Purchase Price Vs. Listed Price, Plus Other ?'s

I do not have a crystal ball handy but I will give you my opinion.
I try not to paint a rosy picture because shit happens and I want people to have their eyes open. So in a way I am trying to bring you down to earth.

I believe that PR will have very difficult time the next 3 years and after that things will normalize and start getting better. Why the next 3 years? Because the Federal Board is starting in full swing and it is determined to cut the island budget by 3 - 5 billion. This means a heavy reduction on government jobs and postponement of projects. So during that time more people will leave the island so there will be more deals. Somebody's loses are your gain. Don't feel bad about it, you are providing the guy with money when instead he could have just lost the property to the bank and they have zero heart.

Flooding is a possibility the lower the house is to the ground, if your house is 8 feet above the water it is unlikely. As to raising seas, you will be dead by the time the announced 4 feet rise occurs. Storms and zhunamies are a possibility but don't freak out. If the base of the house does not look like it is been attacked by the sea, likely you will be fine there. Worst case some of your windows may be damaged by a storm. Zunamies (however the correct spelling is) are a possibility that one can not scape if living anywhere close to the sea, so it is not just beach front, they penetrate inland. Distance an height are the only way to defeat against them. However this is not Japan so it is fairly unlikely.

There are a lot of good deals out there. While people may ask for a lot for a property, they will eventually come down on price. You hold the purse which fills their need so you control the price. There is nothing like being in the island and walking around a neighborhood to really find good deals. If you see a home you like and they are out on the porch approach them and ask if they would be interested in selling. If you find something you like get an appraisal, what he is asking for may not be what a bank would be willing to loan for the place. It is likely but not mandatory that a gringo will get a higher initial asking price since they all think that gringos are rich, and in a way they are since Puerto Ricans are poor. A higher price means that the property will be in the market longer, so do not be afraid to come back later and try again.

I have driven thru the island and found several waterfront houses off the beaten path that I could have probably offered 70K for and gotten it. But you are talking about a basic structure that was made 20-40 years ago with none of the modern amenities. Look past a bad or non existing paint job. In a concrete house the main danger is a leaky roof and they always leak, it is a mater of time.

I would be worried about the owner having title of the property, many cases exist where people just took over the land and been there for 70 years but never got a deed. So make sure he has a deed and that it is in his name.

You should rent first then go house hunting this way you got boots on the ground and can take your time finding the right place at the right price.
Not in the island so I can not speak about insurance but expect similar to the states, they are all regulated the same way. Many coastal homes in the US face the same issues except they are made from wood while most are concrete in PR.

Your definition of beach front also matter, do you want a house facing a sandy beach or a house facing the sea.

If it is an investment with the intention of making money. If your goal is to have a place to live and sell later at a reasonable price, then this is a good idea. I recently sold my condominium right on the beach  in Arroyo and did not lose money.   I started by living half on my year in PR and half in New York.  When I decided to move to PR permanently, I looked for a place that best suited my needs.  I could not afford the perfect  place on the beach so I opted for a newly constructed place which is a five-minute walk. 
Despite what you read, there are some great doctors here and there are some good hospitals.  You just have to look for them. 
There is a massive underground 'cash only' economy here.  Much of the income goes unreported to the government.  On the books, it may appear that these families are dirt poor, but handyman-type work is paid in cash.
I am not saying that everything is rosey. I am just saying that it is important that you come here and make your own observations.

The property we just bought was listed at $85,000. We bought it for $75,000.

I saw many properties for sale while driving along the coast. Listed prices are all over the place. I observed  properties of the same size and close to each other having greatly different listed prices.

We chose property away from the beach for two reasons. Hurricane tidal surge and the  view with privacy.

Growing up in southern California we always watched beach houses being damaged by storms. I have never been wealthy enough to afford rebuilding my home.

Privacy is something you can only get on the beach if you have a lot of money. The property we bought has enough land around it to give us privacy and insure that nothing can be built by a neighbor that will block our view of the ocean.

