Is it still a good idea to invest in Tulum, Mexico?

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Is it still a good idea to invest in Tulum, Mexico?

Val Berechet
Member since 2021 · 18 posts · 10 votes

My wive and I were in Tulum for the second time in about a month's time and love the whole Riviera Maya.
So much so that we are thinking about buying an investment condo in a new development that just blew our mind. The development is the Solemn Ocean Living and we are considering a top floor unit with ocean views (development is 1640 ft from the coast)

We were super excited the past two days about it...then got home and I started researching if its actually a good idea and if its a good investment.

The concern is the rapidly rising crime in the area. Up until about 3 yars ago, it seems Tulum was a quiet coastal town, but its grown immensely in tourist and that has attracted the cartels and hence the crime.
Seems though this is a concern throughout Mexico...so is Mexico just a bad idea altogether for vacationing/investing?

We are also wary of putting so much money as a down payment on a development that isn’t even scheduled to start construction until Dec/Jan. The developer is offering a 20% discount if an 80% down payment is made. 

We love the fact that there is a direct flight to Cancun from Phoenix (then about a 1:30 drive to Tulum) and the jungle setting up against the beach is amazing. The food is outstanding as is the whole vibe of the area. 

I’ve also read Mexico is also currently building a new train system, scheduled to open in 2023 that links Cancun and Tulum (and other cities) as well as the new Tulum International Airport also scheduled to open in 2023 from what Ive read...so tourism to the area is expected to explode even more, which obviously from a rental investment perspective would be great...unless of course people are scared to go there.

Additionally, can anyone provide any input on the developer? They seem to have several projects in the works but I think only one is near completion and the developer (Akela Development Group) is a very new company. 

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Mike LambertPro Member
Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
4y

@Val Berechet

As pretty much everybody knows, Mexico sadly has an issue with drug/cartel related crime, that has been going on forever. In spite of that, more and more foreigners visit, move to, invest and buy real estate Mexico year after year. Why? Because nothing bas happens to 99.99% of them and they feel safe. So they keep coming back in ever greater numbers.

Many people actually feel safer traveling to Mexico than to the US. In the US, they can be randomly shot at a supermarket, a school or a nightclub. In Mexico, that won't happen; you'll be shot if you get involved in the drug business, which most people won't do. Sometimes (rarely), people will accidentally get shot in the crossfire between gangs like a few days ago in Tulum but that type of incident occur pretty much everywhere but you just don't hear about it. When it happens to tourists in Mexico, the press is having a field that with it. Savvy visitors to Mexico avoid certain areas and taking part in certain activities, like they would actually do anywhere.

When a village becomes a city, crime will inevitably rise and that's the same everywhere around the world. In the Riviera Maya, most of the crimes take place in Cancun, which is where most of the population resides. Yet, the murder rate in Cancun is lower than in New York City or LA. Will you refrain from visiting or investing in NYC or LA because of the high crime rate. No, you'll just avoid some areas, like you would in Mexico.

Clearly, if the violence would get out of control and too many accidents with tourists happen, the growth in tourism could in theory slow down but it is nobody's interest that happens, including the drug cartels. And the Mexican government will do whatever to protect the golden goose, as they have proven time and time again.

The renderings of many projects look great and the projects will end up looking great. The quality of those constructions in Mexico is generally top notch. With this kind of development, you'd have to make sure that you don't overpay if you buy as an investment. Look at the price per square meter/foot, as many developers sell super small until to lower the $ price tag. A too high price will translate in a low ROI. Indeed, unless you're in the luxury segment, renters won't give that much of a dime and in any case won't pay a huge premium because your condo is beautiful. People don't go to Tulum to stay in a condo. They spend their time at the beach, doing excursions or drinking or eating out. Ideally, you'd want to avoid the properties that are overpriced and there are many in my humble opinion.

I would never trust the ROI calculations from the developers, as they are meant to sell their condos. They almost invariably end up being exaggerated when compared to the reality. I would calculate my own figures if I were you. You can absolutely make a 9 -11% ROI and even much more in Tulum, especially if you buy the right property and can get any kind of financing. However, you can't buy any property and expect you'll get that sort of return, far from it. You'll need to buy the right kind of property and also having it properly managed will make a difference.

Pre-construction properties are generally speaking the best deals in Mexico if all goes well but there are risks indeed so it's important to know who you're dealing with. There are ways to almost eliminate these risks but, unfortunately, most developers won't go along with that because it's not in their interest.

Since I'm now working on my own development projects, I don't think it's appropriate for me to comment on developers in a public forum but I will respond in my reply to the DM you sent me.

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  • Jody Sperling
    Omaha, NE · Member since 2020 · 612 posts · 665 votes
    4y

    Hey, I know you're looking for people with experience buying property in Mexico, which I don't have, but I did read your post and feel it was worth commenting that while you're asking a lot of great questions to protect your money, you are perhaps missing the point of an investment. None of your concern was for how you would make money on this purchase, just about how you might lose it. Do you plan to rent it to people? Long-term? Short-term. If not. It isn't an investment.

