Buying apartments in Puerto Rico (section 8, sales, real estate market)

[clip314]

I was recently exploring buying a second home in San Juan. For practical purposes it had to be an apartment, where I could just close the door and didn't have to worry about mowing the lawn or break ins. Break ins are a common occurrence in homes that are suspected to be empty for a long time. The apartment had to be on a high floor, for obvious reasons. Break ins are easier in ground floor apartments not so many in higher floors.


I ruled out the beach areas because most of the apartments in Isla Verde and Central Condado are expensive but worse of all they're "entra y sale" buildings used for business. Absentee owners rent them out to every Tom, Dick and Harry, who comes from the Bronx with boom boxes. Renters party all night and don't take care of the apartments. Some of the buildings get run down within several years.


I ruled Old San Juan out because of the prices and one can't own a car. Parking spaces are at a premium except in private parking's that would cost about $300 a month.


Guyanabo has some great deals but it was too far for my purposes.


Hato Rey and La Milla de Oro has some great apartments with a stable professional middle class but they're surrounded by highways with 24/7 traffic jams.


I decided to concentrate on Miramar and Santurce, bordering el Condado. If push came to shove, Puerta de Tierra was also a pick, It has a good crop of older and newer luxury buildings with apartment prices falling like lead bricks. The recently built Atlantis has apartments going for $290,000, down from $400,000 last year!


I decided to stay away from new developments because the majority were on the verge of bankruptcy and people were fleeing them as fast as they could, Example beautiful Capitlio Plaza in Old San Juan.


I found that bargains could be had away from the beaches and away from the metropolitan area. Palmas del Mar in Humacao and Costa Real in Rio Grande, are practically having give away sales compared to prices three years ago. However one has to investigate the finances with a fine tooth comb and check out the monthly maintenance of the buildings. Older buildings seem to be more stable but I'd keep away from the newer ones which offer packages that are unbelievable.

[La Boricua Rosa]

We only hope to rent an apartment, but this information is helpful. Thanks for posting. What did you end up buying?

[clip314]

Still looking. Its a renters market in Puerto Rico because nobody wants to buy, but not many want to sell at lower prices.

Eventually most sellers will get stuck with their properties until who knows when or the bank takes them over.

Why?

Since they changed the bank rules on mortgages things have changed. Where you once needed a 5% down payment to secure a mortgage, now its 20%! In other words, if you're interested in buying a property for $150,000, which is average by U.S standards, you now have to dish out $25,000 + in cash as a down payment. Not many people on the island has this cash in hand.

There are a lot of forclosures, like in Florida, but prices won't fall.

The huge luxury developments are basically empty and there is talk of turning them into rentals to ride the storm. Some are talking about turning unsold apartments into section 8 and homes for the elderly, all paid for by the federal govenment.

[puertoricoistheplace]

Real Estate prices in Puerto Rico really do not go down all the much, when the market is down. The construction is different than in the states. Real estates values have come down almost 50% in some U.S. cities, not so in Puerto Rico. New developments in Puerto Rico will give you the best deal...it just means less profit for the developer. When buying a second home the bank will always request 20% down, that has not changed. When buying to live the property you do not need 20% down. The government in Puerto Rico has tax incentives till the end of the year, that is helping the real estate market.


When thinking of buying a condo, as a second property, these are the things to consider: Will you be renting when not using the apartment? Does location matter or is commuting out of the question? Can you afford the monthly maintenance on your condo in addition to the mortgage? Do you want your condo to be an investment, to gain in value in a shorter amount of time or is that not a priority?


Depending how you answer these questions....then you can decide on location. The farther you are from San Juan metro the cheaper the prices will be, but the chances of renting it out are not as good. Areas like Isla Verde, Condado and Old San Juan hold their value best, because of demand and the option of renting the property when not using it, especially if is on or near the water. Monthly maintenance costs are higher on these areas....the ocean and sun eat everything up. Also, when comparing maintenance cost of different buildings, your share of the insurance for the building is not part of the monthly maintenance, but an additional yearly payment. Is important to know what is included in your monthly Home Owners association fee, to calculate your total cost.