In my previous posts, I’ve mentioned that I have $50K in Emergency Funds. This includes the money I had set aside for the taxes bill in April of 2018.
I wanted to use the money in case the US Debt Ceiling Limited didn’t get lifted. It turned out, that it was attached to the hurricane relief fund. And nobody voted “No” to helping hurricane victims, right? That would be a politician lifestyles and future career sabotage.
Well, what now? That the stock market didn’t drop, not only it didn’t drop, but it’s at the highest price once more time.
I want to buy a property in Puerto Rico or in the US Virgin Islands. But I’m leaning toward Puerto Rico for the following reasons:
- Puerto Rico is going through some hardship. It owes its creditors $72B, and the US territory can’t declare bankruptcy because it’s not a US State. So, it can’t receive the same type of aids from the US Federal Government. That results in decrease public helps, public services, the property values has gone down down down. And people mortgages are in upside down. So, skilled workers left to go to the US mainland. I’d like to take advantage of the low property values right now.
- Puerto Rico is nice! It’s an island with a river. It has the rain forest, and it has the best snorkeling spots. This combination is a great winter destination. That is why we’ve been vacationing in Puerto Rico 3 times. I think I can spot one property for less than $100K less than 1 mile from the beach.
- River means fresh water, means life. Compare to St. Thomas or St. John, they would have to gather the water from the rain, sort it somehow. The locals were telling me that eventhough they have the water plants, but the people couldn’t trust it, as they use the water to water the plants, and the plants die over time! Yikes!!
- Puerto Rico is still the US. Yes There are talks of Puerto Rico voted to be independence, but I think there is a bigger chance that it’d become the US 51th State.
- Economic Recovery is Inevitable and Eventual- Yes, I am optimistic that Puerto Rico will recover from the Economic slump. It’s the big brother Island among the Island in the Caribean – all the fruits, poultry, and other supplies for the small island that YOU and I are paying high price each year to vacate are coming from Puerto Rico. So, some smart people will scoop up these cheap houses and rent to some suckers and you and I. LOL 🙂
I’ll think of more reasons to invest and update this post. LOL 🙂 Now comes the truths: The cons of owning a Puerto Rico Property:
- Taxes – I did some research on taxes. All the internet posts are inconclusive, most of them are pretty discouraging. Sales taxes are at 12%. Property taxes for those who live on the island is $0 for property values <$150K. No mention of people like me who only wants to live there 3 months out of a year.
- Nobody knows when the recovery happens.
- Manage a property that is 2 flights away.
- Language barrier – neither Mr.W nor I speak Spanish.
- I could use $50K to rent 100 months in Puerto Rico or 8.3 years worth of rent at $500/mo. And not having to worry about the upkeep. With $50K if I put in a dividend portfiolio, I’d earn another 29 months. So it’s about 10 years worth of rents.
So, that takes me to What TYPES of Property should I buy?
Single family house, apartment (on a 2-5 units big house), Condo (from a big building), or Townhouse?
- I don’t like paying HOA – home owner associate fee – some HOA actually uses your money wisely to update the roof, clean up the yard, plant flowers, etc. Stuff that ideally would improve your property values and keep your investment “safe”.
- I don’t like being flooded. Or living in fear that another hurricane would blow off the roof, or I’d have to replace all the furniture because the house got flood, or collapse.
- Ideally, I like to own the land, the ground the house is sit on.
- Close proximity to the beach – this is vital, as if I want to rent or live in Puerto Rico fulltime, I don’t want to get stuck with nothing to do. I’m sure renters also wants beach access.
- Prefer in San Juan or Old San Juan – I spoke to my taxi driver, he’s a young 20s, when asking about living 45 mins drive from San Juan and he shakes his head, as if anything other than San Juan is a plague. Well, some American Expats might disagree with him, but I tend to agree with him. Living in San Juan, as a retiree, you’d have access to the hospital, better school (international school where they teach all the subjects in English). Frankly, I just want great access to grocery stores and amenities. I could always take a van camper trips, island hoping and such if I want seclusive. But Heck! you’re on the freaking island! how seclusive you want to be?? haha!!
With my price range of <$100,000, I don’t think I can get a house near the beach and not having to worry about flooding and such. I’m okay with a condos and suck up to pay condo fee.
Remember, I haven’t really buckle down on my search yet. I’m keeping my options open. But for now, I need to write this post so I can have something to go back when waging my option.
Otherwise, it’s still way cool to keep $50K in CASH. Take a vacation and spend $3K/2 people a year, not a problem. Mr.W is not too fond of the idea, but I think we can make this work once we call it off. Opportunities are everywhere, it’d just whether you want to seize the moment or not. The power is always in your hands.
Factors that has been affecting Effort to Relief Hurricane Damage and Puerto Rico Economic Growth: The Jones’s Act.
The Jones Act is a shipping law which, briefly, mandates that any shipping of people or cargo between two U.S. ports must be done with an American ship to avoid tax and tariff penalties. It was passed shortly after World War I to help sustain the American shipbuilding industry after devastating losses in the war
**My thing is this act goes away, maybe a few hundreds or thousand of US small business will go away. The biggest benefactors: CHINESE. This would probably not helping Puerto in the longterm as some might have thought.
Here is a super angry post of how Puerto Rico feels. Maybe this would help Puerto Rico become a true State.