    And if you aren't using it as an investment, the risk profile goes up so much it's hard to even comprehend the purchase. If you really enjoy Tulum so much, continue creating the lifestyle where you can visit as often as you want for as long as you want, with who you want. And that means buying and managing sound assets that make you good money. Best of luck!

    1Reply
  • Val Berechet
    OP
    Member since 2021 · 18 posts · 10 votes
    4y

    Thanks for the reply Jody. 

    Absolutely the main purpose here would be to rent it. The developer is quoting the usual 9-11% ROI after all expenses, including a 20% fee if they manage it and assuming a 65% occupancy rate. We would of course also like to enjoy it when it is not being occupied as a rental.

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Val Berechet

    As pretty much everybody knows, Mexico sadly has an issue with drug/cartel related crime, that has been going on forever. In spite of that, more and more foreigners visit, move to, invest and buy real estate Mexico year after year. Why? Because nothing bas happens to 99.99% of them and they feel safe. So they keep coming back in ever greater numbers.

    Many people actually feel safer traveling to Mexico than to the US. In the US, they can be randomly shot at a supermarket, a school or a nightclub. In Mexico, that won't happen; you'll be shot if you get involved in the drug business, which most people won't do. Sometimes (rarely), people will accidentally get shot in the crossfire between gangs like a few days ago in Tulum but that type of incident occur pretty much everywhere but you just don't hear about it. When it happens to tourists in Mexico, the press is having a field that with it. Savvy visitors to Mexico avoid certain areas and taking part in certain activities, like they would actually do anywhere.

    When a village becomes a city, crime will inevitably rise and that's the same everywhere around the world. In the Riviera Maya, most of the crimes take place in Cancun, which is where most of the population resides. Yet, the murder rate in Cancun is lower than in New York City or LA. Will you refrain from visiting or investing in NYC or LA because of the high crime rate. No, you'll just avoid some areas, like you would in Mexico.

    Clearly, if the violence would get out of control and too many accidents with tourists happen, the growth in tourism could in theory slow down but it is nobody's interest that happens, including the drug cartels. And the Mexican government will do whatever to protect the golden goose, as they have proven time and time again.

    The renderings of many projects look great and the projects will end up looking great. The quality of those constructions in Mexico is generally top notch. With this kind of development, you'd have to make sure that you don't overpay if you buy as an investment. Look at the price per square meter/foot, as many developers sell super small until to lower the $ price tag. A too high price will translate in a low ROI. Indeed, unless you're in the luxury segment, renters won't give that much of a dime and in any case won't pay a huge premium because your condo is beautiful. People don't go to Tulum to stay in a condo. They spend their time at the beach, doing excursions or drinking or eating out. Ideally, you'd want to avoid the properties that are overpriced and there are many in my humble opinion.

    I would never trust the ROI calculations from the developers, as they are meant to sell their condos. They almost invariably end up being exaggerated when compared to the reality. I would calculate my own figures if I were you. You can absolutely make a 9 -11% ROI and even much more in Tulum, especially if you buy the right property and can get any kind of financing. However, you can't buy any property and expect you'll get that sort of return, far from it. You'll need to buy the right kind of property and also having it properly managed will make a difference.

    Pre-construction properties are generally speaking the best deals in Mexico if all goes well but there are risks indeed so it's important to know who you're dealing with. There are ways to almost eliminate these risks but, unfortunately, most developers won't go along with that because it's not in their interest.

    Since I'm now working on my own development projects, I don't think it's appropriate for me to comment on developers in a public forum but I will respond in my reply to the DM you sent me.

    9Reply
  • Val Berechet
    OP
    Member since 2021 · 18 posts · 10 votes
    4y

    Amazing insight @Mike Lambert, really appreciate it.

    0Reply
  • Tak Ogihara
    New to Real Estate · PDX to Mexico · Member since 2021 · 39 posts · 22 votes
    4y


    I would have to agree with @Mike Lambert on my feelings with cartels and violence in Mexico, etc. And I don't think it will affect tourism as much as we think, the numbers show the opposite. Occupancy rates are closer to 80-90% throghout the year. And no major hotels are allowed in Tulum so the

    And like the original poster @Val Berechet, I have just come back from a recent trip to Tulum and saw ther presentations and drank the coolade. Now that I'm back, I'm looking to hear insight or advice from anyone actually OWNing a property in Tulum. 

    1Reply
  • Val Berechet
    OP
    Member since 2021 · 18 posts · 10 votes
    4y

    @Tak Ogihara Interesting, I did not know major hotels are not allowed in Tulum. Thanks for that info. 

