Everything we own requires responsible management. This applies to our homes, cars, investments, and everything else in life that is important for us to maintain. This is especially true for our investments because they affect our lifestyle and how everything else occurs in our lives.
Hand’s On… or Hand’s Free?
Depending on our lifestyle and daily schedules, we often choose what we want to manage on our own and what we want to have managed by professionals. In the case of real estate investments, it often depends on location and whether the investment is local or remote. In the Dominican Republic, for example, real estate properties are generally remote investments and most likely managed by a professional management company. There is, however, some confusion on the different types of management available to property owners.
Different Types of Professional Management?
Property Management is an integral part of the real estate profession and includes:
- Community Administration
- Property Management
- Rental Management
Each of these aspects of Property Management are discussed in more detail below.
Communities in the Dominican Republic can be a gated villa community or a condominium community. In either case, they have an Owner Assembly (HOA) that meets once a year to elect an Administrator to run the affairs of the Association. During the annual meeting, a majority of owners approve the previous year financial reports and agree on a budget for the upcoming year — which includes the Administrator’s salary, — if elected for another term.
The Administrator then invoices the owners and builds a reserve fund to pay operating expenses and maintenance of common areas. At the end of the year, financial reports are prepared by the Administrator for review by the owners. The Association of Owners is set up as a non-profit company and any savings achieved by the Administrator belong to the owners. The Administrator may also decide whether or not to hire employees or hire outside contractors to assist in reaching the objectives of the assembly. If employees are hired, the non-profit organization provides for medical insurance and pension funding which is all included in the operating budget for the assembly of owners.
Responsibilities of the Condominium Administrator include maintenance of common areas up to the “front door” of interior residences. Management of interiors is the responsibility of each owner. In the case of condominiums, space is defined by measurement of party-wall centers and outside lines of exterior walls. Since a condominium includes multiple floors, the ground beneath the building is considered common area. In the case of a townhouse or villa, title to the ground is held by each owner.
Care of residence interiors are the responsibility of each owner. In the event an owner desires interior management, he or she can make arrangements with the Administrator — or any other approved property manager in the local market. Specific requirements of management may depend on condo rules and regulations which may be revised at annual Owner meetings. In any case, each property owner has options for management of his or her vacation rental or investment property.
- “Hands-On” Personal Management
- A Professional Property Manager in the Local Area
- A Separate “Rental Manager” if Not Done by the Property Manager
- The Community Administrator if That Service is Provided
Owners who wish to rent their properties may use a Rental Manager to enhance rental income. To be clear, the rental market can be very competitive in certain areas or during certain rental seasons. Online vacation rental companies like AirBNB or VRBO offer great opportunities for international marketing exposure. However, it comes at a price!
In today’s competitive market, vacation renters have become serious negotiators and use one property against another to gain a lower rental price. When this occurs, it can become very time consuming dealing with rental requests that work one owner against the other. In addition to this, we see two primary factors that increase rental revenue: “Positive Reviews” and “Instant Booking”. As such, it is extremely important to have positive reviews and a booking system that keeps all rental requests and vacation rentals a positive experience. Adding to this is an efficient booking calendar and professional accounting system.
In some cases, a Community Administrator may also be a Property Manager and a Rental Manager. In other cases, some companies may specialize only in one area. Whatever the case, the most important thing is to discuss who controls the rental calendar. As stated above, today’s vacation renter wants immediate satisfaction and prefers an instant booking process whenever possible. Therefore, a professional Rental Manager should have a calendar system that can be easily viewed by the property owner, potential client, and rental manager. To be sure, it does not look good to show an availability calendar with no bookings. However, a good rental management system in place should reduce availability and increase occupancy.
Every owner of real estate in the Dominican Republic decides whether they want the “Hands On” or “Hands Free” approach to manage the real estate investment. If you would like more information about our property management services in the Dominican Republic, please see below.