Basic info about CRIM, the property tax collecting agency in Puerto Rico

Basic info about CRIM, the property tax collecting agency in Puerto Rico.

Puerto Rico is a beautiful country with a rich cultural heritage and a thriving real estate market. However, owning property in Puerto Rico comes with its own unique set of challenges, including the need to pay property taxes twice a year to CRIM, the agency responsible for collecting property taxes for the municipalities.

CRIM, which stands for "Centro de Racecaudacion de Ingresos Municipales," translates to the Center for Municipal Revenue Collection Center in English. Property owners in Puerto Rico are required to pay their property tax payments in July and January each year.

When buying or selling property in Puerto Rico, it is crucial to register the deed at the Registrar's Office and file a change of ownership form with CRIM. These two agencies are both part of the government but operate independently from each other. This means that they don't always communicate, unlike in many US states where the deed is filed at the same location where properties are assessed, and taxes are collected. Therefore, it is important to ensure that these agencies are notified of any changes in ownership by the notary handling the closing process.

Despite being a government agency, CRIM is not as proactive as one might expect. While it is responsible for property tax collection, its focus is on collecting revenue from San Juan or federal grants. As a result, most properties in Puerto Rico have not been assessed in over 50 years, making property taxes very low compared to what owners are used to in other parts of the world. Additionally, there are no separate taxes for fire departments, police, or schools, as all of the budgeting for these services comes out of San Juan, rather than the municipalities.

However, property owners are still responsible for notifying CRIM of any changes to their property that could increase its value. For example, if you add an extension to your existing building, install a pool or tennis court, or make any other capital improvements, you need to notify CRIM upon completion. Although it may take years for an appraiser to visit and reassess the property, the property owner's responsibility is to notify CRIM of any changes. Failure to do so can result in fines if CRIM catches the improvement without prior notification.

In summary, owning property in Puerto Rico comes with the responsibility of paying property taxes twice a year to CRIM and notifying them of any changes that may increase the property's value. While CRIM may not be as proactive as some may expect, it is still important to ensure that all necessary steps are taken to comply with the regulations. By doing so, property owners can enjoy the beauty and richness of their piece of paradise.

Tips for Driving in Puerto Rico

We came across a post on the PuertoRicoDayTrips website the other day, and can’t help but share the driving tips they gave for life in Puerto Rico. Defensive driving is always prudent, regardless in which country you find yourself. These tips fit right into that category:

Some examples of the typical bad driving habits you need to watch out for include.

• Most people don’t use blinkers/turn signals when changing lanes. They just do it … quickly!

• Even if someone’s turn signal is flashing, don’t necessarily believe it.

• We have a "no passing on the right" rule, but people will pass in any lane (including using the shoulder as a passing lane).

• We also have "keep right except to pass" and "left lane is the fast lane" rules. But people will drive slowly or very fast in any lane.

• Motorcyclists make their lane in between lanes by riding on the line. Be careful changing lanes.

• People make U-turns when they have a red light all the time.

• People push the yellow light and end up running the red lights! Be extra careful at intersections. Do not jump the green light until you know the other traffic is stopped.

• Be CAREFUL early in the morning. It seems that if no is using the intersection, people don’t bother stopping or waiting at red lights.

• Be very careful around curves on small mountain roads or on small roads that don’t have a lot of traffic. Local drivers who know the curves take their lane in the middle! Go slowly and toot your horn before going around a narrow curve in the mountains, and keep a driver-side window cracked so you can hear others do the same.

• The police drive around all the time with their blue lights on, so do not panic or pull over unless they turn on the siren.

• Often, people will cut you off and even block a lane if they need to get into traffic. They do not wait for an opening.

• People will stop suddenly and backup if they missed a turn or exit.

• Don’t assume which direction people are going by the lane they are in. If they are in the wrong lane, they will turn from the lane the are in. You’ll see people turn left from the right-most lane, and other people turn right from the left-most lane.

What would you add to their list?

Is it smart to buy a house in Puerto Rico?

Is it smart to buy a house in Puerto Rico?

Puerto Rico is a beautiful island in the Caribbean that has long been a popular destination for tourists seeking sun, sand, and sea. With its warm weather, gorgeous beaches, and rich culture, it's no wonder that many people dream of owning a home in Puerto Rico. However, is buying a house in Puerto Rico a smart investment? We will explore the pros and cons of buying a house in Puerto Rico to help you make an informed decision.

