Networking for Short Term Rentals (AirBnB) In Puerto Rico

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Networking for Short Term Rentals (AirBnB) In Puerto Rico

Jorge Lopez
Rental Property Investor · CA · Member since 2019 · 4 posts · 1 vote

Hello BP Community! My wife and I are finally ready to pull the trigger and execute on the business plan that we have developed which is based on applying the BRRRR strategy to short term vacation rentals (AirBnB) in Puerto Rico! However, we are also very much aware that this will be our first real estate deal as investors. That is why we are reaching out to the BP community to try and connect with real estate investors who have operated in Puerto Rico. Our goal is to prove to these investors that we can provide value for them as we learn as much as possible about doing business on the island.

Why short term rentals in Puerto Rico?  I'm Puerto Rican and I still have a lot of family that lives on the island.  My wife and I both speak Spanish and we love enjoying everything that PR has to offer and sharing those experiences with friends and family.  Additionally, vacation rentals offer a unique opportunity to help heal our beloved island as it is still recovering from the effects of Hurricane Maria (I go into more detail on this in my business plan).  Investing in Puerto Rico fits perfectly within our plans of "lifestyle investing" 

A little about us - I am an engineer in the aerospace industry (mostly working on rocket engines) but my wife is the one with the hard job of staying at home with our two boys.  I have a tendency to be overly analytical and get stuck in "analysis paralysis" but my wife a woman of action so we make a good team.  We live in California but we will be visiting Puerto Rico later this month (late July to early August 2019) and we are looking forward taking the actions necessary to get started in our real estate investment career.

We openly welcome any information that the members of the BP community would like to share with us and we would love to connect and share our business plan with anyone who is interested.  Thanks for taking the time to join this discussion!

P.S. One of our goals is to be successful enough to be invited on the BP podcast :)

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Aaron T.Pro Member
Developer · Aguada, PR · Member since 2014 · 927 posts · 279 votes
7y
Originally posted by @Jorge Lopez:

Good question @Canesha Edwards and thanks for your input @Aaron T!

As you suggested, I looked into Act 22 and I found this great article on on the subject published by Nomad Capitalist:

PUERTO RICO TAX INCENTIVES: THE ULTIMATE GUIDE TO ACT 20 AND ACT 22

It seems pretty clear that I will not currently qualify for either of these tax incentives but it could be something to work towards some years down the road.

Your comments about investors rather than locals being the sellers also makes a lot of sense. My plan is to use the BRRRR strategy and a linchpin of that strategy is to buy properties at (or below) 70% ARV. This means that I will have to put in a lot of work networking with the local brokers while I am on the island!

 If you are looking for short term rentals, then spend the money on Airdna. This will help identify where there are rentals, asd what their income is. This will also help geolocate where are the hotspots where these types of rentals will cash flow with the right numbers. 

If you can buy right and get a good handyman to rehab, you know how easy these properties are to work on. they are cement, so its really paint, interior/exterior doors, kitchen, bath tile. 

if you are doing bnb, then think about solar for both water and electric. with utilities being so high down there, its a good way to cut back on monthly expenses. 

for ACT 22, it also leaves you with a way that you can have tax free income, but you will have to claim residence back down there for at least 183 days a year to qualify. I will look at this strategy in the future. 

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  • Aaron T.Pro Member
    Developer · Aguada, PR · Member since 2014 · 927 posts · 279 votes
    7y

    we are down here in PR this weekend. 

    make sure to understand all the real estate laws, and short term rental laws that are going into effect or proposed. 

    check out the ACT 22 rules. you may or may not apply if you lived here before. 

    run numbers, because some numbers just dont work out down here. 

    0Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Aaron T.

    Hello Aaron,

    I’m curious as to what you mean by some of the numbers don’t work out? Can you give an example?

    Also, are you in the short-term rental space in PR?

    0Reply
  • Aaron T.Pro Member
    Developer · Aguada, PR · Member since 2014 · 927 posts · 279 votes
    7y
    Originally posted by @Canesha Edwards:

    @Aaron T.

    Hello Aaron,

    I’m curious as to what you mean by some of the numbers don’t work out? Can you give an example?

    Also, are you in the short-term rental space in PR?

     depending where you buy, by the time you run your numbers income/expense monthly there is no cash flow. 

    in some places where airbnb is popular, investors own and when its time to sell they are asking high asking prices. its not the locals selling at a discount, due to a situation. 

    like anywhere else, you just have to find the diamonds in the rough.

    0Reply
  • Canesha Edwards
    Developer · Atlanta, GA · Member since 2014 · 475 posts · 424 votes
    7y

    @Aaron T.

    That makes sense. I didn’t consider the sellers would be investors instead of locals. Good point!

    0Reply
  • Jorge Lopez
    OP
    Rental Property Investor · CA · Member since 2019 · 4 posts · 1 vote
    7y

    Good question @Canesha Edwards and thanks for your input @Aaron T!

    As you suggested, I looked into Act 22 and I found this great article on on the subject published by Nomad Capitalist:

    PUERTO RICO TAX INCENTIVES: THE ULTIMATE GUIDE TO ACT 20 AND ACT 22

    It seems pretty clear that I will not currently qualify for either of these tax incentives but it could be something to work towards some years down the road.

    Your comments about investors rather than locals being the sellers also makes a lot of sense. My plan is to use the BRRRR strategy and a linchpin of that strategy is to buy properties at (or below) 70% ARV. This means that I will have to put in a lot of work networking with the local brokers while I am on the island!

    0Reply
  • Aaron T.Pro Member
    Developer · Aguada, PR · Member since 2014 · 927 posts · 279 votes
    7y
    Originally posted by @Jorge Lopez:

    Good question @Canesha Edwards and thanks for your input @Aaron T!

    As you suggested, I looked into Act 22 and I found this great article on on the subject published by Nomad Capitalist:

    PUERTO RICO TAX INCENTIVES: THE ULTIMATE GUIDE TO ACT 20 AND ACT 22

    It seems pretty clear that I will not currently qualify for either of these tax incentives but it could be something to work towards some years down the road.

    Your comments about investors rather than locals being the sellers also makes a lot of sense. My plan is to use the BRRRR strategy and a linchpin of that strategy is to buy properties at (or below) 70% ARV. This means that I will have to put in a lot of work networking with the local brokers while I am on the island!

     If you are looking for short term rentals, then spend the money on Airdna. This will help identify where there are rentals, asd what their income is. This will also help geolocate where are the hotspots where these types of rentals will cash flow with the right numbers. 

    If you can buy right and get a good handyman to rehab, you know how easy these properties are to work on. they are cement, so its really paint, interior/exterior doors, kitchen, bath tile. 

    if you are doing bnb, then think about solar for both water and electric. with utilities being so high down there, its a good way to cut back on monthly expenses. 

    for ACT 22, it also leaves you with a way that you can have tax free income, but you will have to claim residence back down there for at least 183 days a year to qualify. I will look at this strategy in the future. 

    1Reply
  • Jorge Lopez
    OP
    Rental Property Investor · CA · Member since 2019 · 4 posts · 1 vote
    7y

    @Aaron T.

    This is all great advise - thanks for taking the time to share it!

    0Reply
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