Puerto Rico: Gold Mine or Fools Gold?

Sacramento, CA · Member since 2017 · 25 posts · 7 votes

Hello All,

What are your thoughts on the mass exodus of citizens out of Puerto Rico? Are you hopeful that the economy will pick up and investing in this market will be fruitful in the long run or are you staying clear of the area due to the economic crisis they are in?

Look forward to your thoughts.

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Victor Ayala

Residential Real Estate Broker · FRISCO, TX · Member since 2014 · 45 posts · 37 votes

In my humble opinion... after living in Puerto Rico 20+ years and becoming very familiar with the political, economic and cultural situation of the island (after all I AM puerto rican), I strongly believe that what the future holds for Puerto Rico is very similar to that of the Dominican Republic. Which quite honestly wasn't too far from being true prior to the hurricane. And what I mean by that is that I see PR becoming a destination for tourists & Air BnB users. An upper class that's well off, the majority of the people on the island living in poverty and a middle class that's basically non-existent. Where there's WAY too much corruption, government waste, and bureaucracy that it's almost impossible for the locals, without "connections", to run successful business' therefore not being able to stimulate the local economy. Having said all that... no one can dispute the absolute beauty of the island. The beaches, the mountains, rainforest, and all of the ecosystems that exist on the island are stunning. The beautiful people and not to mention... THE FOOD! OMG hands down the best in the world! So if I were to advise anyone on investing on the Island I would definitely tell them to consider purchasing property to accommodate tourist and people looking for vacation rentals. That's my .2 cents. You do your due diligence and research before investing. PS I'll be visiting the island from January 10th to the 17th. I'll be meeting with a several local Real Estate Agents so I should be able to come back with a much better perspective. PPS I Just got back and now have a much better feel and insight of what’s going on in PR. 😳

