per month on Airbnb during peak seasons, compared to RD$35,000 to RD$45,000 in traditional rentals. However, this apparent 40-50% advantage should be evaluated considering actual occupancy rates.
Local market data indicates that Airbnb properties average 65-75% annual occupancy, taking into account the Dominican Republic's seasonal tourism. This means the actual financial advantage is reduced to 15-25%, before considering additional operating costs.
In the Colonial Zone, a popular area for cultural tourists, the difference is even smaller. Restored colonial properties show similar income under both models, but Airbnb requires constant investment in maintenance due to wear and tear from intensive use.
Owners often focus solely on peak revenue and neglect to account for slower months. The financial reality is more balanced than it initially appears.
Two worlds, two philosophies
The short-term rental model offers unparalleled flexibility: the possibility of personal use of the property, dynamic price adjustments based on demand, and the potential for higher income in strategic tourist locations. However, it requires intensive daily management, from communicating with guests to coordinating cleaning and maintenance, laundering linens, disinfecting mattresses, changing pillows, and other supplies.
Traditional rental, on the other hand, provides predictable stability with guaranteed monthly income, less wear and tear on the property, and simplified management in exchange for less flexibility and limited income growth potential.
The fundamental difference lies in the owner's profile: those willing to assume an almost entrepreneurial role versus those who prefer passive investments with stable returns. For any model, there is a price to pay.
The emerging regulatory labyrinth
The legal landscape is constantly evolving. While the National District has implemented specific regulations for short-term rentals, including mandatory registration and limitations in certain residential areas, other municipalities are developing their own regulatory frameworks.
Legal security in traditional rentals is manageable although the current regulations are outdated and awaiting updating; however, regulations for short-term rentals do not have a special law governing them, creating legal uncertainty for landlords.
Lessons from real experience
Some clients who tried both models in their apartment in the National District for two years generated 30% more income from short-term rentals the first year, but in the second year, due to new regulations, neighbor complaints, and constant wear and tear, they returned to traditional rentals. They told me that their peace of mind was worth more than that extra percentage.
Meanwhile, another owner with three units in tourist areas successfully maintains the short-term rental model: “It’s a business that requires dedication, but the profitability and flexibility compensate for the effort. The key is to professionalize the operation,” they tell me.
The formula for making the right decision
The optimal decision depends on specific variables that each owner must honestly evaluate. Location is critical: properties in established tourist areas favor short-term rentals, while traditional residential areas work better with conventional rentals.
The owner's personal profile is equally crucial. Those with the time for active management, tolerance for variable risk, and the ability to adapt to changing regulations can capitalize on the advantages of short-term rentals. Investors who prioritize stability, predictability, and passive management will find greater satisfaction in traditional rentals.
The financial capacity to sustain vacancy periods and cover high operating expenses is another decisive factor. Short-term rentals require larger financial reserves to navigate months of low occupancy.
Final reflection
In an increasingly sophisticated real estate market, the decision between short-term rentals and traditional leases goes beyond a simple income comparison. It represents a strategic choice that must align with the landlord's personal goals, risk profile, and operational capacity.
Success in any model depends fundamentally on professional execution and a clear understanding of the implications of each alternative. As professionals in the sector, our role is to facilitate this comprehensive analysis, ensuring that our clients make informed decisions based on facts, not perceptions.
This article is part of the series 'Trends in the Dominican Real Estate Market'.
