Why Puerto Rican Baby Boomers are Coming Back to Puerto Rico?

As a Mortgage Loan Originator, I assist all interested prospect buyers who live in the mainland. Much of these buyers are Puerto Ricans who were raised there, they left the island many years ago, seeking for better jobs and looking for a better opportunity for professional development and quality life. Nowadays, most of them want to relocate and retire in the Island of Enchantment.

Photo: Puerto Ricans Boarding an Airplane to New York in 1950

The purchasing of a home in Puerto Rico is the ideal choice for those Baby Boomers who are downsizing and would like to enjoy a tropical paradise climate. For downsizing purposes, life becomes simpler and relaxed, getting from those long hard working years a well- deserved retirement property with peace of mind included.

In Real Estate terminology, downsizing refers in this case to property owners whose children have become independent and this mature generation no longer needs a big house, involving mowing the lawn and minding for future long- term expenditures. Instead, trimming the expenses would become a more rewarding option, which at this point could mean finding a smaller and tailor-made place to live, either a cozier house or an apartment.

Puerto Rico Economy and Politics

Puerto Rico has been through an economic recession period since 2006, regardless of this, there still optimism and hope in a better future for Puerto Rico. Starting 2016, headlines news about the economic crisis and local government struggling with its finances. Puerto Rico’s economy has been in serious problems without bouncing back and the government being unable to stabilize and lead the country to an economic growth. the U.S. Federal Government has decided to aid the island assigning a special task force under the PROMESA Act (Puerto Rico Oversight Management and Economic Stability Act) enacted in 2016 and creating the Puerto Rico Financial Oversight and Management Board to oversee budgets and fiscal plans development for mechanisms and government dispositions.

Puerto Rico Fiscal Oversight Board Photo from: Caribbean Business, Newspaper

 The boards responsibilities include:

• approving the governor's fiscal plan
• approving annual budgets
• enforcing budgets and ordering any necessary spending reductions
• reviewing laws, contracts and regulations for compliance with the fiscal plan

The bill establishes procedures and requirements for Puerto Rico to restructure the debt and designates the board as the representative of the debtor.

“I think that Puerto Rico is in an excellent moment to start buying real estate, prices are down right now and this Oversight Board is going to give trust to investors and people to relocate on the island to invest” “In 5 to 10 years price are going to increase” Mr. Jackson, purchasing in Palmas del Mar, Humacao

Puerto Rico citizens have expressed through different surveys that they are in favor of the board because already they no longer trust the political system. There is optimism in the private sector and in the people because the recent elected governor is pro statehood and he and his staff are the ones who are going to be working hand in hand with the board, giving recommendations that will spur the economic growth.

These have been key factors for the decision-making process of most of the people that are interested to move and retiring in the island. Puerto Rico seems like a good business for most of them thanks to the lower cost of living and the bargain real estate market where they could afford a better property than the one they owe having significantly reduced mortgage payments.

Photo: Former President of the United States, Barack Obama and Former Governor of Puerto Rico, Alejandro García Padilla  having lunch at Kasalta Bakery in San Juan, Puerto Rico.                  

The 2010 Census counted the number of Puerto Ricans living in the United States at 4.6 million, more recent estimates show the Puerto Rican population to be over 5 million, as of 2012. Despite newer trending migration, New York continues to be the home of the largest populations of the Puerto Rican community in the United States, followed by Philadelphia. There are large communities in other places as New Jersey, Connecticut, Pennsylvania, Chicago, Boston, Georgia, Texas and Florida among others.

At present, Puerto Rican Baby boomers who have lived in the U.S. for many years are considering a comeback to the island for opportunity reasons.

“I am selling my house in New Jersey and moving to Puerto Rico as soon I retire in January. Here I pay a lot of property taxes in addition to the mortgage payment” Elba

Most Common Reasons For Relocating to Puerto Rico:

1. Cheap Home Prices and Low Estate Taxes: Puerto Rico Real Estate Market is at record low values since the island has been hit by an economic recession since 2006. Banks have many foreclosure properties with sales signs. Nowadays you can purchase a beachfront apartment with two (2) bedrooms and parking in the metropolitan area of Condado or Isla Verde for under $200,000 and paying a lot less in real estate taxes compared to the mainland. It means that you could enjoy the tropical island weather the whole year at a minimum price compared to home prices in the U.S.
2. Home Sick: This generation is looking forward to being close to their family they had left behind for many years to pursue better job opportunities. Puerto Ricans in the U.S. are buying property near job retirement dates. Some of them first are purchasing properties for vacation purposes having in mind to live in them as their primary residence as soon as they retire.
3. Proximity: Traveling to the island just takes a four (4) hours flight from New York City main airports, making it easier to be in the tropical Caribbean paradise and enjoy its beaches, rivers and lush coastal and rural landscapes.
4. Climate: You could enjoy a warm and sunny weather year-round. You could wear your shorts and flip flops to any place and leave the coats, boots and the snow shovel in the closet.

 Ensenada Honda Beach Culebra, Puerto Rico

5. Tax Exemptions for Entrepreneurs: Puerto Rico has become a tax haven for  individual investors and corporations. The island has enacted the Act 20 and Act 22, laws driven by Goverment efforts to create economic development injecting new money to the system. Puerto Rico is seeking to become the hub of business activity in the Caribbean.

The Act 20 is the Export Services Act, it provides reduced corporate tax rate and tax exemption on dividends to elegible service related business. The Act 22, Individual Investors Act, provides 100% exemption on interest, dividends and certain capital gains to elegible applicants who become bonafide Puerto Rico's residents. Puerto Rico is stimulating the economy with real estate investments, job creations and capital injections. These activities are attracting many people to visit the island with business purposes and once they come, they can see for themselves opportunities, infrastructure in place and the highly- educated workforce adding value to investment business. Worldwide renowned companies such as Lufthansa, Technik, PriceWaterHouse Coopers, Yingke Law Firm from China and Advantage among other investors like Nicholas Prouty and Michael Tannenbaum have established in Puerto Rico capitalizing their assets.

The largest and most important law firm from China has opened an office in Puerto Rico to promote business and investment opportunities. Photo from: Caribbean Business, Newspaper

6. Lending: Federal loan programs are available in Puerto Rico. FHA, VA, Rural Development and Fannie Mae are available. Depending on the occupancy purpose, credit, income and property you could receive up to 100% financing.

For those Puerto Rican Baby Boomers seeking for an investment or planning about moving to Puerto Rico I must say that is no better time than this. I am born and raised islander highly experienced in Lending and Real Estate and kindly I offer my services to assist you in fulfilling your dreams or investments needs. We can assist in finding the right location of interest and financing instruments. If you are ready to live and experience Puerto Rico you may reach me at 787.344.4688 or email: [email protected]

Author Bio:

José Daniel Ruiz is a Mortgage Loan Originator (NMLS 408901) with 15 years of experience in Lending and Real Estate Industry. At present he work for Preferred Mortgage, Corp., a local lender with branches in Caguas and San Juan, PR.

Preferred Mortgage, Corp. NMLS: 160115 OCIF LIC IH 020

Resources: www.prbusinesslink.com, caribbeanbusiness.com and www.wikipedia.com