My experience with "waterfront" properties is that the sellers have an unreasonable and inflated view of the price.  There's very little sense of what the market will bear.  One of my favorite properties is on the Lajas/Guanica line.  It looks to be perhaps 100' wide, and oh, maybe 2000' long.  Perfect, if you want to grow spaghetti.  But because it touches the water, the asking price is $3.5 million.  Been on the market for years (and will stay on the market, at that price). 
http://www.point2homes.com/US/Home-For- … 00910.html

Sellers are really odd, or perhaps I've just had the luck to find all of the strange ones.  I've made a 100% cash offer on a listing, only to have the seller back out, and decide not to sell.  You really never know.  Cash is definitely king, and with the right seller, a cash offer can get you a decent (10-15%) discount.  But it is really unpredictable.

I put "waterfront" in quotes because technically you can't own the waterfront -- it's public property, and you can not deny public access.  As far as flooding goes, you do have access to flood insurance -- that's federal insurance, and must be purchased separately from regular homeowner's.  PR experiences surprisingly little hurricane damage.  In the past 20 years, more hurricances make landfall where I am (central Virginia) than in Puerto Rico.  And the homes in PR are usually built to take more of a pounding.

As far as economic projections go, my sense is that the economy will contract as Rey has suggested, probably by as much as 25% over the next few years.  You can also expect to see emigration rates rise, as more people flee the island.  I wouldn't be surprised to see the population fall by 25%.  This means falling real estate prices.  Buying now is probably not the bottom of the market.  Nevertheless, prices have been falling for a decade, so I'd be happy buying now. 

Frogrock is also correct that there is a healthy shadow economy, and many will continue to get by and even do well in an informal, cash economy.  One of the reasons that I (and I suspect many on this forum) am considering a move is that I will have a modest investment income for retirement, so such an economy would work for me.

As for the distant future, an economist would tell you that Puerto Rico needs to pursue it's "comparative advantage" in the market.  That is, what does PR do better than most other places?  It seems to me that there are two such economic sectors.  The first is agriculture -- PR has year-round growing seasons.  However, agriculture requires much land, and few people, so I wouldn't expect much in the way of a re-population of the island.  The second advantage is tourism, and even here, this is not a labor-intensive sector.  So I don't expect any sort of robust economic rebound, nor any significant re-population of the island.  I'm looking for property for my own use -- build a house with gorgeous views, great weather, and largely self-sufficiency in terms of utilities.  The property will also supply me with the ability to grow my own fruits and vegetables, primarily because I grew up on a farm and need to get my hands dirty, but also with an eye towards self-sufficiency.  Land as an investment is not part of the calculation, as I doubt that a local market for land will develop quickly.  At best, the land as an investment would pay off if you sold to another mainlander who waited out the island's fiscal crisis.  But me, I don't intend to buy property that I'm not willing to hold for the next 20 years.

To add to the comments already here, beach front property will require more maintenance as well. Salt water is corrosive, the closer you are to the ocean more maintenance it will requires.
As to prices, we built our main house, our rental property was purchased $15K under asking price. It was on the market for over 6 months. At the begging the seller did not want to lower the price, we stick to our offer and she decided to accept it. But I can tell you cash talks in the island. Banks are very slow to respond and sellers prefer to deal in cash.
Costal areas get hits harder during storms and utilities will prioritize on larger populated areas, so be prepared to wait longer for repairs in costal areas. Consider adding a water tank and generator to your property those in my opinion are a most.
Lastly, I am sure most of us will agree on renting before purchasing. First it will give you an idea of the way island living is without having a permanent investment. Additionally it will allow you time to see what area you want to live at. It's hard to sell a property in the island, reason the good prices out there. Don't expect to see a return value for at least the next 3-5 yrs the island will take that long to recover, in my opinion.

I have to agree with Frogrock, Bkettren, WarnerW, and Adlin20.
Storm surge will cause damages to the house, car, and your land, the salt in the water will also kill your plants. Your tool shed may be torn and your tools scattered for a few miles.

It is best to rent at first to first of all make sure Puerto Rico is for you, find where you want to live and find the perfect home that gets along with your bank account.

Beaches are public, if you are in the wrong place you will have many people passing in front of your property at all times of day or night. You can not control it or fence it. By law it is public space. Check the other houses fences and set yours similar.

I find that being higher provides me a better view of the water, boats,etc. It also provides privacy so I can keep my windows and curtains open. It is ussualy a few degrees cooler when higher up, properties are a little cheaper and you get a bigger lot. You can be at the beach in 5-10 minutes when you want to go in the water. Besides being beachfront means a ground level view of the water, it does not necessarily means you are at a swimming beach or surfing beach. From ground level the view may be rather dull anyway. By being higher up I also don't need to worry about the surge or a zunami. A lot less noice when you live in El Campo and less cars blasting music. You just have to make sure you are not too close to a church.

