Investinista reporting on Tulum, Mexico

Investinista reporting on Tulum, Mexico

Rental Property Investor · San Francisco, CA · Member since 2017 · 207 posts · 138 votes

Many of us is trying to get out of the Rat Race and have probably thought about living abroad.   With the uncertainty of the US economy,  many savy Investors of our times such as the Trumps, Kiyosaki and Buffett have began transitioning their assets adding international properties into their portfolios.  I happen to go to Tulum almost on an annual basis and this is probably my 5th time there so I would like to report on the changes that I see this time around.  Of course taking the advice from Amanda Han that all trips could be Investing focused, I certainly incorporated this advice into this trip.  This is what I see regarding Tulum, Playa Del Carmen, Yucatán area of Mexico:

Tulum is becoming up and up:  more restaurants are added and extending far inside the Biosphere towards Punta Allen.  Most restauranteurs often needs to prove themselves from places like Mexico City and regions of Italy in order to get investor fundings to open their up and coming restaurants in Tulum. The whole town is certainly fitting for celebrities as they love Tulum.  Dinning experience along with its excellent service with its ambience fit for the Bachlor and Bachlorrette show are becoming more creative with eco conscious cuisines and flavorful coctails.  I am seeing more expats here than ever and they come from all over the world.  These people tends to come to enjoy the great weather and comfortable living and were living here as investors to spiritual counselors or yoga teachers and herbalist.  With Cancun airport being such an easy airport with great flights to many destinations I can see how it is very easy to call Tulum home.  

Tulum Real Estate:  as fancy condos are building out in Playa del Carmen, the affordable price points can be found in Tulum.  I toured with an agent whom took us to 5 different properties.  They were in various phases in becoming complete.  One can buy a condo with entry points around $67K for a studio which probably hasn’t broken grounds yet or in its very early stages of building.  My agent took us to a property that was only complete with bricks laid out up to the 3rd floor penthouse roof top.  Back in the states, these types of tours would never happen without a Hard Hat which I didn’t see anyone wear.  (We are in Mexico after all.). But we get the sense of the location and the feel once it is complete only by looking at the brochures.  They didn’t have show rooms.   However that $67K condo once it is complete, kissing that final stage of completion can go up in value to about $100K. According to my agent there are a lot of investors that do just that and making a decent return.  There are some recognition that land for building is becoming scarce and many locals properties are being purchased by developers and some gentrification activities are noted.  Also with the unfriendliness of the US Trump immigration harassment, many Mexicans from the US are moving back and they bring with them their US standards of living so there is more demand for housing from this group as well.  In addition, the US dollars is still trading at $1 to 19 pesos, this makes Mexico a very attractive pick for many investors.

Crypto currencies:  For the first time in my travel, I begin to see that crypto currencies were getting more popular.  As one may have experience in Mexico, many establishments don’t like credit cards.  If they take them, it is usually with a fee of 3% to 6%.  On this trip to Mexico, I must have seen at least 10 restaurants that read on their menu:  “Cash only, no credit cards, BitCoin, Etherum, or Ripple accepted”

So of those of you who are considering Mexico as a place to invest, I would love to hear about it.  Or if you are already investing in Mexico, please share.  As I love it there and I go every year, I would love to hear your take in all that is going on and what sort of investment strategies you are thinking of implementing into your portfolio.  Mexico was voted by International Magazine as one of the top countries to retire a few years ago so wondering if anyone is planning on taking the plunge.  

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Investor · Bradenton, FL · Member since 2013 · 30 posts · 10 votes
8y

@Angela Yan Great post! My wife and I have recently visited Tulum and purchased an investment condo in Aldea Zama. The area is beautiful - somehow laid back and upscale at the same time. The investment value in this area, in my humble opinion, is hard to beat. 

@Eric C. It is obvious that you have never been to this area. Tulum is an hour and a half from Cancun. Calling Tulum and Cancun the same place is like saying Laguna Niguel is the same as Inglewood or Compton, which are certainly much closer (even with traffic) than Tulum is to Cancun.  

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  • Laguna Niguel, CA · Member since 2012 · 122 posts · 58 votes
    8y

    Lots of negative news headlines recently - "14 people reported killed in 36 hours in Cancun near tourist destinations".  "Cancun: From thriving paradise to murder capital?"  "American family vacationing in Mexico died from gas asphyxiation"

    What tourist would want to vacation in Mexico after reading this?  