    0Reply
  • Janissa RodriguezPro Member
    New to Real Estate · Los Angeles, CA · Member since 2020 · 2 posts · 0 votes
    4y

    Hi All, I wanted to ask a few follow up questions to Val's post as I too have been considering investing in Tulum and these questions might also help you Val. I've visited Tulum several times and will be spending a month there doing more research on different properties and land. I also have 3 airbnbs in Tulum that I manage (not my own purchases) but I've seen great returns even during the pandemic which is the reason I'm interested in investing in Tulum. I would like to build my own property meaning I would have to buy land and I would work with the same developer of the properties I manage so its someone I personally know and trust. Assuming the numbers are right and worth the investment my questions are: as a foreigner, am I able to obtain title to both land and the property that I build? Anything to consider when buying land? Would you recommend investing in a pre-construction instead? What are some legal factors (Mexican laws or taxation) to take into consideration? Open to any other advice! Thanks in advance!

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Janissa Rodriguez

    If you want to buy a condo, you're obviously not going to build your own but no worries you can indeed buy a pre-construction property from a developer or a resale. If you want to buy a villa/house, you have much less choice. You can by a resale (but supply is limited) or you can buy a house from one of the rare villa developments. The problem with those is that they're not real villas, they're "just" glorified condos. Many foreign buyers in Tulum buy for lifestyle or at least partly for lifestyle. Some want a real villa and they want it tailor-made so their only option is to have the villa built for them. So, it's being done, although not very common.

    The rules for buying land are the same as for buying any sort of property. You have to use a bank trust (fideicomiso) but it's like having the property in your own name for all intents and purposes.

    If you decide to buy and build, you'll have to do everything by yourself, although I imagine that the developer would be on hand to help you if needed. However, there are substantial legal risks associated with doing this and most people who go this route have no idea they're taking them. As always with legal matters, you're fine until there is the problem and then the consequences can be devastating. That's the horror stories you hear from time to time, that people use to discourage you to invest in Mexico in spite of the fact that the underlying reason was some wrongdoing from the buyer.

    In spite of the corruption, Mexico is governed by the rule of law. This means that, as a foreign buyer, you're protected as long as you're on the ride side of the law. However, if you do anything illegal and you have to defend yourself against Mexican nationals, entities or the government in a court of law in Mexico, good luck to you.

    And this is where the problems lie. What you would presumably do is find land, buy it, ask for a construction permit, hire an architect to make plans and hire a builder (the developer) for the construction. Because you'll be the titleholder and you'll be hiring the sub-contractors, you'll be co-responsible for what they're doing. Those who have read some of my numerous posts know that, while I've been a staunch defender of Mexico against all the unwarranted badmouthing, I've never shied away from telling it like it is, including the bad and the ugly.

    Buying a piece of land and having a house build on it shouldn't be an issue and it isn't in the US or Canada. In Mexico, the reality is that some Mexican developers and other local businessmen do not have the same respect for the law that you and I have. This can result in (huge) code violations, payments of illegal bribes and other shenanigans, all done under your watch. I have no idea who your developer is. But I can tell you that I regularly hear from the grapevine about the shenanigans some of the supposed reputable developers are engaging in. I can pretty much guarantee you that you wouldn't want to have anything to with them if only you knew.

    If you want to avoid these risks, there is a solution and I'll illustrate it with my own situation. After a long search, I found the right trustworthy Mexican partner/builder which has allowed me to work on doing my own condo developments to enable to give a better deal to the buyers, including people who contacted me on BP and couldn't find something that suit their needs. Some people have been asking me about villas and I figured out that I could use our infrastructure to build for them (on spec) as well.

    Let's assume that you're my customer. It'd work like this. You approach me and tell me what you want. Unless you already have found a piece of land, I'd look for one for you. I'd buy the land and then we'd build what you ordered. You (your fideicomiso) will only take title on the property when the construction is over. So all that happens before and during construction would be done under our name, not yours, which would remove you from the potential liabilities. This is exactly the same as when you buy a pre-construction property, which many people do. Of course, this means I'm taking all the risks but I can afford because I'm in control and I can trust the people I work with. Moreover, I would definitely never get involved in bribes as bribing foreign officials is a criminal offence in Canada, let alone being unethical.

    You don't need to come to me to do this. You can ask your developer to do it that way. Of course, there's no guarantee he'll do it. It's indeed not very common that a developer would build a house for you like that so I imagine he'll do it because of your relationship. However, I'm not sure he'll want to go along with that structure, as it's probably not ideal from his point of view.

    Let me finishing off by mentioning that I'm not a lawyer and that none of what I wrote should be considered or taken as legal advice.

    3Reply
  • Tak Ogihara
    New to Real Estate · PDX to Mexico · Member since 2021 · 39 posts · 22 votes
    4y

    @Mike Lambert always coming through with the top notch insight! Amazing info and advice, thank you! 

    1Reply
  • Janissa RodriguezPro Member
    New to Real Estate · Los Angeles, CA · Member since 2020 · 2 posts · 0 votes
    4y

    Thank you for your insight @Mike Lambert, very helpful! From this post and other responses you've written I see how important it is to have a developer that I can trust and work with a fideicomiso. Great info here. 

