I've been interested in Puerto Rico ever since visiting and falling in love with the island and it's people in 2001. I would definitely not consider myself to be any kind of expert (most of my knowledge comes from briefly dating a Puerto Rican woman and researching buying property there with her family, lol. I have never owned property there myself). So take this pros and cons list with a grain of salt, but here goes...
Pros:
1. Beautiful country with 300 miles of beaches, a lovely forested interior with mountains up to 4,000 feet tall, waterfalls, caves, and plenty to do (surfing, kite surfing, snorkeling/scuba diving, boating, fishing, rock climbing, partying, relaxing on the beach).
2. Nice weather. It would be a good job to be a weather forecaster in PR: "For the next 10,000 days it will be sunny with a slight chance of rain, 70-80 degrees, 70% humidity. There may be an occasional hurricane of course, but I'll be on vacation until then".
3. Vibrant culture with good music, great food, friendly people.
4. Lots of interesting history and architecture: Some of the buildings like El Morro and La Fortaleza, San Juan Antiguo etc. go back to the 1500's. If you're into pirates and colonial battles, it's a fascinating place.
5. Tax incentives: Act 22 was passed to encourage high net-worth individuals to move to the island. For those qualifying (resident status is easy to achieve), there are no island or federal taxes on social security income, dividends or capital gains. Pensions, IRAs and wages earned on the island are only taxed 4%. However, you have to become a resident withdraw and rollover your funds from your mainland bank into a Puerto Rican account.
6. Due in part to above tax incentives, demand is rising strongly. In 2021, the # of houses sold was up about 85% YOY (the number fell sharply leading up to and during the pandemic in 2020 then rebounded last year).
6. Anyone can purchase property and have freehold title in their name.
7. Real estate transaction costs are low (similar to US mainland).
8. I like how the economy is not solely dependent on tourism, unlike many tropical destinations. It's not a tiny economy that would fall apart if people suddenly stopped visiting, like most Caribbean islands, Belize or even to some extent Costa Rica. The World Economic Forum classifies PR as a high-income economy and considers it to be the most competitive economy in Latin America. They have economic diversity with manufacturing (primarily pharmaceuticals, textiles, petrochemicals, and electronics), a strong service industry, finance, insurance, real estate and finally tourism (only 7% of GDP). However with this said, see my notes on the economy in the "cons" category below.
9. Easily accessible from mainland US: Only 2.5 hours from Miami or 4 hours from NYC and they have 2 international airports with regular flights.
10. As close as it gets to visiting a different US state without actually being a state: no passport required, US dollar is local currency, familiar restaurants and big-name stores, you can order stuff from Amazon and have it shipped via USPS, cell phone plans work like they do at home, etc.
11. PR is emerging from bankruptcy in 2022, due in large part to billions in stimulus money from Covid relief plus debt forgiveness.
Cons:
1. Puerto Rico has been experiencing a deep economic depression that began in 2006 due to the expiration of a US IRS tax code which gave tax exemptions to US corporations based in PR.
2. The individual tax incentives outlined above in the pros category, which encourage US citizens to retire there, could go away suddenly in a similar manner to the way corporate tax breaks did in 2006, if politicians decide to take them away to boost revenues.
3. PR is known for a highly inefficient local government which accrues a lot of debt relative to its GDP (like A LOT of debt in the hundreds of billions, hence the largest municipal bankruptcy filing in US history in 2017).
4. The population has been declining rapidly for some time (there are now twice as many Puerto Ricans living on the mainland US than there are on the island). Unfortunately many of the educated and wealthy Puerto Ricans are living on the US mainland now. This also contributes to the seemingly uncontrollable debt level (as the population declines the govt. collects less revenue, issues more bonds, etc.).
5. High cost of goods: electricity is more expensive than even Hawaii and most goods are imported so they are very expensive relative to the US mainland.
6. Poverty level is very bad: avg. median income is way lower than anywhere on the mainland and the official poverty rate is 45%, which is over twice that of Mississippi (which is the poorest US state and has a 20% poverty rate).
7. Vacancy rate has been high averaging 13% over the past few years, due to population loss (2020 census showed the population dropping by 12%, exacerbated by hurricane Maria in 2017).
8. Real estate values have mostly gone down since 2005.
9. GDP has mostly been contracting since 2005.
10. Unemployment is high.
11. Hurricanes: PR is susceptible to large hurricanes such as Maria which devastated the island in 2017, causing a portion of the population to leave.
12. Earthquakes: PR is surrounded by complex fault systems. It's stuck between the Caribbean and North American plates as they converge in some places and slide past each other in others. This means there are thousands of small earthquakes there every year, and occasionally large ones that cause damage on the island or tsunami waves.
13. Other than the tax incentives from Act 22 (which only residents qualify for), taxes are quite high. For example, capital gains are taxed at a flat rate of 29% for non-residents. Sales tax is also higher than anywhere on the US mainland.
14. Lots of government red tape and corruption, such as difficult to get construction permits, the political system seems to be broken, etc.
15. Few people speak English. I don't mind it personally because I love to learn and practice Spanish, but for many looking to do business, buy or sell property, move there, etc. it is a deterrent.
16. Despite coming out of bankruptcy, PR still has a very volatile economy. The pension system, bond system, transportation authority and electric authority (both still in bankruptcy) are not in good shape. It's possible that debt will get out of control again quickly.
17. I don't know whether or not PR will become a US state in our lifetime. I wouldn't bet on it either way.