  • Investor · Bradenton, FL · Member since 2013 · 30 posts · 10 votes
    8y

    @Angela Yan Great post! My wife and I have recently visited Tulum and purchased an investment condo in Aldea Zama. The area is beautiful - somehow laid back and upscale at the same time. The investment value in this area, in my humble opinion, is hard to beat. 

    @Eric C. It is obvious that you have never been to this area. Tulum is an hour and a half from Cancun. Calling Tulum and Cancun the same place is like saying Laguna Niguel is the same as Inglewood or Compton, which are certainly much closer (even with traffic) than Tulum is to Cancun.  

  • Rental Property Investor · San Francisco, CA · Member since 2017 · 207 posts · 138 votes
    8y

    @Kevin Smith thanks for sharing and would love to hear more about your experience. Do you plan on renting out your condo? Personal use as you exit the rat race? I was at Aldea Zama and it was told to me a desirable place to be. 

  • Developer · Inglewood, CA · Member since 2016 · 7 posts · 2 votes
    8y
    Kevin Smith And it’s obvious you’ve never been to Inglewood! Inglewood actually has a lower crime rate than Los Angeles. I see what you’re saying, but I’m tired of Inglewood getting a bad rep when it doesn’t deserve one.
  • Investor · Bradenton, FL · Member since 2013 · 30 posts · 10 votes
    8y

    @Angela Yan Yes to both of your questions = )  We plan to use it as an investment until our cash flow is sufficient to reach financial freedom, which should be in the next 2 years barring any global real estate meltdown. 

  • Investor · Bradenton, FL · Member since 2013 · 30 posts · 10 votes
    8y

    @Nick Tolson No offense meant to Inglewood, just trying to make a point to Eric that two places associated with the same general area (Riviera Maya or LA) can be very different. I should have used LA as my example. 

  • Laguna Niguel, CA · Member since 2012 · 122 posts · 58 votes
    8y

    @Kevin Smith Yes, I have been to cities and quite a few times to Mexico in general.  It's funny that you used Inglewood as an example city that you consider dangerous, but in reality is not.  This is the same point I am making.  Potential tourists from other countries only hear headlines which generate a great deal of fear and uncertainty.  This causes them to think twice about going to Tulum or PDC.  Tourists getting murdered is probably one of the worst headlines a potential visitor can read.

  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    8y

    I invest in the Riviera Maya and I agree that the whole area is booming, including Tulum. This means that there are great opportunities to invest there. The other side of the medal is that investing in Mexico can be very risky (especially if you don't know what you're doing or don't know anyone who does). Also, there is a huge amount of building going on. The properties you would consider buying are priced in USD and not affordable to the overall majority of Mexicans. Therefore, the market is very sensitive to any crisis or recession abroad, especially in North America. Also, while an investment over there might have a higher ROI than in the US, the cash-on-cash return could end up being much lower given how difficult it is to leverage at a decent price over there. This could mean higher risk and lower return compared to the US.

    How do I still invest and protect myself? I only invest in either private pre-sales of pre-development properties at a substantial discount compared to their market value and launch price and rom a developer who I personally know, has a great track record and give me cheap developer financing by Mexican standards. Alternatively, I'm looking at investing in existing properties at a substantial discount to market value and try to use seller financing as much as possible.

  • Rental Property Investor · San Francisco, CA · Member since 2017 · 207 posts · 138 votes
    8y

    @Mike LambertThank you so much for this informative post.  It seems like there is a lot of due diligence before pulling the trigger.  Do you by chance have a RE company that you find reputable?  Or a developer company that you trust?  I also like the seller financing idea as well.  So far I may be looking for something for myself versus as an investment as I like the location of Tulum/Cancun as I can be back in the state in less than 3 hrs flight.  Do you by chance live there part of the year?  

  • Kirkland, WA · Member since 2016 · 39 posts · 17 votes
    7y

    @Kevin Smith I took the plunge and got a lot to build in Tulum. We wanted to cut the middle man, so we got a lot and built from the ground up. It's quite the process!, but we are almost at the end of the endeavor (with the experience gained may look into do it again, if we find investors). We are at the finishes stage, and will start furnishing/decorating to rent in Airbnb this year. 

    I have just few SFs here, but it's my first time investing in Mexico, so looking for a savvy CPA EA now that I've added a foreign asset to the real state portfolio. 

    Haven't been able to find a savvy real estate CPA that can do both, national and international real estate taxes as well as foreign earned income (given that will start soon renting on Airbnb). The perfect person would be able to not only prepare the tax returns, but offer guidance and advice throughout the year. Do you have any recommendations? or anybody in the forum?

