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puerto rico real estate market

Why Puerto Rico Is the Best Place to Invest in the World Right Now

A 7-bedroom beachfront property in TROPICAL PARADISE for the price of a home in Montgomery, Alabama?

Where does this exist, Narnia?

While Narnia sounds amazing, this paradise actually exists just 1,000 miles from the United States. 

Puerto Rico is currently an investor’s dream. 

Because Hurricane Maria caused catastrophic damage, the island faces unparalleled opportunities to rebuild. 

The Caribbean island and unincorporated U.S. territory, with approximately 3 million tourists annually and a population of 3 million residents, is becoming a prime real estate market. 

Here’s why it’s the perfect time to invest in Puerto Rico’s real estate market. 

Prices

According to Point2Homes, the current average selling price is $116,750. While the current average selling price of a home in Miami is nearly triple at $339,700. 

Current prices in Puerto Rico, a popular tourist destination, are a STEAL.

The median selling price of homes on the island decreased by 48% from 2010 to 2018, with Humacao and Aguadilla being the highest at a 74% decrease. 

Hurricane Maria resulted in an extra 57,000 mortgages going into delinquency and caused many homeowners to sell their homes to escape the catastrophic conditions. While this tragic event wreaked havoc on the island, it does present ideal investment opportunities. 

Income Opportunities 

With rich history and culture, pristine beaches and world-renowned attractions, it’s no surprise that Puerto Rico is a popular tourist destination – hosting approximately 3.7 million people annually. 

Airbnb provides investors with the perfect opportunity to capitalize on the current low acquisition costs and receive an expected return of 15 to 20%. 

The California based hospitality company currently has 150 million users and more than 5 million listings worldwide. About 2 million people stayed in Airbnb rentals across the world during an average night in 2018, and the company continues to grow at a rapid rate.  

$20,619 is the average expected profits of renting a two-bedroom apartment for a year. 

With statistics like these, buying a property in Puerto Rico for 50% of its value is a no-brainer! 

Our newbie’s guide to buying an Airbnb investment property outlines the following example of the potential ROI. 

Example deal for Farjardo, Puerto Rico: This is a perfect Airbnb rental income opportunity. We just put a duplex for $85,000 under contract that needs very little rehab work to make it rental ready. The three options for the property are the following:

  1. Put in minor repairs under $12,000 and rent to section 8 tenants and generate a gross income of $1,450 a month. That would give the owner an ROI of 13% and get paid directly from the government.
  2. Improve the property more and get a higher rental rate. Spend $25,000 on the rehab work and generate $1800 a month for an ROI 15% a year.
  3. Complete the same repairs as the $25,000 and sell the property for $145,000 Profiting approximately $25,000 on a $110,000 investment in six months or less. 

There are numerous opportunities for receiving a great ROI when purchasing a property in Puerto Rico. 

Tax Incentives

There are several incentives that make investing in Puerto Rico worthwhile. 

Under Act No. 20, qualified businesses are taxed a flat 4%, as opposed to the 39% and soon-to-be 20% rate businesses based in the U.S. are taxed. At the same time, eligible companies enjoy 100% exemption on property taxes, in addition to tax exemption on dividends, interest, and capital gains.

To qualify, business owners and investors need only reside on the island for a minimum of 183 days per year.

Act No. 22 is to attract new residents to Puerto Rico by providing a total exemption from Puerto Rico income taxes on all passive income realized or accrued after such individuals become bonafide residents of Puerto Rico.

This relocation is resulting in new local investments in real estate, services, and other consumer products, and in capital injections to the Puerto Rico banking sector. All of which will continue to accelerate the economy of the island.

The creation of Opportunity Zones allows U.S. investors to defer all 2018 capital gains for 8 years if the profits are reinvested and held in an Opportunity Zone, decrease the amount of such capital gains taxes by 10% and 15% if held for five or seven years, respectively, and also provides a full exemption from capital gains tax on all future capital gains on the invested funds if an investment is held for 10 years, starting in 2018.

The IRS recently announced some changes to the Opportunity Zone regulations. As a result, almost the entire territory of Puerto Rico is now designated as an Opportunity Zone.

U.S. Territory Benefits 

In addition to the increased tax benefits, investing in Puerto Rico is made much easier because the U.S. has a vested interest in the growth and development of the island. 

Repairs will be conducted according to U.S. standards, and the island has access to American disaster relief. 

Visiting the island is made easy for U.S. residents, as there is no visa or passport requirement. It’s also a short distance flight from the Southeastern region of the U.S. 

The island also uses the U.S. dollar creating no additional currency risks and making transactions much easier.