Pros of buying a house in Puerto Rico:

• Lower cost of living

Compared to many other U.S. states, the cost of living in Puerto Rico is low. This can make buying a house more affordable, especially if you are on a tight budget. Additionally, property taxes in Puerto Rico are significantly lower than in most U.S. states.

• Tax benefits

One of the biggest advantages of buying a house in Puerto Rico is the tax benefits. The island is a U.S. territory, which means that Puerto Rican residents are subject to U.S. federal income tax. However, there are several tax incentives available to people who move to Puerto Rico, including Act 20, Act 22 and Act 60. These incentives can reduce your taxes significantly, making it a smart financial move for many investors.

• Beautiful weather and beaches

Puerto Rico is known for its beautiful weather and beaches. If you're looking for a place to retire or escape the cold winters up north, Puerto Rico might be the perfect destination for you. The island enjoys warm weather year-round and has some of the most beautiful beaches in the world.

• Cultural richness

Puerto Rico is rich in history and culture, with a unique blend of Spanish, African, and indigenous influences. The island's vibrant music, art, and food scene make it a fascinating place to explore and experience. Additionally, the island has many festivals and events throughout the year, celebrating everything from music and food to the arts and culture.

Cons of buying a house in Puerto Rico:

• Natural disasters

Puerto Rico is located in a hurricane zone and is prone to other natural disasters such as earthquakes. Hurricane Maria in 2017 was the most recent hurricane to cause problems throughout the archipelago. While the island is in the process of rebuilding and improving its infrastructure, natural disasters remain a potential risk for homeowners. Fortunately, with every storm, we learn what changes need to be made to better prepare ourselves for future storms. For this reason most homes now have generators, cisterns, and concrete structures.

• Property values

The real estate market in Puerto Rico can be volatile, with property values fluctuating significantly in recent years. While some areas have seen strong growth, like Dorado, San Juan, Palmas, and Rincon, other areas have remained flat.

• Infrastructure challenges

Puerto Rico has struggled with infrastructure challenges, particularly with its electrical grid and water supply. Many areas of the island experienced long power outages following Hurricane Maria, and the water supply can be unreliable in some areas. While the government is working to improve these issues, they remain a concern for homeowners. Creating a living space that is self-reliant on water and electricity has become a popular amenity.

Conclusion:

So, is it smart to buy a house in Puerto Rico? As with any investment, there are pros and cons to consider. Puerto Rico offers many advantages to homeowners, including a lower cost of living, tax benefits, beautiful weather and beaches, and a rich culture. However, there are also potential challenges to be aware of, such as natural disasters, property values, and infrastructure challenges. If you're considering buying a house in Puerto Rico, it's important to do your research and consider each of these factors with the particular property and town that interests you most.

If you are interested in shopping properties in Puerto Rico, Paraiso Realty has a gallery of properties to consider. Click on the image on the below left to see our Residential and Commercial Options. the image on the right will take you to our Land options. We’ll gladly answer any questions you may have about either.

CLICK HERE TO SEE AVAILABLE RESIDENTIAL & COMMERCIAL LISTINGS

CLICK HERE TO SEE AVAILABLE LAND LISTINGS

Puerto Rico to hold hearings on short-term rentals, with focus on Zoning and Taxation

Starting February 1, there will be hearings regarding short-term rentals in Puerto Rico, and certain companies like Airbnb are already sending up warning flags about any radical changes. There is a general feeling that short term rentals are more lucrative for landlords, thus creating a shortage of long term rentals. One focus of the hearings will be whether short term rentals should be allowed in residential zoned neighborhoods. As reported in El Nuevo Dia this past week, Airbnb states that if Airbnb is outlawed in those areas, it will be detrimental to the economy of Puerto Rico. Here is a link to the article, which is in Spanish:

https://www.elnuevodia.com/negocios/turismo/notas/airbnb-advierte-que-desaparecerian-miles-de-alquileres-si-limitan-su-operacion-en-zonas-residenciales

Those that follow Puerto Rican politics think that the end result of these hearings is that homeowners will be allowed to rent out their residential properties as short-term rentals for 30% of the year. If they rent out for more than that percentage, they will then be considered commercial entities. Classifying the property a commercial entity opens new tax revenue for municipalities and the PR government, which ultimately is what the Puerto Rican politicians are most focused on. As to what this means from a zoning change basis, no one seems to know. The professionals we have spoken with think these hearings have more to do with reviewing current taxation and collection procedures.

Stay tuned.

How are interest rate hikes effecting the Puerto Rico Real Estate Market?

