Vacation Rental Market in Puerto Rico? Still recovering or what??

[Rebecca Cramer]

I am looking at buying real estate in Puerto Rico and renting it out on Airbnb. I looked at other airbnb rentals and even the superhosts have calendars that are WIDE OPEN! Like a few sparse weekend and weeks but mostly NOT BOOKED! Im wondering if its a good investment because not only can you only ask $65-$125/night (vs my rental in Ocean City, Maryland when I can get up to $700/night) but it seems no one is renting down there. Is this just because of the hurricane and people aren't going there as much or is Airbnb not big in Puerto Rico or is this just the short term rental situation in Puerto Rico period? 

I have heard of the great tax benefits for Puerto Rico so I wanted to take advantage..and if anyone knows those advantages and wants to break that down for a short term rentals business through airbnb that would be great too! Thanks everyone!

[Naomi Santiago]

Hello Rebecca,

I decide to register and open an account on this website just for the sole purpose of replying to your inquiry. It seems that many have replied with erroneous and misleading information most likely obtained from the intense mass media coverage Puerto Rico has received after the two hurricanes.  As everyone knows, information obtained over mass media always needs to go thru a filter in order to obtain objective facts.  

I'll start by letting you know that I'm a Real State Broker born and raised in Puerto Rico. I'm the owner of a Real Estate Company that specialises in Property Management of short term/vacation rental properties. Before this I have about 15 years of experience in the Hotel and Tourism industry of Puerto Rico. So you see I have some knowledge to share regarding this particular subject.

In order to understand the investment possibilities of and income property in Puerto Rico you not only need to understand the target market but PR's unique advantages within Tourism. 

-Most of the Tourism in PR comes from the US. A big part of that from the east cost. That means that whenever the east coast is cold, Puerto Rico is packed with tourist. 

- PR is also a big destination for cruise ship travelers. We are not only a stop for multiple cruise ship companies but also serve as a start port or 1st port (port where the cruise ships board their tourist /basically where the trip starts and ends). This means that many tourists book several nights before and/our after their cruise to take advantage of already being in the island for their cruise.

-Puerto Rico tends to be very attractive for travelers due to several facts that distinguish us from similar vacation spots near by:

1) It is a completely different country from the US with unique cultural differences ranging from food, music, language, history, customs, etc. but still having the many advantages of never actually leaving the US / so you get the best of both worlds (experiencing a foreign country without actually taking the risks of leaving a US territory).

2)US currency is used, so no need to go thru the hassle of money exchange and conversion headaches.
3) No visa or passport needed to travel

4)You can find people that speak english in most areas of the island so no big issues with translation.
5) You can also find some familiar and popular chain stores if any last minute items are needed.

Now one of the most important facts to take into account is how the hotel industry works. Basically, rental properties are so attractive to travelers because the hotels are so expensive year round. Compared to other countries/cities, the hotels in PR are extremely expensive specially taking in to account "price vs. quality" factor. It is usually the case that compared with other countries you can get much higher quality of hotels for less prices than you can find in PR. That is why people who usually stay in hotels while traveling often decide to book a rental property when visiting us.

You should know that the most popular place to visit and stay in PR is San Juan and Rincon is about 2.5 hours from San Juan and almost 3 hours from the main Airport. This means that although Rincon is a very popular area for tourist and is often very lucrative for short term rental properties the target market is very different as it is appealing to certain types of tourists.

Now regarding the tax breaks you mentioned, the specific laws are Law 22 & 20. As a way of promoting economic development there are extreme tax breaks set for US investors and new business opened or moved to the island. Bear in mind that these incentives where not a result of the hurricane as they where available several years prior and are exclusively for foreign investment and not available for local investors. I've attached some links that might help answer your questions.

http://puertoricotaxincentives.com/?gclid=CjwKCAjwvbLkBRBbEiwAChbckQ6X0f3DmM2cE0myoc2mRfplr3-SZ0_F7NTGTISyK3b0JAPfzJ4VoRoCLyoQAvD_BwE

https://www.prtourism.com/dnn/Doing-Business/Planning-and-Development/Project-Categories

https://www.prtourism.com/dnn/Roomtax

https://www.prtourism.com/dnn/Doing-Business/Incentives

Now, regarding Puerto Rico's Politics, I would like to add some information directly focused on correcting an erroneous comment posted by a previous person. The status of Puerto Rico and whether or not it becomes a state is entirely up to the US Congress, as it is very clearly stated on our constitution. The fact that there have been multiple referendums  done in the island without reaching a conclusive decision on PR's status is largely swayed by the fact that the US Congress has never legitimized a referendum nor has ever shown any indication of supporting a change in the status quo. Adding PR as a state would mean many financial disadvantages to the US as opposed to the current "limbo status" of "belong to the US but not part of it". Frankly, it is my personal opinion that the status of the island as a US territory and not a state will not be changing any time soon.

Let me just end this ridiculously long message with a note. Even though Puerto Rico suffered one of the worst natural disasters of our time most of the island has slowly recovered from the damage. An contrary to popular believe the tourism industry has never stalled even right after the hurricanes. The fact that your specific search for occupancy on AirBnB for the Rincon area was lacking, could be attributed to many reasons other that it not been a popular and lucrative place for income properties. It could have simply been that the search might have been done during our slow season of the year, or any other number of reasons. To get more conclusive information consider doing a deeper research maybe focused on statistics and using tools like (Airdna).

FYI... In terms of the current market for real state, this is totally a buyers market. The vast inventory of properties has brought many properties to discounted prices never even seen before, so the possibility of buying an amazing property for a fraction of the original price is very high.

HOPE THIS HELPS YOU. GOOD LUCK! :)