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Mike Lambert:

    @Val Berechet

    As pretty much everybody knows, Mexico sadly has an issue with drug/cartel related crime, that has been going on forever. In spite of that, more and more foreigners visit, move to, invest and buy real estate Mexico year after year. Why? Because nothing bas happens to 99.99% of them and they feel safe. So they keep coming back in ever greater numbers.

    Many people actually feel safer traveling to Mexico than to the US. In the US, they can be randomly shot at a supermarket, a school or a nightclub. In Mexico, that won't happen; you'll be shot if you get involved in the drug business, which most people won't do. Sometimes (rarely), people will accidentally get shot in the crossfire between gangs like a few days ago in Tulum but that type of incident occur pretty much everywhere but you just don't hear about it. When it happens to tourists in Mexico, the press is having a field that with it. Savvy visitors to Mexico avoid certain areas and taking part in certain activities, like they would actually do anywhere.

    When a village becomes a city, crime will inevitably rise and that's the same everywhere around the world. In the Riviera Maya, most of the crimes take place in Cancun, which is where most of the population resides. Yet, the murder rate in Cancun is lower than in New York City or LA. Will you refrain from visiting or investing in NYC or LA because of the high crime rate. No, you'll just avoid some areas, like you would in Mexico.

    Clearly, if the violence would get out of control and too many accidents with tourists happen, the growth in tourism could in theory slow down but it is nobody's interest that happens, including the drug cartels. And the Mexican government will do whatever to protect the golden goose, as they have proven time and time again.

    The renderings of many projects look great and the projects will end up looking great. The quality of those constructions in Mexico is generally top notch. With this kind of development, you'd have to make sure that you don't overpay if you buy as an investment. Look at the price per square meter/foot, as many developers sell super small until to lower the $ price tag. A too high price will translate in a low ROI. Indeed, unless you're in the luxury segment, renters won't give that much of a dime and in any case won't pay a huge premium because your condo is beautiful. People don't go to Tulum to stay in a condo. They spend their time at the beach, doing excursions or drinking or eating out. Ideally, you'd want to avoid the properties that are overpriced and there are many in my humble opinion.

    I would never trust the ROI calculations from the developers, as they are meant to sell their condos. They almost invariably end up being exaggerated when compared to the reality. I would calculate my own figures if I were you. You can absolutely make a 9 -11% ROI and even much more in Tulum, especially if you buy the right property and can get any kind of financing. However, you can't buy any property and expect you'll get that sort of return, far from it. You'll need to buy the right kind of property and also having it properly managed will make a difference.

    Pre-construction properties are generally speaking the best deals in Mexico if all goes well but there are risks indeed so it's important to know who you're dealing with. There are ways to almost eliminate these risks but, unfortunately, most developers won't go along with that because it's not in their interest.

    Since I'm now working on my own development projects, I don't think it's appropriate for me to comment on developers in a public forum but I will respond in my reply to the DM you sent me.

    Your Comment: "Because nothing bas happens to 99.99% of them and they feel safe."
    I don't know about that, the last time I was in Cancun (next to Tulum) I wasn't shot at. Now, shootings are all too frequent. The "missing" in Mexico  The border at Texas and Arizona are pretty bad with the cartels shooting into the USA at border patrol and Mexico City is on the brink. Not all of Mexico is bad. The parts that are unlivable are not being harrassed by the cartels.

    It's nearly as bad as Chicago or New York or San Francisco.

    Nearly 100,000 people in Mexico have disappeared

    Many of the disappeared were abducted and presumably killed by drug cartels or kidnapping gangs, but authorities and police are suspected in some cases

     https://www.foxnews.com/world/...

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Account Closed

    Let me ask you a question: Is it fair to me or to the readers to take my words out of context by omitting to quote part of the paragraph that I wrote?

    For the record, this is what I wrote in its entirety, as everybody can see above:

    "As pretty much everybody knows, Mexico sadly has an issue with drug/cartel related crime, that has been going on forever. In spite of that, more and more foreigners visit, move to, invest and buy real estate Mexico year after year. Why? Because nothing bad happens to 99.99% of them and they feel safe. So they keep coming back in ever greater numbers.

    Many people actually feel safer traveling to Mexico than to the US. In the US, they can be randomly shot at a supermarket, a school or a nightclub. In Mexico, that won't happen; you'll be shot if you get involved in the drug business, which most people won't do. Sometimes (rarely), people will accidentally get shot in the crossfire between gangs like a few days ago in Tulum but that type of incident occur pretty much everywhere but you just don't hear about it. When it happens to tourists in Mexico, the press is having a field that with it. Savvy visitors to Mexico avoid certain areas and taking part in certain activities, like they would actually do anywhere."

    What is mentioned in that article is very sad but these are local people linked to drug activities, with sadly some innocent (overwhelmingly) local victims as collateral but the shootings rarely happen in the places where tourists go. Countries like the US and Canada have travel advices letting you where not to go (and what not to do).

