Things you should KNOW before buying a property in Puerto Rico
One of the biggest challenges buyers face when deciding about relocating to Puerto Rico is: where to begin?
As a real estate broker specializing in residential and commercial real estate since 2016, I can tell you that you have come to the right place to find the answer to this question. Lets dive right into it:
STEP 1: Know your finances
You should know that if you plan on securing a loan you will most likely need a pre qualification letter from a local financial institution. Although there are some US branches that operate in Puerto Rico, they most likely will not be able to provide you the same competitive interest rates as some of the local PR branches. My main recommendation would be to call ahead and have a conversation with the Lender of your choice so that you can provide them proof of income and your debt and they can calculate or give you an estimate as to the type of loan that you would qualify for. There are different types of loans here in PR: FHA, Conventional Conforming, Conventional NonConforming, Veteran , Rural, FHA 203K. Each type of loan provides a different set of criteria that need to be followed in order to qualify so an experienced lender will let you know the type of loan you would most likely be approved and give you an idea of what your cash to close would be.
In my experience, many brokers will only show you their listing as long as you can provide them with a prequalification letter. Some options for you to look at are: Banco Popular de Puerto Rico, Oriental Bank, First Bank, Capital Mortgage, Sunwest Mortgage, Cross Country, C/O Lending Lab, Fembi Mortgage, and Moneyhouse. If you want the direct contact to any of these bank, whom I've worked with in the past, feel free to reach out to me via direct message or contact me at [email protected]
STEP 2: Pinpoint your areas of interests
Puerto Rico will fool you into thinking that it is a small island especially if you come from a big state like Texas or California. However, it is a highly dense plot of land that houses 3 Million People amongst many different residential neighborhoods. Furthermore, the topography of Puerto Rico varies tremendously depending on which area you decide to move to. From mountain ranges, to beaches, to cosmopolitan city life there is truly something for everyone but you must have an idea on the type of lifestyle that you want before you begin your search.
Many people gravitate towards the counties of San Juan or Dorado because they have bigger communities of Expats. However there are many more areas to discover. My recommendation would be to come visit Puerto Rico and explore the different areas in all sides of the country. My favorite area in Puerto Rico is the northeast or the west which have proximity to the two airports here as well as the best beaches in all of Puerto Rico.
STEP 3: Decide to have Buyer Representation
This might seem like an obvious choice but surprisingly no having representation as a buyer tends to be pretty common here in Puerto Rico and that is a BIG mistake. As a Buyers Agent, we provide you with much valuable insight as to the neighborhood where you are buying, have access to comparable sales in the area and will guide you through the entire process from beginning to end. From contract revisión, to inspection findings it is essential to have someone by your side to guide you through this process.
The times I have worked with buyers, I have been able to forecast delays or issues with the properties that thankfully have been resolved because I acted quickly to avoid such issues. From faulty inspections to issues with the title of the property, trust me I have seen it all and there is always something that comes up that needs my expertise in one way or another to solve it. Imagine if you only rely on the Listing Broker, whom you will probably not know, to solve all of the issues that could arise with the property. This could end of costing you more money down the road as interest could keep climbing.
STEP 4: Financial Analysis
You have decided to use a broker to represent you as a buyer, but before you commit I would advise for you to interview your broker so that they know how to do a proper financial analysis on the property you are buying. Ask your broker if they know how to calculate the CAP rate on the property (which is essentially the yield on your investment) should you want to have the property as an investment. The brokers answer will immediately let you know if they know what they are talking about. Having a broker that advises you on the type of investment is crucial for you to have a successful investment here in Puerto Rico.
STEP 5: Submitting an Offer
Once you have found the property and you fall in love, its time to make an offer. Submitting an offer on a property is heavily overlooked. They way you present an intelligent offer is having your agent make a thorough analysis of the market and taking a look at the comparable sales dating up to a year prior to your offer.
The offer is only as good as THE WAY you present your offer. There are many different ways to present an offer so that it stands out above the rest and with my guidance I can help you craft an irresistible offer that the seller can't deny.
STEP 6: The Waiting Game
Its important to recognize that there will be a lot of behind the scenes stuff happening so be patient and be prepared to submit any and all information your loan processor requires: from picture IDs to bank statements to letters explaining any transaction they might inquire about. The bank needs to make sure you are a serious buyer and will go in depth to analyze and revise your financials to make sure you are good to go. During this process the bank will submit a request for appraisal, title study and checklists while you conduct an inspection. All in all you should expect a period from 30 to 45 days to close.
Having me by your side I will be able to fast track some documents to speed up the process but sometimes some issues that could arise are out of my control. I will let you know where we stand at all times and what is being done to correct any obstacles should they arise.
STEP 7: Closing
The most important day! This is usually a stress free day when all the parties have done their part. However, there could be last minute changes to your mortgage structure that you need to be advised on or worst case scenario the seller is LATE to the closing: which could result in a tense atmosphere. It's not the first time that this has happened to me, but it is all about securing that signing of the deed so that you can become the legal owner of the property. In my experience, closings run smooth and I rarely have encountered issues but that is because I am on top of all matters pertaining the purchase of your future home and definitely work so that you are one happy homeowner in PUERTO RICO!
NOW YOU CAN SAY....
Article Written By:
Ricardo E. Bertrán Astor
REALTOR, PSA, CCIM student
787-405-9915