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real estate in puerto rico

Real Estate In Puerto Rico Part 1 – Is This A Good Time To Buy?

One of the most common topics that comes up for us about Puerto Rico is real estate. I’ve been contacted by countless individuals about buying and renting on the island. So, this will be a new series of posts regarding real estate in Puerto Rico. I will cover the following topics:

  • Is this a good time to buy real estate in Puerto Rico?
  • What are the real estate laws in Puerto Rico?
  • What’s the best way to find a rental in Puerto Rico?
  • Other real estate questions we’ve received.

Disclaimer: Please note that I am not a real estate professional or attorney. So, this information is strictly from a layman’s prospective that has lived on the island for a couple of years. You’ll see a lot of anecdotal evidence, and of course, my opinions.

Here is a conversation I had with someone I met in December (I’ll call him Mark to keep his name anonymous):

Me: Hi, I’m Joanna. How long have you lived here in Puerto Rico?

Mark: Hi, I’ve been here for 8 years.

Me: Wow, that’s great! You must really like it here.

Mark: I absolutely hate it. I’m stuck here.

Me: Errr… What???!!!

Mark: Yeah, I moved here and made the mistake of buying a house right away. Then I figured out that I don’t like living in PR but I can’t sell my house, so I’m stuck here.”

 

This is a great example of why I tell everyone: DO NOT BUY A HOUSE IN PR (or anywhere else abroad), for at least a year. You need to have a chance to see if you will like living there first. I will repeat this again (and I say this often): Living somewhere is a lot different than vacationing there. Even if you vacation for a month at a time. This is especially true of living abroad, there are many harsh realities that can surprise you, see my series of posts on realities of living abroad.

playa-azul-condos

It’s easy to get caught up in the vacation mode; you’re sightseeing, you’re relaxing, and you have no responsibilities. But real life is not like that. In real life, you will need to buy a car, pay taxes, go to doctors, shop, etc. etc. etc. And those things can be quite challenging on the island. It is a different mindset, and things move slower, are much more cumbersome, and take a long time. So, why not try it on for size and rent for a while first?

Now to the main question:

Is This A Good Time To Buy Real Estate In Puerto Rico?

Let’s say, you’ve been here for a while and you like it. You see the prices of properties on the beach or in the rain forest are much cheaper than in the USA mainland, so should you invest real estate on the island now?

NO.

My opinion, of course. I have countless friends that are trying to sell their condo/house in PR and many have been trying to sell it for years. Like in the States, Puerto Rico experienced a huge economic downfall in 2007-2008. But, unlike US, the real estate in Puerto Rico has not recovered. In fact, the prices continue to go down. I personally know many folks that have lost LOTS of money. Bought a condo on a beach for $279K and sold, 10 years later, for $120K. What’s worse is that even with the low prices, properties are still staying on the market for years and not selling.

Of course, there are exceptions to this. And some areas of Puerto Rico are better off in this than others, but in general this is true:

The real estate in Puerto Rico, has not recovered and continues to go down.

I’ve talked to accountants, lawyers, real estate professionals and they all agree (unless they are trying to sell you something), that with the bleak economic outlook on the island, things are going to get worse before they get better. Everyone is expecting a rough couple of years ahead.

So, I don’t believe that this is a good time to buy real estate in Puerto Rico. I think prices will fall even further.

house for sale in puerto rico

What If I Don’t Want To Keep Paying Rent?

I would say that you will not be saving any money by purchasing real estate instead of renting. A house always requires upkeep and repairs. And let me tell you, when you’re dealing with a tropical climate, moisture, and salt air, your property will require a lot more upkeep. So, you are still better off renting.

And if you have the idea of purchasing a condo and renting it while you’re not there, I’ll address this in a separate post but it is a pipe dream as well. Here are some reasons: competition is very high, government is cracking down and wants their taxes, the rental season is limited and usually coincides with the time you want to be there too.

If you must buy property, the only way I could recommend it, is if you bought it at a foreclosure auction or short sale. [Be prepared for this to be a ridiculously long process in Puerto Rico – months, even years. I will explain this in a later post.] AND plan on holding onto the property for 20+ years to allow the markets to recover. I don’t expect there to be a sudden up-shift in the local economy any time soon. And, even if there were, it will take many years for real estate in Puerto Rico to recover.

Anyway, I hope that I didn’t burst your happy bubble with this post. I know many of you go down to visit regularly, fall in love with the island (easy to do), and dream of having a place there. I just don’t think it’s the best time buy right now. And, I would strongly recommend waiting a couple of years and seeing what happens with the PR economy before committing.

Cheers,

Joanna-

About Joanna Rolston

is a Polish American living in Arizona with her husband Tim. She is a founding partner of JTR Tech and she is proud to be a professional geek. She had dreamt of living abroad for many years. So, she and Tim created AbroadDreams.com to document the process of making their dream of moving abroad come true. They spent 2 years in Puerto Rico and several months in Spain and Poland. Now they are exploring the American Southwest.