    If you want to succumb to media sensationalism and headlines meant to sell, be my guest. However, for the purpose of a healthy and helpful discussion, I invite you to the the do the following exercise to get the facts first:

    1. Check Mexico's tourism statistics. They will confirm to you that the number has been steadily increasing year after year (Covid or recession effects aside). They will also give you the current yearly number of visitors.

    2. Find out how many visitors have disappeared or been shot in Mexico over the last few years. You'll find articles for every single death. You can bet on that.

    3. Divide the number of visitors who disappeared or were shot over the last twelve months by the number of actual visitors. The result will be even way less than 0.01%, which corresponds to the 99.99% I mentioned in my previous post. But don't take my word for it; do the calculations for yourself;

    4. Find out how many people died from a random shooting in the US over the last 12 months. Compare it to the number of visitors who were shot or disappeared in Mexico. You'll find out that the number of victims in the US is way higher.

    If you don't trust official figures 100%, you might want to complete your research by getting some anecdotal evidence. Go to the closest airport. Check out the first arriving plane from Mexico and ask people such questions as: How was your trip? Did you feel safe? Would you go back? Alternatively, you might want to travel to Mexico and check for yourself on the ground. And, who knows, maybe, like many before you, you'll decide to buy real estate there during your trip. :)

    Finally, I completely agree with you that this cartel-related violence is sad. Because of the stigma of it, many people won't want to buy real estate there. And that's all good. This means more opportunities for the investors who can see the forest from the trees and it also means that I don't need to participate in a bidding war when I want to but a property there.

    6Reply
  • Melanie Dupuis
    Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
    4y

    @Val Berechet We have also recently put in offers on pre-construction condos and villas in Tulum. We are now at the stage of working with our international accountants and lawyers in order to set up our entities correctly. Canada and the states have a treaty with Mexico, which changes the way you should set up your entities. For example, Costa Rica does not have a treaty with Canada, and our entities in which we are looking to purchase our assets there look completely different.

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Mike Lambert:

    @Account Closed

    Let me ask you a question: Is it fair to me or to the readers to take my words out of context by omitting to quote part of the paragraph that I wrote?

    For the record, this is what I wrote in its entirety, as everybody can see above:

    "As pretty much everybody knows, Mexico sadly has an issue with drug/cartel related crime, that has been going on forever. In spite of that, more and more foreigners visit, move to, invest and buy real estate Mexico year after year. Why? Because nothing bad happens to 99.99% of them and they feel safe. So they keep coming back in ever greater numbers.

    Many people actually feel safer traveling to Mexico than to the US. In the US, they can be randomly shot at a supermarket, a school or a nightclub. In Mexico, that won't happen; you'll be shot if you get involved in the drug business, which most people won't do. Sometimes (rarely), people will accidentally get shot in the crossfire between gangs like a few days ago in Tulum but that type of incident occur pretty much everywhere but you just don't hear about it. When it happens to tourists in Mexico, the press is having a field that with it. Savvy visitors to Mexico avoid certain areas and taking part in certain activities, like they would actually do anywhere."

    What is mentioned in that article is very sad but these are local people linked to drug activities, with sadly some innocent (overwhelmingly) local victims as collateral but the shootings rarely happen in the places where tourists go. Countries like the US and Canada have travel advices letting you where not to go (and what not to do).

    If you want to succumb to media sensationalism and headlines meant to sell, be my guest. However, for the purpose of a healthy and helpful discussion, I invite you to the the do the following exercise to get the facts first:

    1. Check Mexico's tourism statistics. They will confirm to you that the number has been steadily increasing year after year (Covid or recession effects aside). They will also give you the current yearly number of visitors.

    2. Find out how many visitors have disappeared or been shot in Mexico over the last few years. You'll find articles for every single death. You can bet on that.

    3. Divide the number of visitors who disappeared or were shot over the last twelve months by the number of actual visitors. The result will be even way less than 0.01%, which corresponds to the 99.99% I mentioned in my previous post. But don't take my word for it; do the calculations for yourself;

    4. Find out how many people died from a random shooting in the US over the last 12 months. Compare it to the number of visitors who were shot or disappeared in Mexico. You'll find out that the number of victims in the US is way higher.

    If you don't trust official figures 100%, you might want to complete your research by getting some anecdotal evidence. Go to the closest airport. Check out the first arriving plane from Mexico and ask people such questions as: How was your trip? Did you feel safe? Would you go back? Alternatively, you might want to travel to Mexico and check for yourself on the ground. And, who knows, maybe, like many before you, you'll decide to buy real estate there during your trip. :)

    Finally, I completely agree with you that this cartel-related violence is sad. Because of the stigma of it, many people won't want to buy real estate there. And that's all good. This means more opportunities for the investors who can see the forest from the trees and it also means that I don't need to participate in a bidding war when I want to but a property there.

    The point you seem to be overlooking is:
    Nearly 100,000 people in Mexico have disappeared. Are you saying they don't count if you can't find the bodies? 

