Guide To Buying a House in Puerto Rico
This guide covers the steps to buying a house in Puerto Rico. Are you tired of the hustle and bustle of modern big cities? Are you done with high federal taxes and probably the bitterly cold winters? And you are wondering the best place to buy your first home and reside in?
The entire of Puerto Rico is like living in Paradise. There are popular places to purchase a home. That said, we will cover three of the best places to begin your search for a house in Puerto Rico.
After extensive research on the property markets in different regions, Puerto Rico stood out. We will tell you why and how to buy your first home on the island. But first, here is something you should know. Even though Puerto Rico is underdeveloped compared to the U.S. mainland, it is still a manufacturing hub, especially for electronics, petrochemicals, and pharmaceuticals, and tourism and hospitality are doing pretty well.
Facts About Territory of Puerto Rico
Puerto Rico is a Caribbean island that’s also an incorporated island territory of the United States. The island is 1000 miles southeast of Miami, Florida, and northeast of the Caribbean Sea, between the U.S. Virgin Islands and the Dominican Republic. The territory comprises the eponymous main island and smaller islands such as Vieques, Mona, and Culebra.
The capital and most populous city on the island is San Juan. Puerto Rico was colonized by Spain, and even though it was contested by other European powers, it largely remained under Spanish possession for the next 40 years.
An influx of slaves and settlers changed the island’s cultural and demographic landscape till today. During the Spanish-American war, the United States possessed the island, meaning that Puerto Ricans became citizens of the U.S. and could move freely between the island and the mainland.
| Population | The current population in Puerto Rico is about 3,252,407 people. The main languages are Spanish and English. |
| Population growth | The population on the island has been declining, partly due to some economic challenges, with most people leaving for the U.S. mainland. |
| Median Income | The median household income is about $21,200 |
| Tax rates | Sales and use tax rates are about 11.5% for personal property and other specific services, while business-to-business tax rates are about 4%. |
| Education | People with High school educations are over 77.5 percent, while those with degrees are over 28 percent. |
| Weather | The climate in Puerto Rico is Tropical Marine, with an average temperature of 26 degrees Celsius. Generally, the island enjoys warm, sunny, and humid weather throughout the year. |
| Median home prices | The median property price is $375,000, with the price per square foot at around $293. |
| Renters vs. owners | Given the super-friendly tax breaks, finance possibilities, and zero immigration concerns, buying property is much more popular than renting on the island. |
Tax Incentive for Buying a House in Puerto Rico
Before we get to that, one of the main factors making Puerto Rico such a magnet for real estate investments is the tax incentives. The government introduced a tax break law to attract foreign investment into the island to motivate investors to buy property within the first two years of moving. After this period, that’s when the investor would qualify for a reduction of income taxes on dividends, long-term capital gains, and service revenues, as well as on interest.
Benefits of Buying a House in Puerto Rico
Even though this law came into effect in 2012, it was not until recently that more investors started flocking to the island’s property market. The number of applications skyrocketed during the pandemic as more people started working remotely. We also have to mention that this influx of property investors has also resulted in the development of much better luxury housing on the island – properties that didn’t exist previously. With that said, here are some tips for buying property on the island of Puerto Rico:
How To Find a Realtor Buying a House in Puerto Rico
The first thing you need to do as an investor looking to buy a house in Puerto Rico, especially if you are relatively new to the market, is find a local agent to help you search. Even though estate agents in Puerto Rico aren’t as common as in the U.S. mainland, it is still very important that you get one who understands the local market to take you through the entire process, from the initial search to the mortgage application and final transaction.
Hiring a Realtor Knowledgeable About the Culture of Puerto Rico
The real estate agent you hire in Puerto Rico should know the area and be knowledgeable about the type of property you are buying. The real estate agent will tell you more about the island’s culture and if there are any challenges rife in the region. So, when you get to Puerto Rico, you must consider looking for a reputable and trustworthy agent. After all, with Spanish being the most spoken language on the island, you would definitely face a serious language barrier challenge without a local agent conversing with the language.