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Victor Ayala
Residential Real Estate Broker · FRISCO, TX · Member since 2014 · 45 posts · 37 votes
8y
In my humble opinion... after living in Puerto Rico 20+ years and becoming very familiar with the political, economic and cultural situation of the island (after all I AM puerto rican), I strongly believe that what the future holds for Puerto Rico is very similar to that of the Dominican Republic. Which quite honestly wasn't too far from being true prior to the hurricane. And what I mean by that is that I see PR becoming a destination for tourists & Air BnB users. An upper class that's well off, the majority of the people on the island living in poverty and a middle class that's basically non-existent. Where there's WAY too much corruption, government waste, and bureaucracy that it's almost impossible for the locals, without "connections", to run successful business' therefore not being able to stimulate the local economy. Having said all that... no one can dispute the absolute beauty of the island. The beaches, the mountains, rainforest, and all of the ecosystems that exist on the island are stunning. The beautiful people and not to mention... THE FOOD! OMG hands down the best in the world! So if I were to advise anyone on investing on the Island I would definitely tell them to consider purchasing property to accommodate tourist and people looking for vacation rentals. That's my .2 cents. You do your due diligence and research before investing. PS I'll be visiting the island from January 10th to the 17th. I'll be meeting with a several local Real Estate Agents so I should be able to come back with a much better perspective. PPS I Just got back and now have a much better feel and insight of what’s going on in PR. 😳
19 Reply
Jimmy Dudley
Real Estate Broker · Westminster, MD · Member since 2017 · 159 posts · 101 votes
8y
Buyer beware. I truly believe Puerto Rico is as American as Kansas. However, PR has a government whose corruption rivals some third world nations.
2 Reply
Roberto Torres
Real Estate Agent · San Juan, Puerto Rico · Member since 2017 · 72 posts · 44 votes
8y
@Victor Ayala Tell us about the trip! Did ur opinion change for worst or better? Looking forward to hear ur experience
3 Reply
Victor Ayala
Residential Real Estate Broker · FRISCO, TX · Member since 2014 · 45 posts · 37 votes
8y
@Roberto Torres
It's rough out there. My opinion hasn't changed really... I was able to confirm my assumptions rather.
I would definitely invest with tourists and short-term vacation rentals in mind. Just because there are just way too few people who can afford even a $500+ rent. Also, it's really not worth buying properties to flip… unless your able to keep the ARV under $60k and still make some money.
Buy and hold would be the way to go for residential. And only buy and hold vacation/short-term rentals specifically.
Commercial property is also profitable… depending on location.
I personally was out there gathering information and documents regarding raw Oceanfront property (with permits in place for Hotel Casino and Resort), Acreage for agriculture development (Puerto Rico is blessed with very Fertile Soil), some shopping centers in urban areas and 2 private islands that a broker wants me to help him market here in the States.
So HMU anyone that would like more info about Puerto Rico.
5 Reply
Roberto Torres
Real Estate Agent · San Juan, Puerto Rico · Member since 2017 · 72 posts · 44 votes
8y
@Victor Ayala Great to know those are your recommendations because I'm doing a deal right now around ocean park (not flood zone area), buy and hold for rentals! I agree with your assessment. You're scope is a little bigger than mine with those types of property and wish you much luck!
1 Reply
Aron D.
Rental Property Investor · San Diego, CA · Member since 2008 · 89 posts · 65 votes
8y
I can picture timeshares, destination resorts, and locals being priced out of their own market. Look at Hawaii and native Hawaiians. They sold their land and got priced out of the land that was once their ancestors. Chinese lease land to big developments in Waikiki on 50 year lease holds. If the infrastructure, beauty, and tourism dollars start flowing into the region, then Puerto Rico will look drastically different than what it used to be. I've never been to PR, but I did see St. Thomas and Antigua and everything is expensive. If I had enough money to speculate, then I would buy up most or all the ocean front lots that my budget could afford.
1 Reply
Victor Ayala
Residential Real Estate Broker · FRISCO, TX · Member since 2014 · 45 posts · 37 votes
8y
@Roberto Torres
Ocean Park... "me gusta". That's exactly where you need to be investing you $$$. Close to the beach, good food and beautiful people. That's where people who will come to visit want to be.
Also, in my opinion, If you get REALLY GOOD at managing property (Airbnb & Vacation Rentals), understand what investors in the States expect and you’re able to provide that service at a high level… There, my friend, you have another great opportunity!
2 Reply
Chris Rivers
Fort Lauderdale, FL · Member since 2017 · 17 posts · 10 votes
8y
Thanks for your advice @Victor Ayala this was great! I am Puerto Rican myself (never lived there) and have visited many times! After this devastation happened me and a few family members have been meeting to see if real estate investing is something we want to take on in PR. I can't wait for our next meeting so I can come with this new info about buying and holding as oppose to "fix and flip". I hope to be reaching out to you soon!
1 Reply
Victor Ayala
Residential Real Estate Broker · FRISCO, TX · Member since 2014 · 45 posts · 37 votes
8y
@Chris Rivers Sure! I'd be more than happy to help and assist you in any way I can.
@Roberto Torres you see! Property management is where it's at!
0 Reply
Roberto Torres
Real Estate Agent · San Juan, Puerto Rico · Member since 2017 · 72 posts · 44 votes
8y
@Victor Ayala Me and my girlfriend rent around ocean park and have rented a room in our place with Airbnb for a year. We love it, use it when we travel, and became superhosts in the meanwhile. We know there's potential because we know who we want to market to. Tourists are coming back already so it's a good sign!
@Chris Rivers I know of locals that do flips all the time here but it's in the suburbs on the extended area of metro area so you need to know market very well to accomplish this. Buy and hold rentals in touristy / college / city work areas in San Juan would be my way to go. Start looking in clasificadosonline.com and see your options. Analyze deals and keep asking questions :)
4 Reply
Chris Rivers
Fort Lauderdale, FL · Member since 2017 · 17 posts · 10 votes
8y
@Roberto Torres You bet! This was awesome thanks so much.
0 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
@Francisco Hernandez I love Puerto Rico but the leadership there is in way over their head. Citizens of Puerto Rico were sold their own islands bonds as retirement and many lost their life savings. Infrastructure is destroyed and it takes more than money to fix it. It could rival Hawaii if it was stable enough for investment. I would like to see things change, but I think it will get worse before it gets better.
1 Reply
Roberto Torres
Real Estate Agent · San Juan, Puerto Rico · Member since 2017 · 72 posts · 44 votes
8y
@Joe Splitrock The leadership of the US government in the treatment of Puerto Rico as second class citizens also lacks. Future also depends on this.
1 Reply
Ola Dantis
Multifamily Syndicator · Houston, TX · Member since 2016 · 1k+ posts · 2k+ votes
8y
@Francisco Hernandez I think PR has a lot going for it. As immigrants, we are sometimes drawn to invest in where we come from, however, we should be careful not to invest out of emotions.
There are several markets in which you can invest in while waiting to see how PR turns in the near term.
Hope this helps. Goodluck. Thanks! - Ola
0 Reply
Joe SplitrockPro Member
Moderator
Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
8y
Originally posted by @Roberto Torres:
@Joe Splitrock The leadership of the US government in the treatment of Puerto Rico as second class citizens also lacks. Future also depends on this.
Citizen rights are not as much the issue as how a territory is handled versus a state. Territories have way more control over their laws and funding. Territories don't pay federal income taxes for income in the territory. They are also exempt from many other federal requirement, resulting in things like lower minimum wage and different investment laws. Way more control is given to the local government, so it is not as easy as blaming the US government. Local politicians may do this out of convenience, which doesn't help fix the problems.
No easy answer, but investors need to beware that there are different laws at play in Puerto Rico, so become educated before jumping in. It is not like investing in Kansas.
4 Reply
Aaron T.Pro Member
Developer · Aguada, PR · Member since 2014 · 928 posts · 279 votes
8y
I just got back from PR over the weekend and there is still opportunity. Just do your research before you buy. There are rules that are different than stateside. Such as you will need to use a bank in PR to get a loan, commercial certificates, municipality certificates, etc... these are all the things you should know ahead of time, because they all cost money.
The government of PR always has a palm out for money, so just know what you are getting into before you buy.
With that said, i plan on buying a VR in the next 12-24 months in PR.
0 Reply
Francisco Hernandez
OP
Sacramento, CA · Member since 2017 · 25 posts · 7 votes
8y
First off, thanks to everyone (@Roberto Torres, @Victor Ayala, @Joe Splitrock, @Aron D., @Aaron T., @Jimmy Dudley) who gave their insights, it definitely helps to see other peoples perspectives which can help you make a more informed decision.
Second, as many of you have expressed as well as direct conversations with others, it might not be the best time to put all my eggs in the PR basket. I'm definitely going to be taking it slow in this market, at least until the lights start coming back on.
1 Reply
Aaron T.Pro Member
Developer · Aguada, PR · Member since 2014 · 928 posts · 279 votes
8y
Originally posted by @Francisco Hernandez:

First off, thanks to everyone (@Roberto Torres, @Victor Ayala, @Joe Splitrock, @Aron D., @Aaron T., @Jimmy Dudley) who gave their insights, it definitely helps to see other peoples perspectives which can help you make a more informed decision.
Second, as many of you have expressed as well as direct conversations with others, it might not be the best time to put all my eggs in the PR basket. I'm definitely going to be taking it slow in this market, at least until the lights start coming back on.
now is a good time to do all your research and pull the trigger when you find the opportunity that fits your business plan. The storm has created some opportunity with foreclosures and bank repos from those that fled to the United States. With that said, the foreclosure process takes forever in PR. The upside is that properties dont appreciate a lot in PR, so if you buy now or in 12 months, you will pay roughly the same price.
1 Reply
Todd LibbyBusiness Member
Investor · Herriman, UT · Member since 2017 · 9 posts · 5 votes
8y
This is a great thread! I’m also looking at buying in PR. We’d like a place where we can AirBnB and then use it when we want to visit. Thinking of Condado area.
I really just want some mofongo.
[email protected]801-319-3502
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1 Reply
Bob Weber
Rental Property Investor · Irvine, CA · Member since 2018 · 10 posts · 3 votes
8y
Just found this thread. I'm heading to Puerto Rico next week, and am interested in looking for vacation rentals to buy. Any suggestions on agents I should contact?
0 Reply
Pj Canales
Member since 2018 · 1 post · 1 vote
7y
Im not gonna blabber to much...I live in puerto rico. Currently reside in fajardo with 7.5 acres of land. PR has much potential..the problem is if you scroll up to the first persons comments they explain it all... But again did those things not exist in the past and we are where we are today...i know first hand exactly whats happening here but i dont know who to elaborate my facts and experiences with to actually make the real change PR needs. LIFE IS WHAT WE MAKE IT!
1 Reply
Evelyn Allendes
Member since 2019 · 1 post · 0 votes
7y
@Victor Ayala, What are your thoughts (if you have knowledge) on investing in Isleta Marina?
0 Reply
Josue Vargas
Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
7y
Originally posted by @Roberto Torres:

