Puerto Rico Investing

35 Replies

I have been interested in Puerto Rico for awhile, but I would like to get some people's insight to what is going on there with real estate prices.

1. As there isn't a good MLS or records search to comp, how do you go about making sure there is good pricing? It seems pretty risky to just find a realtor and expect good results as they obviously get paid on sales.

2. Where are prices at for homes compared to a year ago? five years ago?

3. For commercial, what cap rates is the island running at?

4. For debt, are people looking at PR banks? What are standard interest rates?

5. What do you see as the opportunity right now?

WOW, this could get complicated since the losses that PR has had from weather.  I am unsure there is any clear data right now for this.  I say a prayer that they get back on their feet as soon as possible.  Insurance for these properties might be through the roof....no joking.

@Steven Segal My husband & I just returned from PR Sunday night. We weren't down there long and weren't down there this time to find investment properties. However, it is something we're interested in down the road so we were casually looking online - prices are a bit all over the place. Some areas are still in pretty rough shape but it seemed like some of the more touristy areas we were in are doing much better. We were only on the north coast this time. Things looked very rough driving through Ocean Park & Santurce - I was shocked at how much graffiti was on everything visible from PR-26

Old San Juan seemed more of less put back together in the areas we were in, and we spent a few nights between Isabela and Auguadilla, which seemed to be doing well too. We heard that some of the surfer-town areas from Isabela to Rincon were doing better than many other parts of the island. We stayed in an Airbnb with a woman near Jobos Beach who said she was trying to sell part of her oceanfront property - $450,000 for less than 1/2 acre which seemed high to me given the state of the economy and there aren't any structures on it either. Though it was in a prime area close to the restaurants & bars in the area. I don't see her property on the MLS so I'm not sure how she's trying to market it. Basically it seemed overall that you could get a house for pretty cheap but anything oceanfront or with a view was still priced pretty high. I haven't done a ton of research yet because we're not in a position to buy there for a few years... but already have it on my mind, I love the island! 

Best of luck to you, I'd love to hear more about what you find..

Hi @Steven Segal, I am a local lender here in Puerto Rico and can address some of your questions. 

Finding data for comps online can be difficult. The MLS is here and continues to improve, but as you have seen it isn't a good resource to utilize especially outside of the metro area. I think here it is very important to select a specific area of the island to concentrate on. PR has a vast array of opportunities but presently I think to make a sound investment decision it requires boots on ground to get a feel for the specific town or area you find most appealing and marketable and do your own research there with professionals in the area ( real estate agents, attorneys, property managers etc). It takes a little more leg work and more patience than you would possibly ever image ( as overall true customer service is a bit difficult to find......but is here) however there are multiple deals to be found.

Prices vary depending on location. I basically cover the entire main island including our two main neighboring islands of Vieques and Culebra. Property Values as a whole I feel have stayed steady over the past 12 months even with the storm. In the immediate aftermath of the hurricane there were a number of very motivated sellers ( and there still are many today) that unloaded their properties at superior discounts, you also have a wide range of bank owned properties here that are also available at a supreme discount, but again these deals aren't easy to uncover. Some tourist areas I feel have seen an increase in value over the past year, but with a lack of a strong MLS its basically a matter of "how much are you willing to pay"....name your price and see what the seller will accept regardless of the list price.

Banks do lend here, there is not a wide range of products to offer such as in the states but many of the same basic loan programs ( 30,15,10 YR FIXED Conventional , FHA, VA,) exist. Rates are a bit higher than you would see in the states, and depending on the state you are coming from closing costs may be a bit higher than what you would see stateside.

I'll end with this though, from an investor stand point I feel short term rentals are dominating the market here. AirBnb and other similar options are basically what all of my clientele  are purchasing properties to utilize  these days. Typically multi-units in close proximity to the beach or condos on the beach have been the most popular. Its becoming easier now to get the rental data on specific areas and the tourists are coming back. There are also a number of tax incentives that are bringing more small business owners to actually consider relocating to  the island ( and they all need to rent prior to finding the place they want to  permanently reside in and a number of people that left immediately after the storm are returning as well. 

All in all I feel the current opportunities as well as the future potential far outweigh the risks of re investing here. 

I wish you much success if you do end up pursing something here and know you have a resource to turn to .

@Daniel Kauffman to the best of my knowledge there are no commercial banks in the states will not lend in Puerto Rico. There are few non-depository institutions  such as mine, that are based in the states and have a brick and mortar location here on the island that focus primarily on properties here.

As far as Rehab Costs here compared to other areas are you referring to surrounding Islands or other States in the US?  In either case I will tell you that labor costs are very low here so if one is familiar with the type of material needed for rehab your dollars will stretch  (outside of perhaps concrete costs) a bit more in PR than in most places in the states...the key (as is the same anywhere) is finding reliable and quality  workers. 

Originally posted by @Daniel Kauffman :

@Lawrence Johnson - Can you get a loan in the states for a property in Puerto Rico (A U.S. territory)? Are the re-hab costs higher in PR than other places? Are most investors concentrated on San Juan? 