Life in Puerto Rico

One of the best benefits of investing in Puerto Rico’s real estate market is experiencing Puerto Rican culture.

Salsa dancing until the morning, eating Mofongo, snorkeling in the Atlantic Ocean, or surfing in the Caribbean Sea are just a few of many things to enjoy on the island. With the blend of Taino Indians, Spanish and African cultures, comes a melting pot of people and traditions, making it an amazing place to work and live.

Major attractions include Old San Juan, El Yunque National Forest, Castillo San Felipe del Morro, Bahía Bioluminiscente, and the many diverse beaches. There is much to explore for residents and tourists alike.  

Puerto Ricans are known for their warm hospitality, often considered very friendly and expressive to strangers, which makes working with them a great experience. 

Life in Puerto Rico can be very rewarding both culturally and financially. 

How to Get Started 

It is quite obvious that the Puerto Rico real estate market has much to offer investors. The potential ROI of 15% makes this investment a sound financial decision. Contact us today to get started. 

airbnb investment

A Newbie’s Guide: How to Buy an Airbnb Investment Property in Puerto Rico with an ROI over 15%

If you combine the top 5 hotel brands in the world, you’ll find that Airbnb has done better than them all. There are more rooms available on Airbnb than these companies have been able to put together, meaning that an Airbnb investment property is a pretty good idea.

If you’re considering an investment property in Puerto Rico, this could be the way to go.

Here are four tips for putting together your investment.

1. Find the Right Neighborhood

Short-term rentals on Airbnb typically serve a very specific purpose. Most hotel properties are located by airports and transit hubs. If not, they’re located in downtown commercial sectors for servicing working people and tourists.

If you’re looking to buy a property in an up and coming city, think about tourism and where people are looking to enjoy their time off the beaten path. The places to seek out an Airbnb property are near the hip bars, cafes, and restaurants that are starting to get written up in national magazines. Think about where the natural or cultural draws are.

To get a really strong idea of where to invest, look at the Airbnb site itself. You’ll notice that there will be certain areas with a high concentration of high priced short-term rentals. If you’re able to get an inexpensive place and price your space competitively, that’s the right neighborhood.

Do some research, ask around, and, if you’re from out of town, visit the place yourself. You’ll get a lot more from just walking around than doing research online or listening to word of mouth.

2. Beware of Obstacles

After you’ve found your location, getting it up and running takes some effort. You’ll have to do more than just front the money for a property and list it on Airbnb. You need to learn about local regulations and for how long you can rent your property each time.

In some cases, you can only rent the property out for a few days at a time without being present in the space. Every city has its own regulations and standards for short-term rentals so do your research in advance. Puerto Rico is no different than anywhere else when it comes to regulations.

There are often homeowner’s associations to contend with as well. They might have rules dictating what you can do. For yet another hurdle, look at your mortgage company’s rules and regulations about short-term rentals because you might not be allowed to sublet.

Rules are changing in cities around the country. As some people decry the practice for gentrification, your renters might feel unwelcome or be driven out quickly. You need to find a place that is friendly and welcoming to the plan that you have rather than operating at the margins of legality.  There is a new law that is expected to pass soon that will make it illegal for HOA to not allow short term rentals. 

3. Be Prepared for Expenses

The listed price for a home isn’t the only expense that you need to worry about. An Airbnb investment property requires a lot of setup and a lot of maintenance. You’ll be tasked with doing more maintenance on your Airbnb property than you would on your own home.

You need to be sure that you’ve got cleaning services ready to arrive after every stay. You’ll need to pay for landscaping and the maintenance of any amenities like a pool. You also need to pay for insurance because if anyone is injured on your property, you’re going to be liable.

If you have to wait to rent out your property, are you prepared to make no money while you perform repairs? You’ll have total vacancy while you prepare the property or if you have to do any major work.

There will be ups and downs, storms that cancel plans, and off-seasons. If you choose a fairly inexpensive property, you might have bought someplace that has only seasonal rentals. Are you prepared to absorb the fees while your property sits unrented?

You need to pay for all kinds of insurance to keep yourself from losing out on your investment, so make sure you’ve budgeted for everything.

4. The Field Is Competitive

With millions of listings in tens of thousands of cities, the competition on Airbnb is fierce. If this is going to be your full-time income, you need to make sure that you plan accordingly. You need to work to market your rental as unique and a better option than a place that might be right next door.

This requires great photos, great amenities, and maybe even a fridge full of groceries for every guest.

You live and die by your reviews, so you need to stay a cut above the rest of the competition. You need to spend a little more than other people to achieve success. It’ll cost you in bath accessories, nice bedding, and even some welcome gifts for everyone who stays.