    0Reply
  • Tak Ogihara
    New to Real Estate · PDX to Mexico · Member since 2021 · 39 posts · 22 votes
    4y
    Originally posted by @Melanie Dupuis:

    @Val Berechet We have also recently put in offers on pre-construction condos and villas in Tulum. We are now at the stage of working with our international accountants and lawyers in order to set up our entities correctly. Canada and the states have a treaty with Mexico, which changes the way you should set up your entities. For example, Costa Rica does not have a treaty with Canada, and our entities in which we are looking to purchase our assets there look completely different.

    Hi, you are (finally!) our first buyer in Tulum, with experience. Please share your experience with us, and detail the differences with Costa Rica too! I would love to hear more about this. Thanks!

    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Account Closed

    I'm not overlooking anything. I regularly go to Mexico so I know first hand what's going on there. At the risk of repeating myself, the disappearances you're mentioning are a well-known fact and are nothing new (your article is from years ago). As sad as they are, they haven't affected tourism or there real estate sector. We're here to help each other so I don't see the point of bringing that up to scare somebody away from buying a condo in Tulum when, so far, it's had absolutely no bearing on the performance of investments there. Speaking of which, did you do the exercise I suggested, which would precisely demonstrate that?

    Mind you, it's never wrong to bring any piece of information to the table but it's a good things to help putting it into perspective. Clearly, as I mentioned in a previous reply, if the situation degenerates and visitors start to disappear (in any significant numbers), that would be a problem. If history is any guide, it won't happen and it is in nobody's interest (including the cartels). Yet, you should never say never and any investment carries a certain degree of risk. Therefore, Val was totally right to ask about the security situation. Clearly, you wouldn't be comfortable investing there and that's totally fine. Many people aren't comfortable investing in certain parts of the US either.

    @Tak Ogihara

    If you do a search, you'll find out that there are quite a bit of us investing in Tulum, Mexico and Costa Rica on here. Also, I have commented on the differences between Mexico and Costa Rica several times recently in posts about Costa Rica. You can find them through my profile.

    4Reply
  • Tak Ogihara
    New to Real Estate · PDX to Mexico · Member since 2021 · 39 posts · 22 votes
    4y

    Sweet. I didn't know that. I will search for those articles now! thanks

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Mike Lambert:

    @Account Closed

    I'm not overlooking anything. I regularly go to Mexico so I know first hand what's going on there. At the risk of repeating myself, the disappearances you're mentioning are a well-known fact and are nothing new (your article is from years ago). As sad as they are, they haven't affected tourism or there real estate sector. We're here to help each other so I don't see the point of bringing that up to scare somebody away from buying a condo in Tulum when, so far, it's had absolutely no bearing on the performance of investments there. Speaking of which, did you do the exercise I suggested, which would precisely demonstrate that?

    Mind you, it's never wrong to bring any piece of information to the table but it's a good things to help putting it into perspective. Clearly, as I mentioned in a previous reply, if the situation degenerates and visitors start to disappear (in any significant numbers), that would be a problem. If history is any guide, it won't happen and it is in nobody's interest (including the cartels). Yet, you should never say never and any investment carries a certain degree of risk. Therefore, Val was totally right to ask about the security situation. Clearly, you wouldn't be comfortable investing there and that's totally fine. Many people aren't comfortable investing in certain parts of the US either.

    @Tak Ogihara

    If you do a search, you'll find out that there are quite a bit of us investing in Tulum, Mexico and Costa Rica on here. Also, I have commented on the differences between Mexico and Costa Rica several times recently in posts about Costa Rica. You can find them through my profile.

    I have three guys from, dare I say Mexico, who work for me. They still have family in Mexico. (Yes, they have work visas. Whew. That was a close one.) Anyway, the stories are from them. Heck, you just have to read the news. Anyway, the situation is much worse than it was a few years ago. And you should already know that.


    Feb 21, 2018,09:20am EST

    Mexico: Where More Americans Are Murdered Than In All Other Foreign Countries Combined

     Advisories released last month by the U.S. State Department tell Americans not to set foot in five Mexican states — Sinaloa, Colima, Michoacan, Guerrero and Tamaulipas — because of violent crime. Traveling to those states is as dangerous, according to the State Department's safety ratings, as traveling to Afghanistan, Syria and Iraq. And Americans with plans to go to 11 other Mexican states should “reconsider,” the agency says.

    0Reply
  • Account Closed
    Investor · Scottsdale Austin Tuktoyaktuk · Member since 2021 · 4k+ posts · 4k+ votes
    4y
    Originally posted by @Tak Ogihara:
    Originally posted by @Melanie Dupuis:

    @Val Berechet We have also recently put in offers on pre-construction condos and villas in Tulum. We are now at the stage of working with our international accountants and lawyers in order to set up our entities correctly. Canada and the states have a treaty with Mexico, which changes the way you should set up your entities. For example, Costa Rica does not have a treaty with Canada, and our entities in which we are looking to purchase our assets there look completely different.

