The short version: Cabarete and the North Coast can produce solid rental returns, but the gross yield a developer waves at you is not what lands in your pocket. The honest number is the net, after management, fees, taxes, and vacancy. Here is the real math so you can judge a deal instead of trusting a brochure.
Gross yields, roughly
As a ballpark for the Cabarete and Sosua area: a well-located, well-managed property can target a gross rental yield in the region of 6 to 10 percent on short-term rentals, and around 5 to 7 percent on steady long-term tenancies. Beachfront and strong short-term performers sit at the top; quieter inland units sit lower. Gross means rent collected divided by purchase price, before a single cost comes out.
What actually eats the yield
- Management: short-term management typically runs 20 to 30 percent of rental income. This is the big one. Long-term management is far cheaper.
- HOA fees: monthly community and amenity charges, higher in resort-style buildings with pools and security.
- IPI property tax: 1 percent per year on value above the threshold (around RD$10 million), so many condos pay little or nothing.
- Maintenance and furnishing: the salt air is real; budget for upkeep, and short-term units need furnishing and refreshes.
- Vacancy: no unit is booked 365 nights. Model realistic occupancy, not best-case.
- Utilities and cleaning: on short-term, these add up between guests.
A worked example
| Line | Amount (illustrative) |
|---|---|
| Purchase price | US$200,000 |
| Gross short-term rent (year) | US$18,000 (9% gross) |
| Management (25%) | – US$4,500 |
| HOA fees | – US$2,400 |
| Maintenance, utilities, vacancy buffer | – US$3,000 |
| IPI property tax | – US$0 to 1,000 |
| Net income | ~US$7,500 to 8,000 |
| Net yield | ~3.75% to 4% |
So a “9 percent” property is really a high-3s to 4 percent net cash yield in this example, before any appreciation. That is still a respectable return in USD terms, and you get use of the place yourself. The point is to run your own numbers, not the brochure’s.
The Confotur factor
Many newer tourism-zone projects carry Confotur approval, which can waive the 3 percent transfer tax at purchase and exempt you from IPI property tax for up to 15 years. On a buy-to-rent that exemption meaningfully lifts your net. It is one of the first things worth checking on any new-build you are weighing for income.
Cashflow versus appreciation
Two ways to win here, and good buyers are clear on which they are chasing. Cashflow is the net yield above. Appreciation is the value gain as the North Coast keeps developing, the airport corridor improves, and demand grows. A property can be a moderate cash earner and a strong appreciation play at the same time. Decide your priority before you fall for a view.
Be very wary of “guaranteed 12 percent ROI” pitches, especially on pre-construction. Guaranteed returns are a marketing device, not a contract you can bank, and they are usually gross numbers with the costs quietly left out. A grounded 4 to 6 percent net that actually shows up beats a fantasy 12 that never does.
Rental return questions buyers ask me
What rental yield can I expect on a Cabarete property?
As a rough guide, a well-located, well-managed property can target around 6 to 10 percent gross on short-term rentals and 5 to 7 percent on long-term tenancies. After management, fees, taxes, and vacancy, realistic net cash yields often land around 4 to 6 percent. Always model the net, not the gross.
What is the difference between gross and net yield?
Gross yield is annual rent divided by purchase price, before costs. Net yield is what remains after management, HOA fees, IPI tax, maintenance, utilities, and vacancy. Net is the number that matters, and it is usually a few points below the gross a brochure quotes.
How much does short-term rental management cost in the DR?
Typically 20 to 30 percent of rental income for full short-term management (bookings, guest handling, cleaning coordination, maintenance). Long-term management is much cheaper. This is the single biggest line that separates gross from net, so factor it from the start.
Do I pay property tax on a rental in the DR?
IPI property tax is 1 percent per year on value above the threshold (around RD$10 million), so many condos owe little or nothing. Confotur-approved projects can be exempt from IPI for up to 15 years. Rental income earned in the DR is also taxable here.
What is Confotur and how does it affect my return?
Confotur is the tourism incentive law. Approved projects can waive the 3 percent transfer tax at purchase and exempt the property from IPI for up to 15 years. On a buy-to-rent, that exemption directly improves your net yield, so it is worth checking on any new-build.
Is it better to rent short-term or long-term?
Short-term usually grosses more but costs more to run and swings with the season, and the building’s bylaws must allow it. Long-term is steadier and cheaper to manage for a lower gross. The right answer depends on the unit, the building rules, and how hands-on you want to be.
Should I trust a developer’s “guaranteed ROI”?
Treat it with caution. Guaranteed-return pitches are marketing, usually quote gross not net, and lean on best-case occupancy. Ask for the assumptions behind the number, run your own net math, and weigh it against comparable properties that are already renting.
Will the property appreciate as well as rent?
The North Coast has a real appreciation case as infrastructure, the airport corridor, and demand keep improving, but appreciation is never guaranteed and varies by location and timing. Decide whether you are buying mainly for cashflow, mainly for appreciation, or a balance of both, and choose the property to match.
Want the real numbers on a specific property? Send me the listing and I will give you an honest net projection, not a brochure fantasy, with the costs that actually apply. Write me or grab the free Buyer’s Cheatsheet. Real talk, no bulto.
Don’t take my word for it
Real talk means you can check this yourself. The official Dominican sources:
- DGII: income tax and ITBIS on rental income, and how it is declared.
- Ministerio de Turismo: the Confotur incentive that can exempt a qualifying new build from those taxes.