Why You need to Invest in Puerto Rico Real Estate

Why you NEED to Invest
in Puerto Rico’s Real
Estate
Investor Information Guide
Call 844-Source-4

Investor Information Guide to Puerto Rico
Page 1Call 844-Source-4
Table of Contents
Introduction to Puerto Rico ....................................................................2
Real Estate Investors Guide ....................................................................4
5 reasons to invest in Puerto Rico Real Estate ........................................8
Summary of Act 74, the Tourism Development Act..............................11
Enterprise Business Guide.....................................................................12
Summary of Act 20, the Act to Promote the Export of Services............14
Summary of Act 22, the individual Investors Act ..................................15
Direct Source Wealth............................................................................16

Introduction to Puerto Rico
As a territory of the United States of America, Puerto Rico is uniquely
positioned in that it has the authority to have its own Constitution and
enact local laws and tax codes so long as they are not made contrary to
the US Federal Laws. This affords Puerto Rico the autonomy to create
incentives that surpass the capacities of most States. Such is the case
with regards to Act, 20, Act 22 and Act 74.
As history demonstrates, the government of Puerto Rico has always had
to conceptualize new incentives to overcome overwhelming challenges,
which repeatedly confront the island. With short-term and long-term
sustainable debt issues, the government has a difficult proposition to
ensure that its people remain productive in the global economy without
warning off foreign investments. To mitigate these risks, the
government has enacted new incentives to attract foreign investors to
participate in the local economy of the island in an effort to create,
secure, and elevate its workforce. Such is the case with Act 20, Act 22,
and Act 74, which restructure the islands relationship with the real estate
industry, the tourism industry and the financial industry to create a
sustainable vision beyond the short-term downfalls. Today, as a result
of these continuous efforts, Puerto Rico is the most innovative workforce
among all other Latin American countries, according to the world
economic forum.

It should be highlighted that 1.) It is not necessary to give up citizenship
to the United States in order to take advantage of the tax laws in Puerto
Rico. 2.) Puerto Rico is an easy destination to travel to, just a 3.5 hour
flight from New York and just over an hour from Miami. There are hourly
flights to San Juan and daily flights to Aguadilla. 3.) The legal system is
safe and secure with many of the same familiarities in law and
governance as in the upper 48.
Today, the opportunities in Puerto Rico are rich and tangible. The deals
are easy to understand and Direct Source Wealth makes the process
turnkey. The laws are written in a comprehensive way, which allows all
those seeking the opportunity to expand their horizons and bottom-line
an almost effortless participation in the practicalities and benefits.
However, as easy as the laws are to interpret, be aware that life and
business on this Caribbean island is different than that of the upper 48,
which is why you need a team on the ground you can trust and count on.
Whether coming to Puerto Rico to live for 183 days under Act 22, invest
in real estate under Act 74, and/or move your business here under Act
20, we hope this investor information guide will help you get started and
answer some questions you may have. Please feel free to give us a call
if you would like support in realizing your dreams from an experienced
team residing on the island.

Real Estate Investors Guide
As a real estate investor in Puerto Rico, you should be aware of the
present situation by which many assets are currently held on the balance
sheet of several primary banking institutions in Puerto Rico. After the
market crash of 2007 and 2008, many near complete real estate projects
were transferred from the failing banks, which supplied the liquidity to
the projects, to solvent banks. However, during this transition, the
projects were unable to complete the foreclosure process due to
mandates set by the judicial system as a result of the developers being
unable to complete the project according the development according
agreements set forth by the insolvent bank and thus to this day many of
these assets remain on the balance sheets of the primary banking
institutions in Puerto Rico.
In effort to secure the best projects, our team has built a robust network
of individuals and institutions that possess inside knowledge of this
situation. We have developed the win-win solutions needed to
negotiate between the developer and bank to bypass the judicial process
in order to acquire many of the near complete assets for pennies on the
dollar. Whether we acquire a property from a bank or a private sell,