Rey, your description of property at a higher elevation sounds exactly like what my husband and I want. We'll be in PR around 3 a.m. Sunday! We have been in touch with your friend Carlos and look forward to meeting him. We'll be looking for a rental first. Thank you for your help.

Nanraughley wrote:

Rey, your description of property at a higher elevation sounds exactly like what my husband and I want. We'll be in PR around 3 a.m. Sunday! We have been in touch with your friend Carlos and look forward to meeting him. We'll be looking for a rental first. Thank you for your help.

Hope you have a great trip and not too much rain. I am sure you will find something nice and in your budget.
Don't forget to report back to the forum with all the details of the trip. We are always interested in members experiences.

Thank you all for your input and thoughts!  I will try to remember the different points and respond, and have more questions!  I do notice when looking online at a lot of property all over the island, that houses are notably less expensive than I would see where I live.  Some of them look relatively new, and I wonder if it is that much less to build a home there, or if the prices are just so low, that they are all losing a lot of money?  Eight feet above the water doesn't seem like much but most of the beachfront lots I see are ground level, so I am guessing that some of them may get water during storms? 

Good information about the deed to the property.  I would think in some areas it may be difficult to figure out who the land belongs to?  I don't expect to make money but just hopefully not to lose it all, or a significant amount.  I have experienced a huge loss of money once before on a house sale, and wouldn't hope to repeat that!

I would always expect to have to pay more for beachfront, but as was mentioned, the prices do seem all over the place.  I have seem some in close proximity,  that have markedly different prices, with one being half the size of the other for the same price.  Of course not knowing the area, house, etc, there may be a variety of reasons for this.  But it certainly is noticeable when looking.  And cash is great, but the higher the price of the property, the harder it is to come up with a big bundle of cash!  How about building?  Do you have to pay cash for that too??  Yikes!!!

Privacy near the beach would definitely be harder to accomplish I think.    Also I wonder what is safer?  In an area where there are more people around all the time, or one that is more isolated?  Yes if isolated, maybe less people are around to see your "stuff", but also less people around to notice things too?  If I am by myself, I do have to consider those things!  Also, out in a rural area, I would maybe not feel safe either?  I can be sort of a scaredy-cat!

I do have questions about those of you that are in areas where there is less people and need to be "off grid".  I have seem some land but there are no opportunities for utilities.  So then I assume you would need a well for water, septic system, and a generator and solar for electrical, etc.  And then I assume you can't have tv, etc?  Doubt I could manage that!

Storm surge.....  what sorts of damage generally happens, and how often?  After every storm, or now and then?  Also it was mentioned that salt water will kill plants.  Can you grow fruit trees, and other edibles near the waterfront?  Or is there too much salt water that they won't grow?  That would be disappointing, as I would love to have mangoes, etc!

Thanks for all input!

LOLLLLLL at the being too close to a church comment! It's so true! But this has been my experience as well. I still haven't found a solid rental yet. Prices are all over the place and so far most people are completely unreasonable in what they're asking.

One thing about actually being here while looking for a rental is you discover more so exactly what you want. What I thought I wanted is nothing that I really want.

Mangos are hardy they tend to grow just about anywhere.
Building is more expensive than buying since you need to buy.the land, then build. So two chances of overpaying.
I like to live in the country with other houses far away from mine, more quiet and normally less crime, people tend to raise their kids better. They use the belt!!!! or a good switch. It is still a small town feeling since everyone knows everyone. In the old times the neighbors would beat you then send you home to get another beating by your father.

Not many here are beachfront owners or have been around for many years to experience it, so you may not get many answers about that. Expect furniture to get wet and major appliances if there is a surge that enters the house. That spells mold after that.

Most places you can get water and electricity, you may have to pay for a few electricity poles to bring it to your property or close to the house. If there are houses around you then there is power and more than likely water. Lots of places there is no sewer country side, so you need your own cesspool. My build location is a ways from the road so I will need to pay for 3-4 poles to bring it close to there the house will be build in the lot. It depends where you are putting the house relative to the last electric pole by the road.

If you buy a house it has all of that. Important to get a generator and connect it to the house, outages are common. You can get a gas or propane one. Propane will be cheaper to run.