There is an interesting Opinion piece in today’s El Vocero newspaper about the current market cycle of real estate in Puerto Rico and the Fed’s interest rate hikes. Will the lack of new construction in Puerto Rico combined with other financial incentives mean we jump quickly from the contraction phase to the recovery phase? What is your opinion?

To read the Opinion Piece in Spanish, click here: EL VOCERO

Here is an English translation of the piece:

The recent rise of the Federal Reserve of half a point in interest rates, represents an increase in the mortgage interest rate that brought it from 7.75% to 8.5%. Similarly, the Federal Reserve also announced that further interest rate hikes could emerge in 2023, depending on economic conditions.

To contextualize this phenomenon, it will only be necessary to understand that the local real estate market is adjusting jointly to the stabilization of the economy. That is the response of the dimension of real estate within an integrated economy, which the Federal Reserve wants to avoid its recession after the inflation that the pandemic produced.

This phenomenon is tied to the well-known real estate cycle (Real Estate Market Cycle) which guides the behavior of the property purchase and sale market. This cycle is made up of four stages, namely: expansion, contraction, recession and recovery.

As we all know, at the moment there is little inventory of properties, vis-a-vis the demand of buyers in a scenario where the construction of new projects is limited.

In this way we identify that we are in the contraction stage. How does rising mortgage interest impact the real estate cycle? The answer to this is the essence of the transformation or advancement of the cycle, to oscillate from the contraction in which we find ourselves towards the recovery that we all expect.

To better understand the above, in practical terms in the contraction we see the limited inventory of properties for sale above market value. It is for this reason that it is sold with the condition of "not subject to appraisal"; which contrasts with the previous offer when there was an excess of inventory where we saw properties sold below market value, those that were advertised with a "negotiable price".

The above phenomenon is part of a natural process of the recessionary moment in real estate. This increase in property prices causes the need to increase interest rates. In this way, with the rise in mortgage interest, it affects the purchasing power of the buyer. This seeks to balance the market again and bring it to a midpoint where stability is to the benefit of the seller and buyer of properties.

In short, inflation is at its highest level in the last four decades. We have to see the rise in interest rates as a necessary remedy to contain said inflation, even if we don't like it.

On the other hand, the country is at a point of modulation in its economy with the support of economic variables such as reconstruction funds. Similarly, funds from the buyer assistance program is another variable that will help stabilize the economy. These two positive variables cancel the negative effect of the rise in mortgage interest. The foregoing would produce economic activity in 2023, which in turn would bring economic growth to advance the real estate cycle to the expected recovery stage. That should be the expectation of the real estate and mortgage industry, for the good of all.

December 2022 MLS Statistics

The December 2022 MLS statistics for the Puerto Rico residential real estate market have been released. The inventory of available houses for sale was higher than December 2021, and the average sales price was up 25%. Pending sales decreased, while the months of inventory increased.

It's time to pay your Property Tax bill in Puerto Rico!

Attention all property owners in Puerto Rico! Don't forget that your property tax bills are due at the end of this month, January 2023.

As a reminder, property taxes in Puerto Rico are paid twice a year, with the first installment due at the end of June and the second at the end of January. The government agency responsible for managing and collecting property taxes in Puerto Rico is called CRIM. While CRIM has made efforts to improve their online services, it is important for property owners to regularly check their property tax status, as tax bills may be mailed late.

If you want to take advantage of the 10% discount on your payment, be sure to pay on or before January 30, 2023. There are several ways to make your payment:

· Electronically through the CRIM website: https://portal.crim360.com/crimpr/index.htm

· By phone at 787-625-CRIM

· Personally, by means of cash, check and / or credit cards in any of the nine (9) Regional Centers. On the island of Vieques, the CRIM office is located in the historical, large, blue, schoolhouse on the south side of the Plaza in Isabel Segunda. The receptionist at the building’s main entrance can guide you to the office.

· At any Banco Popular location. Be sure to have a printout of your bill.

Don't let the late payment penalties and interest charges catch you by surprise. Make sure to pay your property taxes on time and avoid any unnecessary headaches.

What is the Value of having Trees on my Property?

What is the Value of having Trees on my Property?

There appears to be a belief in Puerto Rico that when one is trying to sell land, or when they first buy a new house, that folks want to clear the land of all trees. Often they are replaced with concrete, with the short term thought being that the property will easier to maintain. But does this help the value or the property, the welfare of those living on the property, or the neighborhood? We are firm believers that healthy older trees are the ultimate goal and value of any property.

