How to get a mortgage or home loan for investment property in Puerto Rico from the US

Question

I've been a mortgage broker twice as long as I've been a surfer but I think the professional experience might truly be about to pay off! lol

I'm originally from South Florida and buying an investment property near surf in Puerto Rico has been on my radar for a while, my father and I visited in 2018 and at the time were browsing multi family properties. The problem was that mortgage financing wasn't readily available and so the upfront capital investment was just too intensive.

By happenstance the lender I work for treats the territory like a mainland loan (think Hawaii) and almost all conventional programs are available and even priced accordingly. The main hiccup and hinderance for obtaining a mortgage for an investment property in PR is that all files are manually underwritten and the title process can be slightly more intensive.

Now that we've finally finished our casita in North Baja Mexico we're considering expanding our portfolio somewhere warmer in the coming months or years..

We would utilize our investment property in Puerto Rico as a second home or STR. We couldn't quite move there full time in the near term, but a realistic gameplay would be at least 6 months per year within the next decade to take advantage of the tax incentives. Our wishlist includes a view or access to the ocean for surfing and at least a nearby marina or launch for a boat, although our initial target area is in Rincon.

There are definitely some challenges and concerns, like the infrastructure, but I have another friend that relocated there full time post the most recent hurricane and has been rebuilding a lot of the power grid. Being in Mexico the past several years has prepared us for almost any adventure.

Unlike Mexico, where foreign loans and conventional mortgages are non-existent, the mortgage rates and programs for buying a home in Puerto Rico from the US are not only available but actually attractive. If it was a primary residence, there are conventional low LTV's, and as a popular second home destination,10-15% down payments for a SFR is common for well qualified buyers. Investment properties typically require at least 15-25% down but at standard rates.

My fiancé is an interior designer and her friend from Las Vegas just bought an STR they hired her to furnish this summer. It's more of a luxury property but supposedly they can perform really well as full time rentals. We'll let you know how our search goes! Any HOT BNB areas we should check out?

Would you invest in a second home or STR in Puerto Rico if you could get a US based mortgage or home loan?

DM me for any insights or details, yo hablo español.

Kathryn Morea · Answer

Hi Joseph, thank you for posting your response. I have lived in Puerto Rico since 2020 and I have invested in fix & flips, bed & breakfasts (2), a hotel, a triplex, a villa, a commercial complex and a large land development.   And in all of those, there was no bank involved in a single one.  There was 1 commercial lender involved in the hotel and I would never ever use them again.  Ever.  Next level predatory.  There was a short time in 2022 that DSCR loans were available to investors in PR.  And there are some commercial lenders for larger seasoned projects.  But there is virtually nothing for a fix and flip type borrower or a BRRR method borrower.

So if you are ligit a lender for that product, especially for the sub 100K properties, which post private lenders don't even want to bother with - I would love to connect. We have lots of hungry investors wanting to do deals here but capital is an issue.  And there are good reasons.  Cost of securing the collateral is much more expensive here and foreclosures can be troublesome.  There are only 3 major banks on the island.  There are logistical reasons whey other lenders aren't here including the recording process, Puerto Rico's bond rating and lack of MLS / Comps.   Standard homeowner type mortgages are common.  Single person fix and flip investor loans are not so common.

What sort of loan products do you have available in Puerto Rico?  Thanks!

Joseph Chiofalo · Answer

Hi AJ,

Great info on sharing the lack of accessibility to traditional financing in Puerto Rico.  Its such an untapped market.  Many lenders do not offer conventional / government loan terms in Puerto Rico to borrowers. Here at Nationwide Mortgage, we offer a full range of products to service clients in that market.  Whether your looking to purchase or refinance a property our team will have a solution.

Let me know if I can help in anyway.

JC

Maria Rusinque · Answer

Apologies, just for clarification as I couldn’t find the information on the website… Nationwide Morgtage offers loans in Puerto Rico?

Kathryn Morea · Answer

I would mention here that a typical condo or single family does not qualify for the Act 60 TOURISM tax credit (which gives you up to 40% back)  - the project needs to meet certain qualifications as a guest house, hotel, villas or bed & breakfast - it can be as little as 3 rooms.

Would I apply for TOURISM tax credits on a 3 room bed & breakfast?  No way - it's too much work.  Buy a property worth at least a million, better a few million, to make it worthwhile.  The red tape is extensive. Not worth it for a sub million dollar property.  And you do not need to reside in PR to take advantage of the TOURISM tax credits.  If the project qualifies, there are some additional tax breaks on the income and sales tax. It is a steep hill and takes a couple years.

AJ Wong · Answer

Thanks Kathryn,

You can probably help us find a good deal!? We'll be visiting later this summer.. JC and I have worked together for years and recently reconnected, he priced some conventional loan scenarios for me (and my dad) today. For conventional loan amounts on primary purchases with 5-10% down and even FHA eligibility, but I'd imagine the properties that qualify are more specific?

For second homes and investment properties he showed jumbo loan amounts up to $1M or by exception. The sweet spot is 25% down but products were showing with 10-20%.

Cash out refinances are also an option but no DSCR or alt products for PR at the moment.The rates were actually very comparable to mainland.

Trying to get some more clarity on the appraisal, title, insurance and closing requirements. Any good title/insurance company suggestions?

Joseph Chiofalo · Answer

Hi Kathryn,

Thanks for sharing this info-  I believe we can be a solution for you and your clients.  On investor products we would be maxed at 75% depending on the documentation type / fico score for the borrower.

We offer a full range of products for conventional, government (FHA) jumbo.

Feel free to call or email me direct w/ any questions.

David Corujo · Answer

I'm looking for a 💯 % mortgage loan to close asap . Contracts already in my  hands .putting down 150k on contract for purchase of 1.5 million .

Joseph Chiofalo · Answer

@Maria Rusinque

Hi Maria,

Yes, Nationwide Mortgage lends in Puerto Rico.

Do you have a property in mind?

AJ Wong · Answer

Hi Kathryn, send me a DM we have a PR mortgage flyer for you to share with PR clients and investors :)

Aaron T. · Answer

Do you guys REFI on the island? what is the current rates for island loans?

How to get a mortgage or home loan for investment property in Puerto Rico from the US

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