    It looks like you have the same plan of renting your place in Aldea Zama. Are you already renting? How is it going? 

    @Angela Yan Thanks for starting this post! It's hard to find investors also investing outside the US. I love Tulum with its beautiful beaches, the people, the food, all the boutique hotels and restaurants are amazing!. Construction is non-stop now. I just got back from overlooking the construction. The little town if growing!. Crime can happen anywhere... But always felt safe and welcome. Looking at some point in the future, to live in Tulum a few months out of the year and scape the Seattle rain! :)

  • Rental Property Investor · San Francisco, CA · Member since 2017 · 207 posts · 138 votes
    7y

    @Johanna V. biggest congrats in taking that leap of faith!  I can’t wait to hear more about it. If you don’t mind, would you share some numbers? 

    How much you got the land for? How long did it take for you to acquire it? Difficult? 

    Unit mix? How much you plan on selling it for? 

    I have an agent that I have been working with and I am sure she would love to help you market. But I am sure there has been flocks of them. 

    I go to Tulum about once or twice a year. I have the itch now to return. My favorite place to stay is Tita Tulum which over the years all the fancy establishment like the Harwood restaurant has built around this rustic still owned by Mexican family. 

    Let’s talk more soon and keep this post going. 

    Congrats again and I am so proud of you! I know it hasn’t been easy. We all have lots to learn from this experience. 

  • Investor · Bradenton, FL · Member since 2013 · 30 posts · 10 votes
    7y

    @Johanna V. Congratulations! I am happy you did it! I would love to hear all about it - and see some pictures of your project if you are willing to share!  Our development in Aldea Zama is still under construction - it is not expected to be done until this time next year. I sent you an invite to connect.

    I too have been searching for a new CPA that is savy in real estate as well as foreign earned income. I have found a couple potentials, but have not tried either of them yet. 

    1. The Real Estate CPA (https://www.therealestatecpa.com/become-client/) looks excellent, but expensive. 

    2. Amanda Han at Keystone CPA (www.keystonecpa.com). Appears to be very knowledgeable in RE. 

    3. Greenback Tax Services www.greenbacktaxservices.com . They specialize in expats and if you don't have a ton of separate rental properties, they may be what you are looking for. 

    Let me know if you use one of these or if you decide on another - I am in the same boat.

    Thanks,

    Kevin

  • Rental Property Investor · Member since 2019 · 12 posts · 8 votes
    7y

    Johanna, that sounds great.  Please let us know details.  I have been looking at buying a pre-sale 3BR condo or house in Tulum for vacation rental income.  I love the idea of buying a plot of land and building to our specs but am so unfamiliar with Mexico that I would hesitate to undertake the process.  How difficult was it to manage this process?  What type of experts did you rely on to help guide you through the process?

    Very exciting for you!

    Patrick

  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    @Johanna V. Congrats! I'm sure you'll do very well.

    @Johanna V. and @Kevin Smith If you want a CPA who does taxes in two or more countries, you'd most likely have to work with an expensive international firm. Otherwise, there's nothing wrong working with a specialist in both countries, who probably know their national rules better.

    @Angela Yan and @Patrick Sullivan We are going to buy a whole hectare to do a development in Tulum but we won't need the whole area so we'll be subdividing and selling lots if there is enough interest.

  • Rental Property Investor · San Francisco, CA · Member since 2017 · 207 posts · 138 votes
    7y

    @Mike Lambert where is your plot? What area? Keep me posted. 

  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    @Angela Yan Region 15. It’s the new area being developed between the town and the beach. I assume that interested buyers would love to have a trustworthy builder to build for them (unless they want to land bank and sell in a few years at a much higher price). If so, everybody could use the same builder we’re gonna hire and we could negotiate a discount.

  • Rental Property Investor · Member since 2019 · 12 posts · 8 votes
    7y

    @Mike Lambert that sounds very interesting.  Please keep me posted.

  • Lititz, PA · Member since 2013 · 595 posts · 272 votes
    7y

    Will Tulum follow this pattern? More money=more drugs=more crime

  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    @William Coet You are raising an interesting and important point. There are drugs and crime in Mexico and these are mostly connected. Most of the crime is between rival drug gangs and never touches tourists or the tourist areas, with a few exceptions. When these events happen, they get a lot of media attention, much more than if it was happening at home, as the media loves these stories. What they often conveniently forget to say is that oftentimes the people who get shot were involved in drugs, which could easily happen at home too. Yet, most people who go to Mexico to vacation or live feel safe because nothing happens and the government has invested heavily in policing. Because of that, tourists keep coming in greater numbers and more and more Americans and Canadians move to Mexico to live and/or retire.