Trees Add Value

One benefit of planting trees is the aesthetic value they can add to your property. Trees can provide a natural and attractive backdrop for your home, making it more appealing to potential buyers or renters. Additionally, trees can provide visual interest and beauty to your neighborhood, improving the overall appearance of the area. Trees are known to increase one’s mental well being.

Trees Provide Cooling Shade

Another benefit of planting trees is the increased shade they provide. In Puerto Rico, where the climate is warm and sunny, having trees on your property can provide much-needed relief from the heat. The shade from trees can help to cool the interior of your home, reducing the amount of energy needed to keep it comfortable. This can lead to lower energy bills and a more pleasant living environment. Shade in Puerto Rico and the tropics is quite possibly the biggest asset one can have on their property

Trees Help Regulate Temperature

One of the most significant benefits of the shade provided by a tree is the ability to regulate the temperature inside your home. In Puerto Rico, where the climate is warm and sunny, having trees on your property can provide much-needed relief from the heat. The shade from trees can help to cool the interior of your home, reducing the amount of energy needed to keep it comfortable. This can lead to lower energy bills and a more pleasant living environment.

Trees Protect from UV

The shade from a tree can also help to protect your home from the damaging effects of UV radiation. Prolonged exposure to UV radiation can fade and damage your home's exterior, as well as furnishings and other household items. By providing shade, trees can help to reduce the amount of UV radiation that reaches your home, potentially extending the life of your possessions and protecting your home's exterior.

Trees Reduce Noise Pollution

Trees can also help to reduce noise pollution in your neighborhood. The leaves of a tree can absorb and scatter sound waves, reducing the volume of noise that reaches your home. This can create a more peaceful and quiet living environment.

Trees Provide Privacy

The shade provided by trees can also offer a sense of privacy and seclusion. Depending on the location and type of tree, it can provide a natural barrier between your home and the outside world, creating a sense of privacy and seclusion.

Overall, the shade provided by trees can have numerous benefits for your home in Puerto Rico, from improving the temperature and comfort inside your home to protecting it from UV radiation and noise pollution, to offering a sense of privacy and seclusion. 

Planting trees can also increase the value of your property. Studies have shown that homes with well-maintained landscaping, including trees, tend to have higher property values. This means that investing in trees can potentially increase the value of your real estate investment.

In addition to the benefits to your property, planting trees can also have positive environmental impacts. Trees can help to reduce air pollution by filtering out contaminants from the air, and they can capture carbon dioxide, helping to mitigate the effects of climate change. Trees can also provide habitat for wildlife, supporting biodiversity in your community.

Planting trees can also have positive impacts on your neighborhood as a whole. They can increase the value of other properties in the area, improve the overall appearance of the neighborhood, and provide a sense of community pride. By working together with your neighbors to plant and care for trees, you can create a more livable and attractive community for everyone.

Overall, planting trees in Puerto Rico can have numerous benefits for your personal life and the community in which you live. From improving the appearance and value of your property, to providing shade and reducing energy bills, to supporting the environment and creating a sense of community, the benefits of trees are many and varied. By taking the time to plant and care for trees, you can help to create a better, more sustainable future for yourself and your neighbors. The same can’t be said for concrete. It’s time we start ripping up concrete and planting more trees in Puerto Rico.

Why should we restore historical buildings in Puerto Rico?

Why should we restore historical buildings in Puerto Rico?

Puerto Rico has a rich history and cultural identity, and the restoration and preservation of historical architecture can have numerous benefits for the local economy, including real estate values.

For one, the restoration and preservation of historical buildings can attract tourists to the area. Many tourists are interested in experiencing the unique history and culture of Puerto Rico, and the presence of well-preserved historical buildings can help share that history and let people see it with their very own eyes. This can lead to an increase in tourism-related businesses, such as hotels, restaurants, and gift shops, which will boost the local economy.

Additionally, the restoration and preservation of historical buildings can lead to an increase in property values. When a historical building is well-preserved, it can become a valuable asset to the community, and this can lead to an increase in real estate values in the surrounding area. This can be especially beneficial for property owners in the area, as they may see an increase in the value of their own properties.

Furthermore, the restoration and preservation of historical buildings in Puerto Rico can help to create a sense of community pride and place identity. When a community has a strong sense of history and cultural identity, it can be a source of pride for residents and can help to attract new residents and businesses to the area. This can lead to an overall economic boost for the community.

Finally, the restoration and preservation of historical buildings in general can help to create jobs in the local community. The process of restoring and preserving historical buildings often requires the services of skilled craftsmen, such as carpenters, masons, and electricians. These jobs can provide employment and income for local residents, further benefiting the local economy.