Yes churches make it a point to make sure everyone can hear their sermon with big speakers. They have a hard time understanding why you would not want to hear it. The worse ones are tre Protestant churches (51 varieties like ice cream). A lot of Protestant life revolves around the church, some go twice daily. But it is very social if you are a church goer and speak the language. There are plenty activities going on.
Most of my family is Protestant so I know what living with them in PR is like. Very devout people, I want to be left alone and they keep insisting on praying for me and that God enters my life. It is cool until you hear it a thousand times.

Our house is off the main roads, we preferred that way for several reasons. We do not have to deal with the trucks with the big speakers at all times, not only the political ones but also the ones selling bread and all kind of goods. Less traffic, after certain time almost all traffic is locals. What translates to been quiet for the most part. Down side, farm animals on the road, specially at night.
We never had a break in or anything missing from our property. We installed cameras and monitor the house remotely. Plus have family and friends that stop by to check the property when we are away.

Unless you live in the cities, expect to have to install a septic tank.

Neighbors are good and bad, if you get to know them, they will be your best security system. On the other hand, they will watch who comes and goes on your place and gossip about it, lol.

Chisme = Gossip
The are busybodies but they mean well, they just have to have something to talk about. If they start  with (Yo no te dije nada pero ....  = I did not tell you anything but ....) you know they are getting ready to gossip.

When they call you "Don ___your name" or your wife "Doña ___ your wife name", you made it, you are part of the community.

It is also common to call you compadre (friend or Godfather) or Comadre (Godmother to your wife) or Primo (cousin) when speaking with you, they are being respectful and familiar at the same time.

Ours neighbors stop by when we are home. We get a run down of who had stopped by our place when we are away!! 

Years ago, we rented a house that happened to be next door to the town Catholic church.   It was fine six days a week, but on Sunday AM they started ringing the church bells - early AM - man it was loud.  No sleeping in on Sundays!

Hi ReyP,
I want to thank you for being so candid.
I want you to know that everything you have said is very similar to what my husband has been telling me.  You said 3 years he said 2-3 years, etc.  I tend to look at things through rosy eyes, so it's great once in a while to get a dose of real down to earth talk.
Thanks again for all your contributions... I just joined and I could not help but notice all the wonderful advice you offer.

Hi Amy,
Thank you for your vote of confidence, I try to get everyone to come down to earth and know what they are getting into. While PR is a great place, it is not perfect and can be a source of frustration.

Welcome to the forum.

Thanks a million ReyP.

Rey, just out of curiousity, what is involved in fixing a leaky roof?  My husband and I have looked at a house we like, but are unsure of the roof.  We don't speak great Spanish, so we don't even know how to get a professional to evaluate it.  Any suggestions?

Ann

You can call a contractor to look at it and give you an extimate for the roof and separetly for anything else the property may need.

Basically it depends on how bad the roof is. You clean it, then clean it with pressure hose, look for cracks and seal them, check inside the house for additional cracks and tell tale rust or mold stains. If minor you paint the roof with a roof sealer, if bad you may need another layer of concrete.
Check for paint coming of the ceiling inside, stains, attempts to cover it up by spot painting an area. Visit house during a rainy day.
There are house inspectors also that you can contract.

Get two or three estimates if you are going to fix it then. For purchase decisions 1 single estimate is fine. But to fix get 2 or 3

This question is likely not easily answered, but is it possible to add a second floor to a concrete house?  I know in the states it is a fairly common practice, but they build wood houses.   I would think adding an additional concrete story would not likely be common?  Not sure if original structure could carry the load of an additional story?  Any thoughts on this?

Most single story houses will have no issue carrying the load of a second story or even a third. It all depends on the number or columns and position of walls on the first floor. In general YES. Consult with an architect to be absolutely sure. Pipes and electrical will likely need to be carried on the outside to reach the second floor and some minor changes to the first floor may be needed. Both options are available, extending the house or making a second house with no access from the first, with stairs on the outside. There are plenty examples in the island.

If you are building a new structure, make sure is built to withstand adding in the future. A lot of people do that in the island, specially thinking on the future for their kids. Now, if you are buying an existing structure, you may want to invest on having an engineer do an inspection to make sure the structure is capable of the additional weight. Not because the house is in concrete assume that it is capable of having a second floor built to it.