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nikalex

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Reply with quote  #1 
driving through Puerto Rico reminds me of 2009 California market, lots of opportunities and a lot of potential, is anyone looking into as well!
taddyangle

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Reply with quote  #2 
What type of properties?  Vacation rentals?  Year round rentals?

I think too risky, and I don't see an upside.   Heavy debt, no jobs, I think you would really need to know that market well to take a chance there.  



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nikalex

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Reply with quote  #3 
Airbnb type rentals only. Yes, as always you need to know the areas. You can get beach front or view 1/1 br condo for really good price though. Price still can drop a little due to foreclosures, a lot of activities from east coast us buyers.
taddyangle

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Reply with quote  #4 
Yes, you definitely need to go beach front if you are going the vacation rental route.  We own a couple of beachfront condos in the USVI, so I have some experience in this area.  We have been doing this for 5+ years.  Since the hurricane, rentals are really down, and fortunately for us we have a huge repeat renter base that wanted to return to support the island.

What price point?  Annual gross rents?

Also, it is a different world out there.  Are you going to manage yourself?  Are you doing the maintenance yourself?  

How often are you planning to go out there?





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nikalex

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Reply with quote  #5 
I’m definitely not going to manage myself. Fee around 25%. Met couple people from San Diego who bought million $ houses ( really gorgeous) for tax reasons full time residents. There is no MLS but Zillow can give you some price brackets. Put bids on something, hope to get eventually sometime. You can’t n believe how busy is here though, try to rent something nice on Airbnb now below $200/ night in San Juan beach front, good luck. And we are talking slow season which is after April 15th. Lots of options, there was RE investors conference in April lots of people attending paying $1000 to attend ( crazy if you ask me) shows lots of interests.
taddyangle

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Reply with quote  #6 
You can look at VRBO to get a feel for occupancy and rates.  I list on AirBnB as well, but only very rarely does this lead to a renter.  I manage these myself and I am based in San Diego.  


If you are looking to buy in a condo complex, and if there are ground floor units with direct access to the beach, those will rent more often and collect more in rents.  In addition, if you are in a large complex you will want to make sure you have an remodeled unit.  We had one unit that was remodeled and one that was not and the rent differential was 30%.  Both units were beach floor access and just 4 doors from each other.  I was out there in August 2017 remodeling the other condo, so it is now updated and return on this investment will be 9-12 months.  

Be sure to check closely into insurance for these units.  Some of the units you are looking at may still be under the pre-hurricane insurance plan, and they have not yet renewed their policy.  For reference, our condo complex paid $580k for insurance last year and renewal is going to be $760k.  I suspect this will add $200-250 to our monthly HOA fees.  This does not account for our owner policy, which will probably go up $50 a month.

What is ball park price for a beachfront 1br/1 condo unit?



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nikalex

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Reply with quote  #7 
Quote:
Originally Posted by taddyangle
You can look at VRBO to get a feel for occupancy and rates.  I list on AirBnB as well, but only very rarely does this lead to a renter.  I manage these myself and I am based in San Diego.  


If you are looking to buy in a condo complex, and if there are ground floor units with direct access to the beach, those will rent more often and collect more in rents.  In addition, if you are in a large complex you will want to make sure you have an remodeled unit.  We had one unit that was remodeled and one that was not and the rent differential was 30%.  Both units were beach floor access and just 4 doors from each other.  I was out there in August 2017 remodeling the other condo, so it is now updated and return on this investment will be 9-12 months.  

Be sure to check closely into insurance for these units.  Some of the units you are looking at may still be under the pre-hurricane insurance plan, and they have not yet renewed their policy.  For reference, our condo complex paid $580k for insurance last year and renewal is going to be $760k.  I suspect this will add $200-250 to our monthly HOA fees.  This does not account for our owner policy, which will probably go up $50 a month.

What is ball park price for a beachfront 1br/1 condo unit?



For 1/1 beach front I would say depends on updates $170-200 / square foot max. Personally I’m hopping to end up with beach view or maybe even beach front 2/2 $100/foot, let’s see.
taddyangle

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Reply with quote  #8 
How much will a 1/1 beachfront generate in gross rents?    Generally speaking, if you are not able to manage vacation rentals yourself, they normally do not pencil out.  You can expect to pay 25-40% of gross rents for a property manager to manage a vacation rental.  But if you can manage it yourself, it opens some doors to properties you may not otherwise be able to afford.  





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larrywww

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Reply with quote  #9 
I don't agree with what the federal government has done in Puerto Rico, but I would be very reluctant to invest there---even though it's absolutely awful what has happened to the people in Puerto Rico----we have probably shown more generosity to helping out some nations responding to catastrophes that aren't even territories of the US, etc.  The foreseeable impact will be compel a mass exodus, especially of those young and mobile to the mainland---that won't help if you are interested in investing there.

You can't invest in an area without reliable infrastructure----and the federal government doesn't seem to be in any hurry to offer any long term solutions right now.  How can you invest in an area where the electrical grid, and other utilities are outmoded and may not be reliable?   Puerto Rico has been mired in debt a long time and I recall seeing some articles that they haven't been making repairs to the infrastructure, but mainly short term fixes. 

You may be safer to invest in urban areas and/or areas near the beach----but I don't even know how to calculate what infrastructure is being rebuilt---and what will suffer from benign neglect for the foreseeable future.

What they should do is offer incentives like they did with the gozone or similar areas---but no one seems that interested in fixing what is broken there.   The other thing is that the island is the treasury (apparently) broke in the sense that they can't get new loans, even for basic infrastructure---and no one seems inclined to forgive any part of their massive debt on which they have defaulted.  The Trump administration hasn't shown any inclination to alienate Wall Street at this point by forgiving the debt---or restructuring it.  Meanwhile, Puerto Rico likely can't get any loans to rebuild.

The other issue, of course, is that we are just about to get into hurricane season----and I'm pretty sure you can't even buy affordable insurance to guard against the risk----so you might find yourself buying a home just in time to see it flattened. 

Until a long term plan to address infrastructure emerges and the debt problem----and/or you have some way of neutralizing the storm risk (I don't know if anyone can make predictions about this any longer since superstorms seem to be part of a new normal)--I would probably avoid it.

There are probably other issues, but will do as a start.


Greg

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Reply with quote  #10 

So maybe any Puerto Rico investment strategies would be pretty speculative, buy and hold, hoping for a long term fix.

I would expect some travel bargains available right now.

Paul

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Reply with quote  #11 
I've been to the west side of Puerto Rico many times. My first trip was in 1968 to the World Surfing Championships. The town of Rincon and surrounding areas will always be popular destinations because the beaches feature many of the best surfing spots in the Atlantic. Puerto Rico is to east coast surfers what Hawaii is to California – a world-class surfing destination. That will never change.

If I was considering a VRBO type investment, that's where I'd put my money.
larrywww

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Reply with quote  #12 
Great suggestion, Paul, as always.  (Wow, I didn't know you were a world class surfer).

How are you finding making investments in the Southeast?


Paul

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Reply with quote  #13 
Larry, Although I would have liked to be a world class surfer, I wasn't. However, I was the editor of Surfing Magazine for six years.

I did one flip immediately upon arriving in North Carolina and nothing since that time. That was almost three years ago, and I think I got lucky.
mlreits

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Reply with quote  #14 
Quote:
Originally Posted by Paul
Larry, Although I would have liked to be a world class surfer, I wasn't. However, I was the editor of Surfing Magazine for six years.

I did one flip immediately upon arriving in North Carolina and nothing since that time. That was almost three years ago, and I think I got lucky.


[rofl][rofl][rofl]

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