Rental markets are generally cyclical in nature and vary from one year to another. In most cases, rental markets are seasonal. In the Dominican Republic for example, property owners are blessed with two rental seasons. The first “high” season starts in mid December and ends mid April. The second “high” season starts in mid June and ends in mid September. As a result, many property owners in the Dominican Republic prefer short-term rentals. for two reasons. First: short-term rentals in some areas can generate a greater cash flow than long-term rentals. Second: many property owners in the Dominican Republic like to use their properties for personal use — which cannot occur with long-term leases. In this scenario, it is unlikely that property owners would be interested in rent-to-own agreements.
In the event that short-term rentals generate a lower annual cash flow than long-term rentals, you will see a greater ratio of long-term rentals under that scenario. If this condition exists, more property owners might be interested in looking at rent-to-own agreements. In addition to “low” short-term rental cash flows, some areas of the Dominican Republic have systemic issues of low rental results throughout the year. This may be caused by things such as: remote locations; distance from sandy beaches; distance from international airports; perception that the area is unsafe; poor infra-structure; and poor maintenance; etc. Oddly enough, this scenario could see an increase in long-term rentals because some of the negative things mentioned above are positive for other people. Stating this in a different way: “perceptions” do not always tell the true story and long-term thinkers tend to do their own research to get to the reality of things. In turn, in markets like these where long-term rental agreements are readily accepted, it is also a prime area for rent-to-own agreements.