Direct Source Wealth has the knowledge and processes in place to
handle all the key steps of the transaction.
Title Search - When buying land or property in Puerto Rico, you should
first conduct a title search from a credible company, such as Stewart
Title. This information will provide you with the name of the current title
holder, the description of the property, and any liens and encumbrances
which the property could potentially have and start the process for title
insurance.
Our team has already experience the need to conduct the proper due
diligence with this process. In Puerto Rico, it is very common for
investors to bypass this process during a transaction. This can be a costly
mistake as some have learned. During a transaction to acquire a 30-unit
condominium project, we learned of a $300k tax lien on the property and
thus were able to pull the bank back into the deal to renegotiate the deal
with the settlement of the lien.
Property Inspection - We have a network of reputable property
inspectors to perform a thorough check of the property you are
interested in buying. Most of the structures are constructed using
concrete due to the existence of terminates. Many structures are not
built to the same construction codes of the upper 48. You will want to
ensure the property you are buying does not have any major issues
which could be costly in the long run.
Construction - You will need to consult with the Planning Board for a site
consultation prior the purchase. You want to ensure the land is suitable
for your specific need and is complaint with the specific zoning
requirements. While starting on a new construction project in Puerto
Rico would allow you to execute your vision, it should be noted that
many outstanding visions already exist with permits in place creating a

3-5 year advantage. New construction permits are simply not a priority
as many projects sit near complete or complete ready to purchase.
Government Properties - There is a great opportunity to purchase
government buildings, which are no longer in use and can be purchased
for great prices and supported by subsidies depending on the nature of
your business. For example, PRIDCO, currently has available real estate
assets for industrial, commercial, and institutional uses ranging in size
from 4,000 to over 100,000 square feet. Though these properties are
available at great prices they can be further negotiated with approval
from the PRIDCO board of directors.
Local Network - Without the support of a physical team (boots on the
ground) in Puerto Rico, it would be exponentially more difficult to
manage your project. The relationships that we have developed are
necessary to infiltrate the inner social fabric of the Puerto Rican business
culture. While in the upper 48 money talks and propels the velocity of
business, in Puerto Rico we find that a large portion of business moves
faster by simply knowing the right people.

Direct Source Wealth Contact Network - Direct Source Wealth has
taken the time to develop relationships with the agencies responsible
for managing the real estate industry in Puerto Rico.
Rules and Permits
Administration
Centro Gubernamental
Roberto Sánchez Vilella
Edificio Norte, Piso 9
San Juan, PR
(787) 721-8282
www.arpe.org
Land Administration 171 Ave.
Chardón
Hato Rey, PR
(787) 753-9300
www.terrenos.gobierno.pr
Public Housing
Administration Ave. Barbosa
606
Edif. Juan C. Cordero Piso 9
Río Piedras, PR
(787) 759-9407
www.gobierno.pr/vivienda
Puerto Rico Aqueduct and
Sewer Authority (PRASA)
Avenida Barbosa #604 Hato
Rey, PR 00917
(787) 620-2277
www.acueductospr.com
Puerto Rico Public Buildings
Authority (PBA) Centro
Gubernamental Minillas
Edificio Norte Piso 6
Santurce, PR
(787) 722-0101
www.aep.gobierno.pr
Puerto Rico Electric Power
Authority (PREPA) Ave.
Ponce de León #1110
Pda. 16 ó Santurce, PR
(787) 289-3434
www.aeepr.com
Puerto Rico Fire Department
Edificio Casa Lee 2432 Calle
Loíza Esq. Doncella San Juan,
PR
(787) 725-3444
www.bomberos.gobierno.pr
Housing Department of
Puerto Rico
606 Ave. Barbosa, Piso 10
Edificio Juan C. Cordero Río
Piedras, PR 00928
(787) 274-2525
www.vivienda.gobierno.pr
Puerto Rico Planning Board
Minillas Edificio Norte, Piso
19
San Juan, PR
(787) 723-6200
www.jp.gobierno.pr
Puerto Rico Industrial
Development Company
(PRIDCO) Ave.
Roosevelt 355
Hato Rey, PR
(787) 758-4747
www.pridco.com
Stewart Title Puerto Rico,
Inc.
MCS PLAZA Suite 1207, 255
Ponce De Leon Ave. Hato
Rey, PR 00917
(787) 753-1200
Tel. (787) 274-1200
http://www.stewart.com/pu
ertorico/

