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Is this the time to invest in Puerto Rico?

Discussion in 'Real Estate Investing' started by DangerousDave, Apr 23, 2018.

Get in now?

  1. Definitely!

    0 vote(s)
    0.0%
  2. Not a chance!

    2 vote(s)
    33.3%
  3. Wait a while

    4 vote(s)
    66.7%
  1. DangerousDave
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    DangerousDave Contributor Read Millionaire Fastlane

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    The housing market has crashed. People are abandoning the island in droves. After decades of neglect, the electrical grid couldnt handle a hurricane.

    Unemployment and poverty are extremely high.

    Property prices have nowhere to go but up?
    Lots of $ coming in, repairing the old infrastructure.
    Once that is stable, tourism will return, and with it, people looking to buy and live in the Caribbean for a reasonable cost.

    So is this the time to get in? Or wait a couple years to see how things pan out?
     
    Lex DeVille and 21elnegocio like this.
  2. Scot
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    Scot Ductus Exemplo Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Oddly enough, this came across my feed today.

    AC0B0C2C-F991-43FD-91F6-56DFCB48E6D1.jpeg


    I think that might be a little extreme. But it also would suck to see a total land grab by outside investors. Here in Florida, we have a huge influx of Puerto Rican’s moving here and abandoning their home because of the disaster.

    I would say, if you chose to invest, do it in a way that that investment benefits the local economy.
     
  3. Spencer Norton
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    Spencer Norton New Contributor

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    Good Day!

    As someone who has both vacationed in Puerto Rico several times and done business with medical facilities on the Island, I would absolutely go for it. While primarily Spanish speaking, most Puerto Ricans that I have encountered speak some semblance of English, particularly if they are educated. There are plenty of high quality luxury malls and the highway system is "Decent".

    PROS:
    - Housing there is INSANELY CHEAP, I often find homes with beachfront property that are "livable" for pennies compared to florida/California/Carolina/etc
    - Lifestyle. The culture and lifestyles of Puerto Rico are much more South American then any lower 48 state. this means you can live in a place that doesn't feel like America at all, while still living in the US. this is strengthened by the cost of living changes and the average wealth of Puerto Ricans. in constrast to many resort style cities I have visited in south america, PR was nearly absent of hustlers and pan handlers/
    - Space. despite PR being an island, once you are outside of San Juan you'll encounter a lot of open spaces that have never really been developed.
    - no Currency Conversions
    - No Passports / Visas for Americans

    PRO OR CON?:
    - Hurricane. this is a bit morbid, but the devastation of the recent storms has vastly accelerated the outcomes of major problems the island has faced. power plant issues, 4G availability, reliable infrastructure in general, water, MASSIVE Debt. the good side of this: the government can not ride this out, they will have to make very real and serious decisions in order to ensure the survival of the island and their way of life.

    CONS:
    - Infrastructure. PR has one of the only (if not the only) state run power plants in the Country. it was badly maintained and dilapidated. this can lead to rolling blackouts if you do not own a whole home reserve battery / generator
    - Crime. some areas of San Juan have serious crime, but mostly gang violence and drug cartels.
    - I will edit as I remember more

    In summary,

    I have always described Puerto Rico as the easiest way to experience visiting another country, without actually leaving the country. The unmistakable qualities of PR that are huge assets are THE BEACHES, some of the most beautiful in the world, and many are completely void of tourists.
    BUT
    I would wait and keep an eye on 1) the relative price of self sustaining power (solar/wind) and utilities (water). 2) the employment rate in PR 3) discussions PR has with the Federal government / internal political decisions. As soon as we can be certain that their impending debt crisis or infrastructure will be resolved, move.

    Hope this helps.
     
  4. DangerousDave
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    DangerousDave Contributor Read Millionaire Fastlane

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    This is all good info, and in line with that I've been seeing.
    It is clear PR has a LOT of issues right now. But I think the (long-term) future will be bright.
    In addition to everything you noted are the major tax benefits of living there, especially in regards to Acts 20 & 22. I am currently a Software Developer, and if I were to live on PR, exporting my services, I would be nearly tax free, which would leave lots of extra income for investment.

    There is also a lot of business potential in rebuilding the island, if I am smart enough to figure out what those are. I believe I read 45% of the residents are below the poverty line, which means if you have capital to invest, you (likely) wont have nearly the competition you might here.

    All said, I do think PR RE is going to be a great investment, but the big question is "When"? Sure would be nice to be able to see the future.
     
  5. Spencer Norton
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    Spencer Norton New Contributor

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    That is a great point. I just realized, maybe take a look at the call dates on Puerto Rico bonds? all that debt is the biggest problem, finding out when the biggest payments are due. there's your pivot date.
     
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  6. Xirtam
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    Xirtam Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    Hello, I was born and raised in PR. I visit at least once a year for a month at a time and most of my family still live there, and yes, my first language is Spanish. I have also been pondering the idea to invest in PR real estate, however, these are some of the reasons I have not done so:
    1) Many Puertoricans had to abandon their mortgages because they lost their jobs and the banks might still be in the foreclosure process trying to get as much for the homes as possible. I would wait until the supply of properties is so high that the banks are willing to part with them taking pennies on the dollar.
    2) Even though there will be an excess of real estate at a bargain price - who will rent, buy, or lease the property that you buy at a great discount? One of the major problems that the island had, even before the last hurricane, is that college graduates (same requirements as the mainland USA) would earn their degrees and have to take a job making $8 an hour. Now you may think that $8 dollars an hour is ok for an area that has a low cost of living, however, although true, to a certain point, it is important to consider that PR has a 11.5% IVO tax on all purchases and most consumer products are much more expensive than the mainland as everything has to be either flown or shipped there. For example, the same brand new vehicle that you can purchase in the mainland for $30000 will cost you around $35000 in PR. All this to say, that young professionals were leaving the island before, and the hurricane was just the straw that broke the camel's back. So maybe if the island can attract retirees from the mainland and the rest of the world, buying real estate would work?
    3) Because PR had it's right to apply for bankruptcy taken away (pork added in some bill with no explanation) years ago, the government's only recourse is to continue increasing taxes, taking away tax incentives for big companies, denying cops their overtime pay, taking away pensions, closing schools down, and others.
    4) With our current climate change, if PR experiences another natural disaster it may take the island to a developing country status.
    5) Unfortunately, even though PR is USA and all born there are American citizens, permanent residents cannot vote for the President and don't have the same representation as the mainland States have. I don't see many Americans willingly giving up their right to vote for their president...

    I am no expert in PR law and the above are just my opinions and personal experience, but I hope my opinions may give some insight into the island. If I can think of other pros and cons, I will share.
     
    Last edited: Nov 2, 2018
  7. 21elnegocio
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    21elnegocio Bronze Contributor FASTLANE INSIDER

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    I have been thinking of visiting out there to start looking into buying a few condos to AIRBNB but I dont know if it is a good idea. There was a real estate event that took place this weekend that I kind of wanted to go.

    Does anyone know what zip codes or cities are median price range areas in PR ?
     
  8. SquatchMan
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    SquatchMan Gold Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    I personally wouldn't bother. Corruption is rampant, it is 2x as poor as Mississippi, unemployment is 2.25x the amount on the mainland, and they have a debt crisis. This isn't because of the hurricane either. My mom was an 'expat' there in the 60s and 70s and they had the same exact issues.

    Not exactly a place that looks like its ready to take off economically. Looks more like the perfect conditions for a communist revolution, but we know that won't happen because it's a US commonwealth.
     

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