    Hi, you are (finally!) our first buyer in Tulum, with experience. Please share your experience with us, and detail the differences with Costa Rica too! I would love to hear more about this. Thanks!

    Sounds like the guests at the Hyatt had a lovely time and lots of exciting entertainment today in Cancun. The machine guns must have been quite a show.

    Two dead after drug dealers open fire at five-star Hyatt hotel in Cancun: Panicked guests were instructed to hide, barricade their doors and given metal sticks to defend themselves

    https://www.dailymail.co.uk/ne...

    • Men reportedly armed with machine guns opened fire at the Hyatt Ziva Riviera Cancun resort Thursday afternoon
    • Several people said on Twitter that vacationers were told by staff to hide
    • One guest claims they manned the entrances to the basement and were given metal sticks and a pedestal bathroom sink to defend themselves
    • Police said the shooting stemmed from conflict between members of hostile groups of drug dealers and that two people had died

    • The shooting broke out around 3pm Thursday when men allegedly carrying machine guns fired shots on the beach area of the Hyatt Ziva Riviera Cancun resort in Mexico,


    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Account Closed

    This thread was about somebody asking for help buying property in Tulum, not about you or me being right about safety issues in the country. And, by the way, Tulum is in not in Sinaloa, Colima, Michoacan, Guerrero or Tamaulipas.

    I refuse to be drawn further into that kind of unproductive discussion that helps no one and I don't want to get into a personal argument with you that has no place in this forum. The only reason I got drawn into it in the first place is because you mentioned me in your post/reply and quoted me out of context, omitting from your quote whatever I wrote that was contradicting your argument. I don't think it's right to do that and especially not in a public forum so I was "forced" to set the record straight.

    Mind you, the irony of that discussion is that I suspect we aren't probably disagreeing on much. You were "just" disputing my comments that nothing bad happens to 99.99% of the visitors and that they feel safe. This is fair enough and disagreements make for a healthy and interesting discussion. However, as I always say in such circumstances, we're entitled to our own opinion but not to our own facts. I suggested that, before disputing "my" statistics, you check the figures out for yourself. Did you? Did you also see that the number of people visiting, moving to or investing in Mexico keeps growing year after year? I guess we're all stupid people who don't read the news and are fools to think we're safe lying on the beach in Tulum...

    3Reply
  • Jeff T.
    Rental Property Investor · Culver City, CA · Member since 2014 · 222 posts · 79 votes
    4y

    @Val Berechet

    I’m no expert, but I would just be aware that other countries have different laws, and that investing in the US it’s pretty clear what you are getting yourself into, but it may not be so clear in other countries as a foreign investor.

    Obviously you are making an effort to understand this, and maybe you can find out what you need to, but the risks are higher for sure out of country.

    So could you get a similar return in the US where the risks are lower?

    Could you just stay in a hotel or AirBnB vacation spot in Tulum for yourself and then invest in the US. I would just ask yourself if you are just interested in this because you like the place.

    If things don’t go as expected, there is probably not as much you can do from the US.

    1Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Jeff T.

    Maybe you're no expert but you bring some interesting points to the conversation so no need to apologize! :)

    I totally agree with you that, all other things being equal, investing domestically is less risky than investing internationally.

    The thing is other things are not equal. Real estate prices in the US are again fuelled by unsustainable monetary policies and artificially low interest rates, which are creating artificial economic growth. They are on the same path as before the 2008 crash and, in many places, prices are again completely disconnected from rents. As people tend to forget, the law of physics dictate that the same causes have the same consequences. I don't have a crystal bowl and I'm not predicting a crash or the timing of it but something will have to give at some point. Contrast that with many other countries like Mexico, where you don't have that cheap financing and the real estate inflation that goes with it. This is one of the reasons why you can often get a higher ROI overseas but, from a risk point of you, you could argue that the downside risk is higher in the US, depending on the location of course. Viewed this way, it becomes a toss whether domestic or international investing is the riskiest.

    Let's give you the benefit of the doubt and assume that investing internationally is riskier. Yet, looking at your whole portfolio, you would actually decrease your risk if you invest internationally while you would increase it if you invest (more) domestically. This is thanks to the essential risk-lowering benefit of diversification.

    Sadly, most people are 100% financially dependent on what's happening in their own country. They own all their properties and their stocks and bonds in their own country and they get all their W2, business and social security income from their own country as well. Isn't that crazy? Is that intelligent financial management? This is why so many Americans got financially ruined in 2008 but, as usual, people sadly never learned so history is doomed to repeat itself. And the risks of 100% domestic investing don't stop there. You are at the mercy of arbitrary government decisions or lawsuits. You have no escape.