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20 comments

  1. Hi, what are your thoughts to buying land ? Or a fixer upper dwelling?

    • Hi Robert,
      Well, my opinion is the same for buying land and houses. I think the value will continue to decrease for a while longer but one can never tell for sure. As for fixer-upper, unless you can do all the work yourself, I would not recommend it. You will be very surprise how slow contractors are in PR and how unreliable. We had to have some plumbing work done once and it took the contractor 4 trips over 2 weeks to fix things because he kept coming out without the things he needed, and that’s if you can even get them to come out quickly. There is also the issue of price hikes for outsiders.
      Joanna-

  2. Hi Joanna and other posters,

    What would you say is a good price for a condo studio (500 sq ft) or 1BR in Isla Verde?

    Is 130k much for an ocean view studio? The building has security, pool and beach access. I see such studio prices vary upwards of 120K. Just wondering what your thoughts are.

    This is for investment purposes only. I’m not planning to live in PR long term.

    Thanks

    • Hi Dan,
      I am not familiar with Isla Verde prices but I will tell you what I do know about it. Beach is beautiful but it has a huge amount of gang activity in the summer. I have a friend that leased a condo near the beach there and they were afraid to go to the beach during certain months of the year. She actually witnessed drug deals and hand guns flashed around. Tim and I spent a week in a hotel there during off season and it seemed fine but knowing what i know now, I would not purchase property there. As far as price goes, $130k for a studio seems high to me. But I’m going by Luquillo prices. A friend of mine bought a condo on the beach (with full ocean views obviously) for $150k for 3brm 2bth. The original list price was $225k and they negotiated it down to $150k. I would consider that a good deal but only for long-term investment.
      Hope this helps,
      Joanna

  3. It is different for everyone. No, really it is.

    I don’t work, I got a great cash deal on my property and I was able to retire at 34. The trick that most people haven’t figured out is that you buy when the news is bad. That is when everyone is freaking out, because people are sheep. When the news is good the markets are already high.

    Now for example is NOT a good time to buy in Colorado, but it is a GREAT time to buy in Puerto Rico.

    But hey, what do I know?

    • Have you tried to sell a property in PR lately? I agree, if you’re planning on being in it for many years, it may be a good deal. But there is no denying that property values are still going down. The trick really is to know exactly when they hit bottom. But of course, no one knows that.

      • The way I see it renting is a sure way to lose money. You do nothing but pay. We bought and I am confident if we sold right now, we would have been paid to live in PR.

        When you rent, that is not going to be an option.

        When CO was going thru the recession we bought every time the market went lower. Now that prices have recovered, every decision to buy turned out to be the right one.

        Unless the entire economy collapses and everyone starves to death, houses will be in demand.

        • Well, it remains to be seen what happens with PR economy.. I would have to disagree with you on PR prices, I think they will go down further, and perhaps by quite a bit. But, again, that’s just my opinion and no one has a crystal ball.

    • I wish I could have bought in CO two years ago but if things just don’t crash here we should be ok. Sometimes you can’t choose the best timing. Things can still go lower in PR. On my last trip there a year ago I did a lot of caving. That takes us into some remote areas. One place we park at the family just abandoned their house. It didn’t take long for it to be destroyed. I’ve seen so many abandoned worthless properties while caving. It’s sad as these were nice houses that easily cost over $100,000 to build.

  4. Your website is glitching. It thinks I am Jeff Kruse!!!!

    So weird!

  5. This is an interesting series you’ve started and pretty much what we’ve thought as well. I wonder why the banks would kick out the tenants when they could just as well apply that to the mortgage…..they then have an empty house that won’t sell.

    • Good question. I’m not sure. But if the lease is with the owner, not the bank, I guess the bank doesn’t have any legal standing in case of squatting (which is a problem in PR too). There are countless laws on the books for this stuff but most of them do not get enforced.

  6. You can’t beat renting in PR. Rents are so low the property owners loose money but they look at it differently. Most of them don’t look at the hidden costs. 3 years ago when I was there you could rent a house for $500 – $1000 a month. Condo’s are different and cost a lot more.

    That said, we bought and sold two houses in PR. We worked hard and found good deals and we worked hard and improved our houses. Because YOU sell the house you don’t have relator fees. That makes breaking even much easier. Finding a nice house for $120K – $150K is doable. Don’t go out and pay $300K – $500K on a house or a condo, you will loose money if you do that. If you paid $120K for a house and had to sell quickly you could sell it for $100K in a short period of time. Consider the $20K loss as rent for the time you were there. Like Joanna said things may still be going down. 70,000 people leave every year and the population is getting older. The doctors are leaving!

    Most importantly austerity measures have not been put in place, YET. Government pensions run out of money this year. PR hasn’t felt the consequences of their situation yet because they just decided to stop paying their debt and put a stay on lawsuits. If you stop paying your mortgage with no consequences you’d be sitting flush. The PROMESA act could change things.

    • Hi Jeff,
      Thanks for commenting. Yep, pretty much agree. Only thing I would say that I personally know people trying to sell houses in PR for less than $60K and they just can’t get buyers. So, I’m sure it depends on the area but I don’t think selling quickly is the norm. Playa Azul area in Luquillo, condos stay on the market for 3+ years and still haven’t sold. Entire developments of houses in town are empty as families leave the island. 1/2 of the properties in foreclosure. Also, many of the owners are renting the houses out, but not paying the mortgage, so banks take over and kick out the tenants. It’s a mess.
      Joanna-

      • When this type of stuff was going on in Colorado it was the PERFECT time to buy.

        Buy LOW sell HIGH. It is knowing how to recognize the signs and you just spelled them out. When markets are low, things seem dire.