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.
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?
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.
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.