Remember that you’re acting as concierge when you have people on your property. You might have to put together a map to show them where to go.

Don’t be afraid to start slow when you’re trying to figure out what works for you. It takes a while to differentiate yourself, especially if you don’t have a background in hospitality.

Start by renting out a room of your home and giving it your all. You’ll get a feel for what Airbnb renting is like before you’re forced to commit.

Airbnb Investment in Puerto Rico Is Smart

If you love the island and the culture of Puerto Rico, an Airbnb investment property brings lots of benefits. You could have your own place to visit as well as a reason to stay and work on the island.  We have helped a number of new investors on the island find the right property and help them remodel the property to have it Airbnb perfect to make real returns on there investment. 

If you’re wondering how the economy is doing post-Maria, check out our guide for details. 

When a fisherman who has experienced countless islands decides Puerto Rico is the place he wants to live, you know he has a good story.

When a fisherman who has experienced countless islands decides Puerto Rico is the place he wants to live, you know he has a good story. See how #TouristTalk turns local this week.

Posted by Discover Puerto Rico on Thursday, July 19, 2018

Home depot

I have gone to Home Depots in the states for over 20 years.  Good to know that there are nine Home Depots in Puerto Rico that have everything you need to remodel a home.    This will be the first Depot run of many to follow.  The great thing about this store is there is a great coffee shop next door.  

New deal in Farjardo Puerto Rico. This is a perfect Airbnb rental income opportunity. We just put under contract a duplex for $85,000 that needs very little rehab work to make it ready to rent out. The three options for the property are the following: Put in minor repairs under $12,000 and rent to section 8 tenants and generate a gross income of $1,450 a month. That would give the owner a ROI of 13% and get paid directly from the government. The second option is to improve the property more and get an higher rental rate. Spend $25,000 on the rehab work and generate $1800 a month for an ROI 15% a year. Or lastly do the same fix up as the $25,000 and sell the property for $145,000 Profiting approximately $25,000 on a $110,000 investment in six months or less. Good options to have.

Next great deal

We just purchased this tri plex in Farjardo for under $50,000 We plan on rehabbing the project for $35,000 and then renting out the units.   

How is the economy in Puerto Rico recovering after Hurricane Maria?

Investment-Puerto-Rico-San-Juan-property-12

Puerto Rico is a paradise-like island with rainforest mountains, dazzling beaches, and clear blue ocean. Like so many tropical islands, hurricanes and their devastating consequences are part of the Caribbean reality. For centuries, Puerto Rican’s have joined efforts to rebuilt and redevelop their island – better and more beautiful every time. Hurricane Maria is no exception.

The economy is recovering fast. Since my first visit in December 2017 – two month after hurricane Maria – water and power sources are stabilized, hotels and restaurants are back up and running, and small businesses take advantage of tax opportunities. There is no doubt that the tourist industry is an important factor driving the redevelopment. Over 2 million visitors – mostly cruise ship tourists from the North American mainland – are expected to set foot on the island in 2018 alone. That is more than 5000 people per day. With an average stay of 2-5 days, tourists usually stay in local hotels or Airbnb apartments, to enjoy the culture of old San Juan, the Vatican-worthy coffee, the juicy pork dishes, and live salsa music. Other than the U.S. mainland, where government regulations restrict Airbnb businesses and development through private investors, Puerto Rico’s government has massively changed tax and business laws in 2012 to promote the tourism industry and real estate development. And it’s working!

The Act 20 and Act 22 guarantee a 20-year 4% tax rate for businesses and investors. All it takes is a local residence, a driver’s license, a bank account, and 183 days on the island per year, which accumulate rather quickly.

I’m not the only one who thinks that Puerto Rico is a true paradise. Whether it is Green Energy engineers, cryptocurrency enthusiasts or medical marijuana start-ups, people who move their businesses to the island are pioneers and freedom-seekers. People who share the vision of a
better future, who believe that everyday groundwork is necessary to make a difference, who appreciate an opportunity, and who know that freedom is fun.

A great example is Pete, who is more than 70 years old and recently moved his business from California to Puerto Rico. He builds and develops wind turbines for homes and small hotels. For him, coming to the island was the next logical step in his career and a much better alternative to retirement. The tropical winds work perfectly for his turbines, which generate lots of green energy for the community. He is making a huge difference for the local community and people love him for that.

Green Energy in Puerto Rico

Pete is over 70 years old and has moved his business from California to Puerto Rico. The wind turbines are truly amazing and generate lots of green energy for homes and small hotels.