Get Pre-Approved For a Mortgage Buying a House in Puerto Rico
When buying a property anywhere – not just in Puerto Rico – you need to consider how you will finance the project. Some prefer to pay in cash, but many are the ones who decide to get a mortgage. In the case of a mortgage, you must get pre-approved before you do anything else in your search. In fact, it is always a prerequisite to purchasing a home.
Getting Pre-Approved To Buy a House in Puerto Rico
A pre-approved loan will help you know how much you will spend on the investment; therefore, even in your search, you will only look for properties within your price range. FHA Bad Credit Lenders is one of the few national mortgage lenders in Puerto Rico that do TBD Underwriting Pre-Approvals, a loan commitment signed off by the mortgage underwriter.
When it comes to applying for a mortgage, you will need to find a reputable mortgage broker on the island of Puerto Rico. Not too many lenders with no overlays are licensed in Puerto Rico.
The language barrier may still be a problem since most of the brokers on the island don’t speak English. So, again, your agent will be of much help in this case. If not, you will want to search for a mortgage broker who can speak English fluently so that when explaining the terms and conditions of the loan, you won’t miss anything.
Shopping For a Home After Getting Pre-Approved
When looking for a home in Puerto Rico, you really need to pay attention to the surrounding neighborhoods. This is because there are places with higher crime rates than others, and of course, you don’t want to settle in such a place. You also want a location close to some basic amenities, including schools, hospitals, and a potential workplace.
Buying a Home in San Juan Puerto Rico
San Juan is one of the best places to live in Puerto Rico. Being the largest city on the island, San Juan offers a typical urban lifestyle, with plenty of restaurants, shops, attractions, and basic amenities to the residents. Also, if you would like to find employment once you settle down on the island, the city does provide employment opportunities. The transport system between the city and the surrounding areas is excellent. So, during your search, how about concentrating on neighborhoods such as Puerto de Tierra, Condado, Isla Verde, and Ocean Park?
Buying a Home in Dorado Puerto Rico
Dorado – if the hustle and bustle of San Juan City don’t sit well with you, but you still don’t want to be too far from it, you probably want to take advantage of its amenities, jobs, and attractions. Dorado should be an ideal place to look for a home. Approximately a 40-minute drive from San Juan, Dorado offers a much more relaxed lifestyle. It has several excellent English-speaking schools, a golf course, a water park, and restaurants. You will find diverse housing options in this area that would definitely suit your budget and preferences.
Palmas Del Mar Puerto Rico
Palmas Del Mar – if you would like to live in a gated community, this is the best place to begin your search for a home since it is a collection of small gated communities. There are also English-speaking schools, a private beach, a marina, a hotel, a golf course, and several other amenities. You will find luxury homes and condominiums in this area. Get the listings in these three areas and try to find the best properties you could look at. Your estate agent will help you in this stage.
Steps To Buying a House in Puerto Rico
After shopping for a home and finding the house you want to purchase, take an offer and close the deal. You should make an offer once you find the property that fits your budget and preference. Of course, before this, you will have inspected the house, and your realtor has ensured that there are no problems with the home that would cost you.
Your realtor and lawyer would be useful in this stage, as you must sign several documents, get your funding ready, and finally close the deal.
A lot is involved in this stage so you will need as much expert help as possible. The process does take some time to complete – about 15 – 45 days, which is understandable considering all the processes you may need to go through.
How Much Does Property Cost in Puerto Rico?
Given the tax haven status of Puerto Rico, many wealthy Americans have been flooding the property market in recent years, and this has boosted the market massively. Property prices have increased as a result, with an average home ranging from 175,000 USD to 319,000 USD in places like San Juan and Dorado.
It’s also worth noting that the main currency in Puerto Rico is the U.S. dollar. If you want to buy a home in Puerto Rico, the time is now. Demand of homes in Puerto Rico is escalating at a fast rate.
The reason is that the property market on the island is on an upward trajectory, which means that property prices will be on the roof sometime in the near future. And considering the rate at which Americans are coming to invest in the island, it might actually be sooner than expected. Get a local real estate agent to help in your investment journey today! FHA Bad Credit Lenders are experts in originating and funding government and conventional loans in Puerto Rico.
