Investor checklist: what to look for in a pre-construction development

Pre-construction is an opportunity... if you know how to evaluate it

Buying pre-construction allows access to prices 15-25% below market value, with direct developer financing at 0% interest. But it also carries risks: delays, finishing changes, or worse, projects that never complete.

This checklist helps you separate good developments from problematic ones.

Block 1: The Developer (Due Diligence)

1. Track record of delivered projects

• ✅ Ask: How many projects has the developer completed and delivered?
• 🔍 Verify: Visit previous projects, talk to existing owners
• 🚩 Red flag: Developer's first project without experienced partners

2. Financial situation

• ✅ Ask: Does the project have bank financing or does it depend 100% on sales?
• 🔍 Verify: A project backed by a bank (Banco Popular, BHD Leon) has passed bank due diligence — good sign
• 🚩 Red flag: Developer relying exclusively on sales flow to build

3. Company legal structure

• ✅ Ask: Under which company is the project developed?
• 🔍 Verify: Request the company's RNC, verify with DGII that it's active and current
• 🚩 Red flag: Newly created company with no track record

Block 2: The Project

4. CONFOTUR certification

• ✅ Ask: Does the project have CONFOTUR approval? What's the resolution number?
• 🔍 Verify: Request a copy of the CTC/MITUR resolution. Confirm exempt taxes and exact period
• 🚩 Red flag: "We're in process" without an issued resolution — benefits don't exist until approved

5. Construction permits

• ✅ Verify: Municipal construction license, MOPC approval, environmental impact study if applicable
• 🔍 Your lawyer should request copies of all permits
• 🚩 Red flag: Construction started without complete permits

6. Land title

• ✅ Verify: Land is registered in the developer's name at the Title Registry
• 🔍 Your lawyer verifies: clean title, no liens, no disputes
• 🚩 Red flag: Land with pending survey or litigation

7. Construction timeline

• ✅ Ask: Estimated start and delivery dates?
• 🔍 Verify: Visit the site — is there real construction activity? Is it consistent with the timeline?
• 🚩 Red flag: Delivery date that has moved multiple times

Block 3: The Unit and Contract

8. Technical specifications

• ✅ Review: Architectural plans with exact measurements (interior vs total m2), detailed finishes by material, appliance brands
• 🔍 Compare: Do contract specs match marketing materials?
• 🚩 Red flag: "First-class finishes" without specifying exact brands or materials

9. Pre-sale contract clauses

Your lawyer should specifically review:

• Delay penalty: What happens if the developer doesn't deliver on time? (ideal: 0.5-1% of value per month of delay)
• Return clause: Under what conditions can you get your money back?
• Modifications: Can the developer change specifications unilaterally?
• Trust: Do payments go to an escrow account or directly to the developer?

10. Payment plan

• ✅ Verify: Typical 30/70 or 40/60 structure, clear installments with dates
• 🔍 Ideal: Payments to escrow account at a Dominican bank
• 🚩 Red flag: Demand for more than 50% before construction starts

Block 4: Yield Potential

11. Location and tourist demand

• ✅ Research: Airbnb occupancy in the area (use AirDNA or Airbtics), tourist reviews, beach proximity
• 🔍 Compare: Similar properties already operating in the area — what income do they generate?
• 🚩 Red flag: Area with no demonstrated tourist demand

12. Vacation rental amenities

Amenities that most impact yield:

• Pool (increases rate 15-25%)
• Beach access or shuttle (critical for Airbnb)
• 24h security (indispensable)
• Gym, coworking, social areas (attracts digital nomads)

13. Rental program or property management

• ✅ Ask: Does the development offer a rental program? What conditions?
• 🔍 Verify: Commissions, exclusivity, contract duration
• 🚩 Red flag: Promises of "guaranteed 12% returns" without documentation

Block 5: Investor Protection

14. Post-delivery warranties

• ✅ Ask: What warranties does the developer offer after delivery?
• 🔍 Standard in DR: 1 year for finishes, 3-5 years for structure
• 🚩 Red flag: No written warranty commitment

15. Homeowners Association (HOA)

• ✅ Verify: Estimated HOA fee? What's included? Who manages it?
• 🔍 Ideal: $150-$300/month including common area maintenance, pool, security, landscaping
• 🚩 Red flag: No HOA budget or unrealistically low fees

Executive Summary

Before signing, confirm you can check at least 12 of the 15 points. If there are more than 3 red flags, reconsider the investment or look for another project.

| Priority | Points | |----------|--------| | Critical (non-negotiable) | 1, 4, 5, 6, 9 | | Very important | 2, 8, 10, 11 | | Important | 3, 7, 12, 13, 14, 15 |

Remember: Due diligence is not an expense, it's an investment. The $2,000-$3,000 you pay a lawyer can save you $150,000 on a bad decision.