Puerto Rico Real Estate

[HermanCain]

Go check out some of the prices in San Juan/Condado, property tax rates, etc. and tell me, would it be a good idea to invest?

[mozar]

I think a better question is are you ready to be a landlord in san juan? Also how long do you intend to hold it for? I would do some research in prices and profits and post in either Ask a mustachian or the real estate discussion group.

[crimwell]

You may want to read some of Lyman Stone's posts on Puerto Rico population estimates. Things don't look good for future demand, basically

Here's one of several posts: https://medium.com/migration-issues/how-low-will-puerto-ricos-population-go-c8d108ac8b3b

[Sibley]

I really can't imagine how a bunch of absentee landlords who are only in it for the money is going to help them. Find your investment opportunities elsewhere, Puerto Rico has enough problems.

[sokoloff]

I’d be inclined to stay away, unless you think the Act20/22 community is both your clientele and large enough for you to make money.

Otherwise, you’re tying up your capital in a territory under tremendous fiscal pressure, and at some point, they’re going to need to go looking for the money wherever they think they can get it. If you find yourself such a target (as a non-voting, absentee landowner), what are you going to be able to do about it?

For me, downsides exceed the upside.

[HermanCain]

The condos are ocean view and so cheap; there is so much upside. Yes, tax shelter people would be the target, although I myself am somewhat fluent in Spanish and am a frequenter to caribbean hotspots. I think it's less risky than owning a place in, say, Mexico for example, since it's in the US.

Even if they raised property taxes to a punitive 3%, which they wouldn't, I'm not sure how they could tax nonresidents. If they're desperate for capital, they're not going to do things that would ruin that attraction.

Finally, there has been a mass migration to Florida. So there isn't really a population that thinks its being exploited. They are Americans. If they want opportunities, they can just leave.

To me, this is just a once-in-a-while opportunity. PR is the only place you can escape federal capital gains taxes (23.8%) if you are an American, unless you give up your passport.

[sokoloff]

Even if they raised property taxes to a punitive 3%, which they wouldn't, I'm not sure how they could tax nonresidents. If they're desperate for capital, they're not going to do things that would ruin that attraction.

Jack the taxes up and provide offsetting income tax credits (refundable) to residents.
Jack the taxes up on non-owner-occupied properties.
Jack the taxes up and provide credits/exemptions to owner-occupied property.

I agree they're desperate for investment now. There may come a darker phase where they're desperate for current income to avoid a disastrous bankruptcy and that may push them into "scorch the earth; it's not going to get worse anyway" type of actions.