5 reasons to invest in Puerto Rico Real
Estate
1. Great Deals - After the market down turn in 2007 and 2008, many
real estate assets in Puerto Rico were forced to transfer from insolvent
banks to the islands’ solvent banks. Today, many of these assets exist
85-90% complete and require minimal finishing’s to perfect. These
assets can be acquired for well below wholesale value, some for 50% of
appraised value and much less than the cost to build, and have been
constructed to US standards. The banks which hold these assets on
their books have been given until April 15th of 2015 by the FDIC to
settle which means private investors and large institutions are now
acquiring these assets by the handful. We have locked up many of
these deals for you. Call us to inquire about these deals.
2. Transparent Tax Haven - Puerto Rico is poised to become the next
financial frontier as the laws enacted by Puerto Rico are incentives for
wealthy investors and retirees to domicile on the island for 183 days. Act
22, known and the Individual Investors Act, provides investors the
privilege of little to no capital gains tax. Outside of attracting investors
to relocate to Puerto Rico, the island has created incentives for
manufacturing, export services, agriculture, and tourism designed as a

full circle strategy. These laws will propel and accelerate the growth of
the real estate market for years to follow.
3. Strong Workforce - The real estate in Puerto Rico isn’t just supported
by wealthy investors, snow birds, or tourism. According to the world
economic forum, Puerto Rico has the most “innovative” economy
throughout all of Latin America. This advanced workforce, containing
advanced technology experts, bio-chemical engineers, financial experts,
legal experts, and so on, demand real estate with standards equal to that
of the upper 48 in the United States. Due to the tax incentives offered
by Puerto Rico, economic growth in manufacturing industries, the
agriculture industry, the pharmaceutical industry, and the financial
industry are continuing to drive global consumers to do business with
the island for the long-term with a sustainable outlook.
4. Hidden Economy - While averaging out the economy of Puerto Rico
makes the island appear dismal on paper, according to a study conducted
by Estudios Técnicos Inc., which was commissioned by the Development
Bank of Puerto Rico, the underground economy is estimated to be
approximately 20 billion dollars annually. This cash is able to support the
anomalies in analytics such as the city of San Juan having one of the
highest prices per square foot for retail space anywhere in the world.
Many Puerto Ricans like to pay with cash and one thing they love to pay
with cash is rent. Generating cash-flow from a multi-billion dollar cash
economy is something worth looking into.
5. Caribbean Lifestyle - The average temperature in Puerto Rico is 82
degrees Fahrenheit (28 deg. C). The beaches are among the best in the
world with warm water temperatures. The people of Puerto Rico are
educated in public schools in English and Spanish so getting around and
finding what you need is in many cases as easy as asking. Puerto Rico
moves at its own pace which is much slower than the upper 48 so the

cultural environment here is welcoming, friendly, and appreciative. At
least for 183 days of the year, we invite you escape the hectic lifestyle of
the upper 48 and burry your toes in the sand. Don’t think twice about
doing business on the beach or from the comfort of your Puerto Rican
villa. It’s easier than you think, just ask us.

Summary of Act 74, the Tourism
Development Act
Enacted in 2010 to stimulate investments into infrastructure, which
promotes tourism.
Eligibility - Leasing and purchasing benefits may apply to: Hotels,
condos hotels, guest-houses, golf courses, vacation clubs, timeshares,
recreational entertainment, and more.
Tax Exemptions
 Up to 90% tax exemption on income tax (100% in some areas)
 Up to 90% tax exemption from personal property tax
 Up to 90% tax exemption on municipal licenses
 Up to 100% tax exemption on excise tax on imported goods.
Tax Credits - Receive tax credits when renovating or expanding existing
property. Investment tax credit out to 50% of the cash paid for equity.
Puerto Rico has a secondary market for selling such credits.
Tax Decree - The decree is a contract between the business and the
government of Puerto Rico.