The restoration and preservation of historical architecture in Puerto Rico has a number of positive effects on the local economy. By attracting tourists, increasing property values, creating a sense of community pride and place identity, and providing employment opportunities, the restoration and preservation of historical buildings can be a valuable investment for these communities. Every historical building in Puerto Rico should be restored, if not to improve the community, than to help save the patrimony of the archipelago.

Can I do a 1031 Exchange into Puerto Rico?

Can I do a 1031 Exchange into Puerto Rico?

A 1031 exchange, also known as a “like-kind” exchange, is a tax-deferred transaction that allows investors to sell one property and purchase another without paying capital gains tax on the sale of the first property. This type of exchange can be a useful tool for investors looking to relocate their investments. However, there are certain rules and guidelines that must be followed to qualify for the tax deferral.

It should be noted that U.S. real estate is only “like-kind” to U.S. real estate, and international real estate is only “like kind” to international real estate. Therefore, under Section 1031, international real estate cannot be exchanged for U.S. real estate and vice-versa. “U.S. Real Estate” refers to property within the Continental U.S., including “coordinated” U.S. Territories. Guam and the U.S. Virgin Islands are considered U.S. real estate, but not Puerto Rico.

Unfortunately for U.S. real estate investors looking to acquire island vacation investment property, real estate in Puerto Rico is currently not an option under Section 1031, unless both the relinquished and replacement properties are foreign real estate. In which case, if a U.S. taxpayer is selling international real estate, then real estate in Puerto Rico may be an option.

Before attempting a 1031 exchange involving Puerto Rico, please consult with your real estate attorney and accountant. They are best informed of current rules and regulations. If you do not have a lawyer or accountant in Puerto Rico, we can recommend a few for you.

Christmas in Puerto Rico 2022 has begun!

Christmas in Puerto Rico is a festive and joyful occasion. The holiday season officially begins on December 16 with the start of the nine-day celebration known as the Novena de Aguinaldos, or the "Nine Nights of Carols." During this time, families gather together to sing traditional Christmas songs known as aguinaldos and to participate in religious services.

One of the most important traditions during the holiday season in Puerto Rico is the “parranda,” a lively musical celebration where friends and family members go from house to house singing and playing instruments. The parranda often continues into the early hours of the morning, and is a highlight of the holiday season for many Puerto Ricans.

Another important tradition is the making of the Puerto Rican pastel, a savory meat-filled pastry that is a staple of the Christmas dinner table. The pastel is typically made with a variety of meats, such as pork, chicken, and beef, along with olives, capers, and raisins. It is then wrapped in a plantain or yuca dough and baked until golden brown.

On Christmas Eve, many families attend the Misa de Gallo, or the "Rooster's Mass," which is a midnight mass held in churches across the island. This mass is named after the rooster's crow, which is believed to have awakened the shepherds on the night of Jesus' birth.

After attending mass, families return home to enjoy a hearty Christmas dinner, which often includes the Puerto Rican pastel as well as other traditional dishes like lechón (roasted pork), arroz con gandules (rice with pigeon peas), and coquito (a coconut-based holiday drink).

Overall, Christmas in Puerto Rico is a time for celebration and joy, as friends and family come together to enjoy the traditions and festivities of the season. And if you think Christmas in Puerto Rico ends on December 25th, you would be mistaken. Traditionally it runs until the end of the San Sebastian festival in late January.

Should you consider living on the island of Vieques?

Should you consider living on the island of Vieques?

If you're considering a move to the idyllic island of Vieques, you're in for a treat. Nestled just off the eastern coast of Puerto Rico, Vieques is a tropical paradise with crystal-clear waters, powdery white sand beaches, and a laid-back lifestyle that will make you feel like you're on permanent vacation.

No Crowds

One of the first things you'll notice about Vieques is the lack of crowds. Unlike other Caribbean islands that can get overrun with tourists during peak season, Vieques has managed to retain its charming, small-town feel. This makes it a great destination for anyone who wants to escape the hustle and bustle of city life and enjoy the natural beauty of the island in peace and quiet.

Rich Cultural Heritage

Another thing that sets Vieques apart is its rich cultural heritage. The island has a long and fascinating history, and you can see evidence of this everywhere you go. From the historic Spanish fort that overlooks the town of Isabel Segunda to the many Taíno artifacts that have been discovered on the island, there's no shortage of interesting things to explore.

World Class Beaches

Of course, no discussion of Vieques would be complete without mentioning its world-class beaches. With over 40 miles of coastline to choose from, you'll have no trouble finding a secluded spot to soak up the sun. Whether you're looking for a place to lounge and relax or you want to try your hand at some of the water sports that the island is known for, you'll find it all here.

