Puerto Rican Island Retreat / 2nd Home

[Lynne Hart]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $167,000
Cash invested: $80,000

This property is part time home and part time short term rentals and is in Puerto Rico (the state field doesn't allow for PR even though its a US Territory). Bought right after hurricane maria, and started to clean up after a couple who could no longer care for the property left. We bought 2 more acres next door when we heard developments may be coming to the area, to secure our tranquility.

What made you interested in investing in this type of deal?

I've been visiting Puerto Rico for decades and love it. I had a goal of having a home in the Caribbean by the time I turned 50, and achieved it at 48! Every property I have is a cash cow in one way or another.

How did you find this deal and how did you negotiate it?

Networking and relationships. It was a FSBO. Negotiated through telephone calls and with a mortgage broker. Yes, the mortgage broker wrote the one page, double spaced, contract that included 2 languages with which I bought this house. I then used her format to write a contract to buy the neighboring 2 acres a year later.

How did you finance this deal?

A conventional loan from a PR lender for the purchase. Cash for the land and improvements.

How did you add value to the deal?

We had one acre of land cleaned and cleared, added a fence around it with an elecric car gate, converted the lower level into a King Suite with kitchenette, french doors and a patio, painted, changed some vanities, added an outdoor kitchen to the gazebo, with some terra cotta tile, added solar power and internet - and so much more!

What was the outcome?

This home is now a vacation rental that can be rented as the whole home, sleeping 8, or more if you do air mattresses, or each floor is indpendantly rentable on its own. I live here part time when in Puerto Rico.

Lessons learned? Challenges?

Buying in PR is not for the faint of heart, and only for people that truly love the island and its culture. Anything you may normally expect to be the case in a real estate transaction can not be expected here. Everything is relationship based, and I wouldn't have been able to do this without very good local connections and a life partner who is a general contractor, fluent in spanish.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

I did not. I do have a loan officer I can recommend and various real estate agents, most of which cater to their own listings and do not work with buyers outside of their own listings.