    I'll give to you that this is less bad for you and I, living in the US and Canada, for the time being at least. However, again, we are being hostage to ill-advised monetary policies that could wreak havoc on anything that you own. Most importantly, China and India (and Asia in general) are in the process of taking over as the world's main economic powers and the reality is we can't compete against their cheap labour. The (economic) centre gravity of the world will shift away from North America and this could be financially devastating for anyone who has all his/her assets and sources of income there. Next time you take a 30-year mortgage, maybe you shouldn't think about that before assuming that you're going to be able to repay it easily in the outer years. The world is changing rapidly in front of us for all of us to see but we're all too much bogged down in the minutiae of our lives that we fail or just don't want to see it.

    To conclude, I'm not quite suggesting that you liquidate all your US assets in a hurry to go and invest everything overseas. Yet, in my humble opinion, not investing internationally is utterly financially irresponsible.

    2Reply
  • Tak Ogihara
    New to Real Estate · PDX to Mexico · Member since 2021 · 39 posts · 22 votes
    4y

    Hi all. I'd like to change up the mood a bit, and the subject.  I think we've thoroughly covered all the negative reasons or "dangers" to watch out for investing in Mexico.  But can anyone help shed light on all the great benefits of investing in real estate in Mexico, mainly Riviera Maya and Tulum especially. 

    I already love the place, but if I were speaking to investors who were not familiar with Mexico or Tulum, what points have I forgotten?

    1. + Explosive growth in tourism, population, economy, etc.
    2. + New international airport, Maya Tren
    3. + Attracts the perfect demographic for STR guests
    4. + Great investment potential...?
    5. + What else? 
    0Reply
  • Mike LambertPro Member
    Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
    4y

    @Tak Ogihara

    My first reaction after reading your list was: Isn't that enough??? Well, there is actually much more (more on that in a sec).

    Regarding the negativity, I think this has been a healthy discussion and it's great that people bring the negatives. I'm a rather risk averse person so I started looking at the negative aspects to make sure I was comfortable with them. This way, I'm not shaken when I read that one out of the 40 million tourists who visit Mexico was accidentally shot as I have context.

    Let me make an analogy for everyone's benefit. I live in Montreal, Canada, one of the safest places in the world to live in. Today is municipal Election Day here. One of my friend is candidate so, a few months ago, I started watching the local news on TV. I now exclusively invest internationally so I was never interesting uninteresting neighborhood stories. The headlines are made up of all the petty crime stories they can lay their hands on and make us feel that we're living in the most dangerous places on earth. So much so that the media almost felt me feel insecure and "manipulated" me into voting according to the safety criteria. This discussion about Mexico actually woke me up. I did what I suggest worried people do. I looked at Montreal's crime statistics, which confirmed that I live in one of the safest places in the world. I realized also that I have never felt insecure in my hometown and neither has anybody I know. And it's exactly the same thing when I or my friends travel to Mexico. So when, sadly, I see the headline of one visitor accidentally shot in Mexico, I understand we're talking about 1 out of 40 million visitors a year. These odds might be less than getting run over by a car when I leave the house.

    Without further ado, he are some points you forgot (these apply to investing in Mexico in general):

    1. Unless you buy into the fancy overpriced properties (a minority), properties like-for-like are much cheaper than in North America and the building quality is either the same or even superior;

    2. Much lower operating costs;

    3. Property taxes close to 0;

    4. International diversification (I went deeper on that in my previous reply above);

    5. STR regulations are getting increasingly punitive in many desirable places North America and this is probably going to get worse because of the shortage of long-term rentals and the increasing long-term rents. That risk doesn't exist in Mexico, where ST rentals are for all intents and purposes unregulated and are going to stay that way.

    6. Diversity of visitors. Visitors come to Mexico from all over the world so the tourism industry isn't dependent on what's happening in any single country. There are direct flights into Cancun from pretty much anywhere in the world.

    7. Proximity to North America, the main market for tourism in Mexico.

    8. Government support. The Mexican government has been a genius at bringing tourism to the country and there's no sign of that changing any time soon. They invest massively in infrastructure and in marketing. 40 years ago, Cancun was a coconut plantation was hardly anything else. Today, the Riviera Maya is one of the most visited places in the world. When it comes to this, other countries competing for tourists have fallen asleep at the wheel, which is why Mexico keeps climbing in the most visited countries' charts in spite of the negative media publicity.

    3Reply
  • Tak Ogihara
    New to Real Estate · PDX to Mexico · Member since 2021 · 39 posts · 22 votes
    4y

    Thanks again to @Mike Lambert for a thorough and superb reply, seriously thank you. This is exactly the kind of info I was looking for. 
    would you mind elaborating a little more on how the Mexican Gov’t has helped ensure foreign investments and makes it very safe to purchase.
    I understand the difference between titles held in Fideicomiso vs. a corporate entity, and the confusing “restricted zones” but, if I were speaking to investors unfamiliar with Mexico, how can I assure them their investments will be safe? One of them mentioned political changes can all-of-a-sudden cause you to lose ownership. But I think that’s BS, can’t find the right information online supporting or denying this. 

    2Reply
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