Art Scene & Outdoors

But there's more to life on Vieques than just lounging on the beach. The island is home to a thriving arts scene, with galleries, studios, and performance spaces that showcase the work of local artists. There are also plenty of opportunities to explore the great outdoors, with hiking and biking trails that wind through the island's lush forests and mangrove swamps.

Laid Back Lifestyle

In short, living on the island of Vieques is a dream come true for anyone who loves the laid-back Caribbean lifestyle. With its beautiful beaches, rich culture, and endless outdoor adventures, you'll never run out of things to do or see. If you're looking for a place to call home that feels like a permanent vacation, look no further than the island of Vieques.

November 2022 MLS Stats

The Puerto Rico residential listing statistics for November 2022 have been released by Stellar MLS. The amount of active and new listings is on the rise, which is mirroring some of the concerning levels seen in the states. Months of inventory has also jumped up. We’ll have to see if this is a temporary blip, or the beginning of a new trend.

What are the Capital Gains Taxes when selling Real Estate in Puerto Rico?

What are the Capital Gains Taxes when selling Real Estate in Puerto Rico?

When selling your real estate property in Puerto Rico, you will be required to pay capital gains taxes to Hacienda, a tax collecting arm of the Puerto Rico government. The following is a guideline on how that tax is calculated. To see how a sale specifically effects your tax liabilities, please consult with your tax advisor in Puerto Rico and wherever in the world you may declare your residency.

When you sell a property in Puerto Rico, there is a 15% tax on any capital gains. That gain is calculated by taking the Sales Price, subtracting Closing Costs, subtracting Capital Improvements, and then subtracting your original Purchase Price. The number left over is your capital gain, and you will be required to pay 15% of that to Hacienda.

If you are a resident of of Puerto Rico, you will need to declare your capital gain tax responsibility when you file your end of year taxes. No taxes will be withheld at the closing.

If you are a non-resident of Puerto Rico selling a property in Puerto Rico, that 15% capital gains tax will be withheld at closing. That tax will be held by the closing Notary or Title Company at the closing, and sent to Hacienda by the end of the next calendar month. There is the possibility of factoring in capital improvement costs to minimize your gains for cash closings if you work in advance with your accountant.

For closings where the buyer is using a mortgage company, we have noticed that mortgage and title company only factor in the purchase price, closing costs and selling price when calculating capital gains. We have not seen any situation yet where a seller is allowed to factor in any capital improvements into the equation.

It is suggested that you file your end of year Puerto Rico taxes within a few weeks of the closing, so that you can get a quicker refund, if you are owed one. The capital gains taxes you pay in Puerto Rico also become a federal tax credit for those of you having to file in the USA.

No seller, buyer or closing is the same. And Paraiso Realty is not a licensed law firm or accountant. As always, consult with your accountant in the USA and in Puerto Rico to discuss you specific tax circumstances and strategy.

Three Numbers to know when Financing a Condo Purchase

If you are buying a condo in Puerto Rico, and are planning on financing the purchase with a mortgage, here are three numbers that your lender will want to know. Each will effect the amount of mortgage for which you will qualify.

1.       How much is your monthly Homeowner’s Association Fee (HOA)? These fees vary from building to building, and are usually paid on a monthly basis. The fee covers various services of which everyone in the building benefits. As an example, some buildings include water and electric service in the monthly HOA, so it is always best to find out what the fee includes and how much due each month.

2.       Are there any pending special assessments. After Hurricane Maria, many buildings now understand the value of having a generator that services the whole building. Those that don’t have a generator, or one that only serves public areas like the lobby and elevators, are now opting to install whole building generators. And because of this, the HOA is now adding special assessments to the monthly HOA fee until the cost of the new generator is paid off.

3.       What is the cost of the insurance for the unit? This insurance should cover the repairs in the event of fire, hurricane or earthquakes and is often mandatory.

Each of these three numbers may affect the amount of mortgage for which you qualify. For further advice and info on the condo costs that effect your mortgage qualification, please check with your chosen mortgage lender.

How do I get to Vieques and Culebra from San Juan?

How do I get to Vieques and Culebra from San Juan, Puerto Rico?

When folks get enchanted with photos they see of Vieques and Culebra on Instagram or in magazine articles and then decide they need to visit our jewels in the Caribbean, ultimately the question comes up of how do I get from San Juan to Vieques & Culebra?