    Did you know that the US is ranked above 100 in the list of the safest countries in the world? Did you know what the murder rate in New York City or Los Angeles is higher than in the Riviera Maya? Would you not visit or invest in real estate in those cities because of that? You’re probably most likely to get gunned down at your local grocery store than by walking in the tourist areas of Tulum or Playa del Carmen, unless you’re looking for trouble.

    Finally, Mexico is a developing country and has a lot to do to improve. But us BiggerPocketers don’t we look at the facts before rushing to judgement or regurgitating what the uninformed crowd does? Shall we look at the facts and stop the unwarranted Mexico bashing?

    I’m not criticizing you here. You were actually asking a question without being judgmental. And you brought an important subject that should be discussed so all you deserve is praise :-)

  • Rental Property Investor · Member since 2019 · 12 posts · 8 votes
    7y

    @Mike Lambert very well said and very balanced.  If you have ever been to this region, the police presence is pervasive and you really do feel safe.  One gets the feeling that nobody wants to do anything that would decrease the enthusiasm of the tourists.  Riding the local bus, going to local stores, etc. I always felt respected and safe.  I'm sure this is not the case in other cities - the Riviera Maya is likely an exception, but I can't comment on other areas.  

  • Los Angeles, CA · Member since 2018 · 95 posts · 46 votes
    7y

    I would love to invest and work on projects in Mexico and other central american countries such as Colombia. The biggest obstacles are financing, at least in acceptable terms, and currency risk. 

    If anyone had success financing real estate projects such as hotels or holiday rentals in central america i'd be very interested to get in touch

  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    7y

    @Account Closed I agree financing is the issue. I'm getting financing in Mexico but that's because of my connections and it literally multiply my already high unleveraged returns. I buy and do projects with investors there so that they can take advantage of it since they couldn't get it by themselves. In Mexico, most nice properties are priced in US dollars so there's no currency risk. And, if you do a project, your costs are low and in depreciated Mexican pesos whereas your rental income, capital gains and sales proceeds are in US dollars. I love that kind of currency risk!

    Colombia is next on my list as I have great connections there as well. There is currency risk there but it could be positive than a negative because the Colombian peso is at a multiyear high against the US dollars. Also, if you do short term rentals, your income will be in US dollars while your cost base is in Colombian pesos.

    Feel free to send me a private message if you want to get in touch and I don't mind to get on a call with you if I can be of assistance further.

  • Atlanta, GA · Member since 2019 · 18 posts · 9 votes
    7y

    Glad I found this thread.

    @Angela Yan I visited Tulum for the first time in January and can't wait to go back. Such an easy trip from the east coast. Would love to hear who your local agent in Tulum is. 

    @Kevin Smith Where in Aldea Zama did you end up purchasing your condo? Was there a local agent you enjoyed working with that you can recommend?

    I am a first time investor and just returned from a week in Tulum. I find the many offerings interesting but overwhelming and I am still reading through the many sales decks that were thrown my way. 

  • Investor · Bradenton, FL · Member since 2013 · 30 posts · 10 votes
    7y

    @Brunnhilde Wijnaar  we were very lucky to find our agent, Nora Moreno. She was excellent! She knows Playa Del Carmen and Tulum very well and she owns property in both places as well. She also is on a first name basis with the each of the best developers in the area (in my opinion: Anah, Tao, GMB). I’ve included her contact info below. Seriously, she is impressive.

    After a ton of property visits, research and developer presentations, we finally decided on Anah Hunab Tulum. It is right there at the entrance of Aldea Zama. Good luck with your search! Let me know if I can help at all.

    https://www.a-nah.com/anah-hunab.html

    Here is Nora’s website. Pm me and I can send you her email and phone.

    Nora Moreno 

    www.buyinrivieramaya.com

  • Rental Property Investor · Member since 2019 · 12 posts · 8 votes
    7y

    I have been looking into investing in property in Tulum and have had good luck with my agent. PM me if interested in his name. Very fluent in English, Mexican native and very knowledgeable and connected.

    Also, I am interested in Essentia by Artia. I think the builder is R4 Group.

    Does anyone have any insight into the quality/reputation of this builder or this development in particular?

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