Enterprise Business Guide
Entities - Like the mainland of the United States, Puerto Rico supports
many different type of entity structures for structuring a business
including: sole proprietorships, partnerships, corporations (domestic
and foreign), non-profit corporations, limited liability companies,
business trusts, joint ventures, international banking entities, insurance
companies, real estate investment trusts, and more.
Basic requirements for starting a business in Puerto Rico
1. Obtain Employee Identification Number (EIN) unless acting as a sole
proprietor.
2. Register your business with the Registry of Business with Puerto Rico
Treasury Department. Must be completed within 30 days of starting
your business.
3. Register with the Compulsory Business Registry. Must be completed
by July 15 of each year.
4. Obtain a business license from the municipality in which your
business is conducting business
5. Obtain a use permit. Complete Inspection with Fire Department.
Basic Labor Laws
Minimum wage $7.25/hr | 8 hour work days | 40 hour work weeks

Safety Laws - All employers who are a part of a commercial outfit are
required to establish health and safety regulations set forth by OSHA.
Helpful Contact Information
Puerto Rico Manufacturer’s
Association (PRMA)
Edificio Centro Internacional
De Mercadeo
St 165 Torre 2 Suite 702
Guaynabo PR 00968
(787) 641-4455
www.industrialespr.org
Rules and Permits
Administration
Roberto Sánchez Vilella
Edificio Norte, Piso 9
San Juan, PR
(787) 721-8282
www.arpe.org
Treasury Department of
Puerto Rico
Edificio Indendente Ramírez
Piso 8
Paseo Covandonga
San Juan, PR 00906
(787) 721-2020
www.hacienda.gobierno.pr
Puerto Rico State
Department
Calle San José
Viejo San Juan, PR
(787) 722-2121
www.estado.gobierno.pr
Department of Labor and
Human Resources
Edificio Prudencio Rivera
Martínez
505 Ave. Muñoz Rivera
Hato Rey, PR
(787) 754-2119
www.dtrh.gobierno.pr
Puerto Rico Fire Department
Edificio Casa Lee 2432
Calle Loíza Esq. Doncella
San Juan, PR
(787) 725-3444
www.bomberos.gobierno.pr

Summary of Act 20, the Act to Promote
the Export of Services
Enacted in 2012 to attract foreign capital in effort to establish Puerto
Rico as an international service center.
Eligibility - Investment banking, marketing, public relations, advertising,
economic, technological, human resources, information consulting,
professional services, computer programmers, and more.
Tax Exemptions
 4% income tax rate
 Up to 60% municipal license tax exemption
 100% tax exemptions on dividends and profits from export
services
Tax Decree - The decree is a contract between the business and the
government of Puerto Rico for up to 20 years.

Summary of Act 22, the individual
Investors Act
Enacted in 2012 to attract new residents to Puerto Rico by providing a
income tax exemption.
Eligibility - Must become a bona fide resident of Puerto Rico (non-US
citizens welcome). Must live in Puerto Rico for 183 days a year.
Tax Exemptions
 Up to 100% tax exemption income tax to Puerto Rico on dividends
 Up to 100% tax exemption on income taxes
 Up to 100% tax exemption on capital gains
Tax Decree - The decree is a contract between the individual/company
and the government of Puerto Rico until December 31, 2035.

Direct Source Wealth
Contact Direct Source Wealth today for your FREE strategy session with
one of our Turn-Key Real Estate Consultants.
Our phone number is 844-Source-4, or 844-768-7234.
Website: DirectSourceWealth.com
We are located in Puerto Rico and would like to welcome your visit with
us in person.
Call us today at 844-Source-4

Why You need to Invest in Puerto Rico Real Estate

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Why You need to Invest in Puerto Rico Real Estate