Taking the ferry to Vieques and Culebra

By land and sea would be the simple answer, with the sea being the easiest to explain. There are ferries to both islands that run out of the Ceiba ferry terminal on the old Roosevelt Roads naval base. Located on the east side of mainland Puerto Rico, in the town of Ceiba, one can catch a cargo ferry or passenger ferry to either island. It should be noted that in November of 2022 it is nearly impossible to bring a car on the ferry if you are not a resident. And it should also be noted that mainland rental car companies will not allow you to take your rental car to Vieques & Culebra either, so it is best not to even consider that option. The ferry system now has a website, with the opportunity to buy tickets in advance. Ticket prices are currently around $2 per person each way, and there is a senior citizen discount. Yes, you read that correctly, $2 per person. The website for the ferry company is www.puertoricoferry.com

Flying to Vieques and Culebra

For air options, there are a number of airlines and airports to choose from. Vieques Airlink, Cape Air and Flamenco Air are all commercial airlines that serve Vieques & Culebra from mainland Puerto Rico. Occasionally Vieques Airlink and Cape Air will serve Vieques from the island of St. Croix. They all have prop planes that seat up to 9 passengers.

As for airports, Vieques & Culebra can be reached via San Juan International, San Juan Isla Grande, Ceiba and St. Croix. San Juan International is where all of the major commercial jets land (i.e. Jet Blue, American & Delta), and Cape Air has the most flights to Vieques and Culebra from there. Isla Grande airport is a smaller airport near Old San Juan and the cruise ship terminals. Ceiba airport is located on the old Roosevelt Roads airbase in Ceiba, on the east side of the island. Vieques Airlink and Flamenco fly primarily to Vieques and Culebra from Ceiba and Island Grande.

The shortest and cheapest of the flights will be out of Ceiba. Because of landing fees, San Juan International will be the most expensive. Flight time from Ceiba is around 7-10 minutes to Vieques & Culebra. Expect flight times of around 30 minutes from International or Isla Grande.

Here are websites for the above-mentioned airlines:

Vieques Airlink: https://www.viequesairlink.com/

Cape Air: https://flycapeair.com/

Flamenco Air: https://flyairflamenco.com/

Regardless of how you get here, it will be worth the time and effort!

Of these options, which do you prefer?

The Cats Of Old San Juan

Animals are often the charm of many places around the world. There is a whole tourism industry set up for travelers that want to see the “Big 5 “ in Africa, bears feeding on Salmon in Africa, or bird watching in Panama. On Vieques we have the horses that roam the island, grabbing the adoring attention of tourists. And in Old San Juan, everyone has seen the cats living on the streets and around the El Morro park. They have become social media stars. Sometimes they are as hard to ignore as the pigeons in El Parque de las Palomas on Calle Cristo.

The National Park Service is now wanting to make a change to the cat population in Old San Juan, and as one can imagine, it is raising the attention of those humans living amongst their feline friends. What do you make of this situation?

#cats #oldsanjuan #viejosanjuan #gatos #gato #puertorico

Is it safe to live in Puerto Rico?

As a Realtor, the topic of safety always comes up at some point of the home buying process. Those not familiar with the archipelago of Puerto Rico may start out by asking what towns are safe. Those focused on a particular town will ask when it comes down to specific neighborhoods or streets. This is such a difficult topic, that I often cringe when a listing agent tells my clients, without missing a beat, that they will be “safe” in a certain house. Besides the liability that one takes on when they tell someone they will be safe buying a product, no one can predict the future. And safety is ultimately a relative subject.

Legally, the Fair Housing Act prevents Realtors from answering questions about neighborhood safety. So, when a client asks me if they will be safe living in a certain neighborhood, I can’t give them an answer. This is a boundary that has been set justifiably to prevent discrimination. The buyer will have to do their own legwork on whether they will feel comfortable walking to their favorite neighborhood restaurant at night, or the likelihood of someone breaking into their car if they park it on the street overnight. As a Realtor, I can give clients resources to check out, such as the local police department, websites that compile data, or local community groups that have social media pages. But I can’t guarantee or tell them whether they will be safe anywhere.

While the online resources with crime data are limited in Puerto Rico, and most likely unreliable, there are other options for buyers. The best option is to talk with the locals that live in the neighborhood. Take a good walk around the neighborhood, talk with folks you see in their yard or at the corner grocery store, and ask them about their experience of living in the area. Ask if there are any safety issues of which you should be aware. The same conversations should be started when you meet folks at the beach, local watering holes, retail shops and restaurants. Local knowledge the most powerful. And if at anytime during this process you feel uncomfortable, then trust your gut instincts. You know yourself, your daily routines, and what makes you uncomfortable. You should seriously trust any red flags or gut instincts that give you pause. But if you like what you see, hear, and feel during that process, then perhaps that town, neighborhood or house is right for you?