@Victor Ayala Great to know those are your recommendations because I'm doing a deal right now around ocean park (not flood zone area), buy and hold for rentals! I agree with your assessment. You're scope is a little bigger than mine with those types of property and wish you much luck!
Ocean Park is gold! I rented there in 2006, is a great community, with a lot of great places and there is a lot of US people moving from mainland to the island looking in that area. I remember, I paid $500 for a studio (less than 250 sqft), because it was so near to my job and a great area.
2 Reply
Josue Vargas
Real Estate Agent · San Antonio, TX · Member since 2017 · 814 posts · 466 votes
7y
I want to elaborate on some topics that I found they don’t actually meet the reality/standards in Puerto Rico in these days:
Corruption – PR is currently under the microscope (due to lack of self-financial ability and wrong/bad decisions for decades), PR is now under the faith of the PROMESA board. This board is supposed to be experts selected by the US Government to control expenses, laws, and all that related to control the amazing debt. So don't expect much corruption in the next following years (nor that has been a true impact for REI in the island). When you talk about corruption in PR, you are talking on the Government level, not the tenant that will corrupt you not paying the rent and go away without consequences. Yes, the juridical side of thing is very slow, so expect some evictions and the like to be very hard to resolve within your expectations.
Tourist – Great places, same dollar currency, same “dollar” value. What I mean is the cost of living, how much a $1K in the US in each city can buy for $1K in Puerto Rico? Don’t get me wrong, cost of living in the island could be very high for groceries, gas, and the like, meaning tourist often preferred Dominican Republic or other Caribbean destinations with all inclusive resorts, but of course, this is not what we are discussing here.
Maintenance – Most likely properties will be made from concrete and masonry, so “flips” will have a very high price, but also labor and contractors are cheaper in PR compared to US, most of them are very good at what they do.
Prices – They go up and down but not substantially. Is harder to do comps, compare rents, it all depends on the location (similar to US?). There are less public web sites you can look at comps, unless you have a very very good realtor. I have one beach apartment property that rent has been very stable, less than 3% vacancy overall for the last 10 years. Thought is in a very good location and a good property as well. Myth: There are a lot of properties available, because "people are leaving the island". This may be true in some extent, but most puertorrican that leave the island, they are not selling their property for 50% off. There is still a good market of REI in PR, so don't come with expectations that everything is at half price, not even 20% discount.
I still want to investing in PR. It isn't that easy, but doable. It has giving me much cash flow and that's how I became an investor to begin with, with a property in PR, and proud of it.
3 Reply
Raul Villanueva
Real Estate Broker · New York l Puerto Rico · Member since 2015 · 22 posts · 15 votes
7y
Gold Mine! March 2018 acquired a small cozy 3/1 single family home with small yard close to the beach in Fajardo:
$17,000 bank repo purchase price $7,000 rehab. $24,000 capital investment $45,000 sold Feb 2019 $19,470 profit 55% ROI
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