Real Estate Agent · San Antonio, TX · Member since 2019 · 33 posts · 6 votes
Hi BP!
I got into a pre-sale for a condo in Tulum, Mexico with the idea that I would Air BNB it and also go in visit through extended periods. I'm supposed to receive the keys this summer and they have been making great progress but who knows how much it'll slow down with this Covid-19.
Is anyone in some kind of similar situation with their Air BNB rentals in any different country? I imagine in this economy the money has come to a grinding halt but if anyone has property in other countries whats the next move? If Keys are received on time should I attempt to rent it to a local for a long term play instead? Curious to see if anyone is in a similar situation. Thank you.
There are no restrictions to foreign investment. If you buy a property within the Forbidden Zone (within 31 miles of the coast or 62 miles from the international borders), you need to buy through a bank trust (fideicomiso) or a Mexican corporation. The corporation is only worth it if you buy several properties.
There are no logistical challenges to buying furnishings, electronics on anything else. You can find pretty much all of your usual American store chains in Mexico.
What your VAs are telling you is correct. Operating costs are dirt cheap in Mexico, in absolute value and compared to the potentially (very) high amount of rental income you can make.
I haven't run into any problems thus far. The recipe: knowing what you're doing and people who you know and trust.
Feel free to reach out if you have any more precise questions.
Rental arbitrage generally makes no sense in that market and I haven't heard of anybody doing it. Typically, nobody wants to rent long term because short-term rentals are more profitable and owners want to use their property part of the time for their holidays. Because of that, there's actually a shortage of long-term rentals. Therefore, owners who do long-term rentals will charge very high rents, whereby you'd need a very high occupancy rate with short-term rentals just to break even. And, just using property management might bring you in the red even if you're successful with renting short-term. In other words, there's not much profit to make and it's fairly risky. This notwithstanding the fact that you'd have to find landlords agreeing to do that, which looks doubtful to me.
I have 13 virtual assistants in central America (11 in Mexico) and I was considering using them to help me get a few Airbnb's going down there but only looked at it from a high level thus far. I was also not intending to buy anything as I was under the impression they still had restrictions on foreign investment in coastal properties but instead was going to just do arbitrage and rent a condo or house. So what have you guys run into in the way of problems? My VA's assure me that cleaning is dirt cheap, utilities are dirt cheap, rent is not so cheap (for a nice place). I have no idea how much or what logistical challenges I would have in the way of furnishing, buying electronics, etc.
Hey @Robert Gilstrap! I own a few properties in Tulum and manage a portfolio of vacation rentals. It's true that manual service jobs pay poorly compared to the US, but I've found paying our cleaners and support staff well goes a really long way in terms of the level of service we receive. AND we can still make really, really good margins. I own my properties through a trust (fideicomiso) which is how more foreigners do it. Let me know if I can answer any questions!