Marry The House, Date The Rate

With the change in interest rates lately, there has been a popular slogan being pushed towards home buyers that says one should “marry the house, and date the rate.” The idea being that you should not worry about the current interest rate, as you can always refinance when the rate drops later. Instead, focus and commit to the house you want to buy. Has a nice ring to it, no?

In theory it sounds nice and simple, but in certain scenarios it might cost you more in the end. As with everything else, home buyers need to do their homework and figure out their own best scenario. Not everything is one size fits all. Buying a home can be the biggest buying decision one can make in their lifetime, and deserves proper attention.

Jon Brooks recently published one such scenario where he explained how this friendly slogan could actually be costly for home buyers. Here was his example:

The Assumptions.

If you buy a house for $400,000 today and put 20% down ($80,000), you'll have a $320,000 loan balance. Let's say you locked in a great rate of 6.5%. With these inputs your monthly payment would be approximately $2,675 (including taxes and insurance).

Private Mortgage Insurance.

You saved up and put 20% down (80% LTV) on your mortgage so you could waive private mortgage insurance (PMI). Your mortgage insurance that you avoided ranges from 0.58% to 1.85% depending on your credit score, loan-to-value (LTV) ratio, and debt-to-income (DTI) ratio. So let's just meet in the middle and say your PMI is 1%.

Housing Price Expectations.

Now, the base case for most economists is that home prices will drop 10-15% in 2023 due to rising interest rates, which destroys buyer demand, and causes listings to stack up on the market. more supply = more competition = lower prices. This could mean if you buy a house today for $400,000, it's very likely it could be worth $360,000 next year (let's assume 10% less). Your principal pay down over your first year was only $3,576. Meaning you lost net equity of $36,424.

The Costs of Refi & PMI

Now let's say that mortgage rates also went down from 6.5% to 5.0% (unlikely but possible) and you try to refinance your interest rate in late 2023 or 2024. You now have to pay 2% in closing costs again to complete the refinance, which is $6,400. Your new monthly payment is $2,348, a good $327 less in a monthly payment, BUT now since your house is worth less, during your refinance you found out you have to either bring $36,424 to the table to make the LTV 80% to avoid the PMI again or actually pay the PMI, which is $266 per month.

If you don't have the money to bring to the table to close the refi, tough luck, your new PMI from your refi has eaten up 81% of your savings from the refinance. It still helps - but you have to pay the closing costs again to refinance. If you do have the money to refinance plus pay the closing costs, good for you.

Most Americans do not have $36,424 (equity loss) plus $6,400 in closing costs to bring to the table to lower their monthly payment by $327 per month. And, even so, most people wouldn't pay this money out of pocket to change the payments by that amount.

As much as we would like to live in a world of simple slogans, Jon Brooks’ example confirms that home buyers need to constantly sharpen their pencils and figure out what works best for them. The more work done during the home buying process, the happier one will be with their purchase.

Mortgaged Home Prices Down 15% in Puerto Rico

El Vocero newspaper published an interesting article today about current mortgaged home prices in Puerto Rico, and where interest rates might be headed. The quoted professional said that prices are down 15% and that mortgage interest rates will soon rise above 8%.

The average mortgage interest rate in Puerto Rico right now is between 7.5% and 8%, about 1 percentage point higher than the continental USA. That difference is normal. Rates are always higher in Puerto Rico by about that amount. Because of that difference, many second home buyers in Puerto Rico will often take out a home equity loan on their primary residence and use that cash for a quicker close here in Puerto Rico.

It is expected that mortgage interest rates in Puerto Rico will go above 8% as the Fed is expected to raise rates later this week.

Meanwhile, the price of mortgaged homes in PR has dropped 15%, and the mortgage industry expert quoted in the article expects that prices will level off from here. She did not give the time metrics for the decrease, but I’m guessing she means to say that mortgaged-prices are down 15% year-over-year? This decrease in price is typical during a time of rising interest rates. As interest rates level off or drop down, we can expect an increase in prices again as demand from buyers will no doubt increase.

Here is a link to the full article:

https://www.elvocero.com/economia/finanzas/cae-el-valor-de-las-propiedades-en-la-isla/article_f1956ea2-58a7-11ed-aa13-93f0dfc1a363.html

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