 If you are going to finance a property in PR, it will need to be done through a bank in PR. 

- something to consider is that buying for annual tenants, that a lot of PR is out of work or rents may not cover expenses.

- Utilities are a premium cost.

- Where the tourists travel, investors own those properties, so they know what they are worth and you wont get much of a discount.

Hi Steven,

I bought a condo next to the Ritz Carlton three years ago.  There is nothing like flying into San Juan Airport and seeing your building from the airplane.  I would be happy to answer your questions. 

Best,

Charles

Forget PR banks and Insurance companies. They both rip you off.  You are better off securing money here and buying there.  If you are planning on renting your property look at Isla Verde and Condado.  Remodeling is cheaper there because the labor is so much less.  A good carpenter in San Juan is $100 day and electrician $150 per day.

Thank you for the detailed information.  I am also interested in investing in PR and plan on traveling there on 1/12/19. 

Originally posted by @Lawrence Johnson :

Hi @Steven Segal, I am a local lender here in Puerto Rico and can address some of your questions. 

Finding data for comps online can be difficult. The MLS is here and continues to improve, but as you have seen it isn't a good resource to utilize especially outside of the metro area. I think here it is very important to select a specific area of the island to concentrate on. PR has a vast array of opportunities but presently I think to make a sound investment decision it requires boots on ground to get a feel for the specific town or area you find most appealing and marketable and do your own research there with professionals in the area ( real estate agents, attorneys, property managers etc). It takes a little more leg work and more patience than you would possibly ever image ( as overall true customer service is a bit difficult to find......but is here) however there are multiple deals to be found.

Prices vary depending on location. I basically cover the entire main island including our two main neighboring islands of Vieques and Culebra. Property Values as a whole I feel have stayed steady over the past 12 months even with the storm. In the immediate aftermath of the hurricane there were a number of very motivated sellers ( and there still are many today) that unloaded their properties at superior discounts, you also have a wide range of bank owned properties here that are also available at a supreme discount, but again these deals aren't easy to uncover. Some tourist areas I feel have seen an increase in value over the past year, but with a lack of a strong MLS its basically a matter of "how much are you willing to pay"....name your price and see what the seller will accept regardless of the list price.

Banks do lend here, there is not a wide range of products to offer such as in the states but many of the same basic loan programs ( 30,15,10 YR FIXED Conventional , FHA, VA,) exist. Rates are a bit higher than you would see in the states, and depending on the state you are coming from closing costs may be a bit higher than what you would see stateside.

I'll end with this though, from an investor stand point I feel short term rentals are dominating the market here. AirBnb and other similar options are basically what all of my clientele  are purchasing properties to utilize  these days. Typically multi-units in close proximity to the beach or condos on the beach have been the most popular. Its becoming easier now to get the rental data on specific areas and the tourists are coming back. There are also a number of tax incentives that are bringing more small business owners to actually consider relocating to  the island ( and they all need to rent prior to finding the place they want to  permanently reside in and a number of people that left immediately after the storm are returning as well. 

All in all I feel the current opportunities as well as the future potential far outweigh the risks of re investing here. 

I wish you much success if you do end up pursing something here and know you have a resource to turn to .

Hello I am traveling to PR next week and would like to meet some REI contacts there. I am viewing some properties In Isabela and San Juan...Any advice and contacts are greatly appreciated!!

Heading to PR in February.  Will be visiting Dorado, Palmas and Isabela for specific reason to look at purchasing something that will work with Airbnb.  Interested in making real estate contacts, lender contacts, contractors and support partners such as cleaning services and handyman that can assist with guest needs.  Looking forward to hearing back from the community.

Originally posted by @Justin Ceballos :

Hello From Puerto Rico. Just learning and getting into wholesaling. Currently operating two air bbs 

I live in Camuy. (Northern PR.)

It’s my 6th year living here.

Justin, how you doing for occupancy on your BNBs? we are buying our first bnb in PR this year.  

Originally posted by @Justin Ceballos :

@Aaron T.

One is down for a serious 3motnh rehab and the other is just under 40%. I have friends that are in the 80's the more you move west. 

How much time have you spent on the island?

 I am down there 3-4 times a year visiting family. My wife is down there now looking at places. 

33yrs old. from Upland, CA 91784

This is my 6th year here and I have been fortunate enough to see the entire island. In addition, I have lived in homes/condos in three of the four major markets.
My grandfather was an Eastern Airline exec who lived in Bayamon. 
I read and write Spanish fluently and I am actively prospecting as a wholesaler in addition to my two short term rentals. 
I would gladly share my available skills or resources in exchange for experience. 
@Benjamin A Ersing

@Edwin Figueroa Torres

Damaged structures are, and expected to stay, in what you call central southern PR. 
Yauco, Guayanilla, Ponce, 
These are cities where you can expect to get deep discounts

Adversely, in my opinion, this should trigger a rise  in value in an already growing market (North) which is from Hatillo to Mayaguez. Aguadilla especially should soon see a heavy rise in prices in 2020 and 2021

Ironically, Ponce is where cement comes from