Investing in Puerto Rico

In September 20,1917 Hurricane Maria hen directly hit Puerto Rico”-Enchant Island” as a Category 4 with 155-mph winds, making it the third-strongest storm to make landfall in the U.S. Damage was catastrophic. Billions of dollars in damages, electricity blackouts and thousands of Puerto Ricans living the island. Before Puerto Rico had already been combating the financial crisis after years of economic decay and grappling with more than $70 billion in debt. Things looked bad for Puerto Rico.

Existing studies report when hurricanes disaster strikes, natural disasters may even promote growth. The new building code was revised in Puerto Rico; which brings better and superior construction. The island is facing with an extraordinary opportunity to rebuild its infrastructure strategically and expertly. Our flora and fauna already look green, strong and resplendent.

Puerto Rico will be one of the most progressive Caribbean Islands with coveted real estate and blossoming tourism industry.

Puerto Rico is the perfect place to invest right now:

U.S. territory benefits.

Puerto Rico has been part of the U.S. for more than 100 years, and the government has the same responsibility to the country as any other U.S. state. As a U.S. territory, Puerto Rico enjoys unique benefits not shared by its fellow Caribbean islands. Puerto Rico has access to relatively extensive American disaster resources. Because Puerto Rico is a territory, the U.S. has vested interest in helping the island recover. Power and water systems, bridges, and roads will be constructed to U.S. standards.

U.S. citizens can travel to and from Puerto Rico without a visa or even a passport. In terms of travel freedom, Americans can visit Puerto Rico as easily as they could in Colorado. And because Puerto Rico uses the U.S. dollar, there is minimal currency risk.

Tax incentives.

In 2012, Puerto Rico introduced a series of tax loopholes to lure investors and businesses. These incentives make living and working in Puerto Rico an enticing prospect for businesses and investors. We’ve summarized the key incentives below:

Act 20. Also known as the Export Services Act, this provides tax incentives to certain companies that move to Puerto Rico and export their services. Under Act 20, qualified businesses are taxed a flat 4%, as opposed to the 39% and soon-to-be 20% rate businesses based in the U.S. are taxed. At the same time, eligible companies enjoy a 100% exemption on property taxes, in addition to tax exemption on dividends, interest, and capital gains. To qualify, business owners and investors need only reside on the island for a minimum of 183 days per year.

Act 22. Also called the Individual Investors Act, this awards individuals who gain Puerto Rican residency a personal tax rate of 0%. Under Act 22, individuals enjoy 100% tax exemption on Puerto Rico-sourced dividends, interest, and certain capital gains. To qualify, investors must become Puerto Rican residents.

Puerto Rico Opportunity Zone Investing.

Puerto Rico: An Opportunity Zone with tremendous potential. The IRS recently announced some changes to the Opportunity Zone regulations. As a result, almost the entire territory of Puerto Rico is now designated as an Opportunity Zone. An Opportunity Zone is an economically-distressed community that has been nominated for the designation by the state governor and certified by the Secretary of the U.S. Treasury. The goal is to incentivize much-needed investments into housing, small businesses, and infrastructure in economically-depressed areas. As a result, almost the entire territory of Puerto Rico is now designated as an Opportunity Zone.

Real Estate prices.

“At the end of last year, Puerto Rico suffered a devastating hurricane, which some estimates say killed as many as 5,000, and left the island without power for weeks.”

“Now, Americans are moving in on the island, capitalizing on the downward trend in real estate prices due to the storm. After Hurricane Maria hit the island, homes saw their values decrease by an average 15%, according to a new study from Point2 Homes.”

The study shows that Americans’ interest in the island’s real estate is on the rise and online searches for homes for sale even peaked during the storm’s impact. In fact, the survey conducted by Point2 Homes shows potential U.S. homebuyers are looking to purchase homes on the island within a year.

Hurricane Maria caused an estimated $90 billion in damages, with housing receiving the largest portion of the destruction at $37 billion. More than 470,000 properties were hit by the storm, of which about 20% were completely destroyed.

But while home prices dropped 15% after the storm hit, it is hardly a new phenomenon on the island and was only exaggerated by the storm. Even before the storm hit, about 16,000 residents were facing foreclosures.

And due to the island’s ongoing 10-year economic recession, median home prices had already fallen since the housing bubble burst in 2008. Currently, home prices stand at about half of what they were before the recession.

Bottom of Form

Over the past eight years, the median home sales price dropped 48% from $224,000 in 2010 to $116,750 in 2018. Right before Hurricane Maria hit the island, home prices were about 15% higher at a median $136,500.

Now, as home prices continue to fall, Americans are growing more interested in buying real estate on the island. And while some of the traffic could be less serious lookers or those who are just curious, a majority of Americans said they are seriously interested in buying a home in Puerto Rico.

A survey by Point2 Homes of 435 of its site’s visitors showed 60% of views said they were seriously interested in buying property in Puerto Rico. Another 34% answered they were just trying to get a feel for the prices, and 6% said they’re looking to sell their home on the island.

As far as time frame, those looking to buy within the next six months saw the highest percentage of lookers at 29%, followed by 28% of those looking to buy a home within the next seven to 12 months. Another 16% said they will be buying in the next one to two years, 9% said they will buy in two years or more and 18% answered that they don’t know their timeframe

Climate and natural beauty.

Located in the heart of the Caribbean, Tropical temperatures averting 80 to 85 degrees all year-round.

Puerto Rico has beautiful beaches. Around the island, you will find white sand and clear waters. On the island, most popular west coast adventures involve grabbing a board and paddling out into the ocean. Surfers coverage along the west coast of the island in Rincon. Boasts one of the island’s most unique attractions in Las Salinas, located in Cabo Rojo. This area is home to the salt flats, part of the National Wildlife Refuge. Get a panoramic view of the area, and maybe even spot some tropical birds. While the west coast is a mecca for surfers and sunbathers alike, the west coast offers more than its fair share of incredible beaches as well.

Puerto Rico boasts one of the most changeless climates in the world, with tropical temperatures averaging a balmy 80 to 85 degrees all-year-round. Then, of course, you’ve got the beaches. The tiny island of Puerto Rico is rimmed by more than 270 miles of glittering coastline with white sands, surf-worthy waves, and colorful coral reefs.

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