Hi all, newbie here with a few questions regarding investing in STRs in Tulum. I’ve been evaluating a few different recommended markets for STRs (Florida panhandle, Smoky Mountains etc) and I’ve found that from a numbers perspective, Tulum has the most potential for returns, here’s why:
1. You can buy a pre-sale hotel-condominium with resort like services and property management features for 100-150k. These have potential to easily go for $100+ a night. I don't know much about management fees, but from what I've found is that they rival HOAs in popular STR markets
2. Tulum is growing very quickly and it’s easy to find developers who are building new condo-hotels left and right. I know that supply must meet demand but it seems like the growth in Tulum has a ton of potential to aid in appreciation
3. Real-estate in Tulum has been heavily impacted by Covid thus slashing prices.
I’d love for someone to point out what I’m missing in my current analysis and let me know what the risks are
The sargassum has been an issue for a while now but it's mostly seasonal and so its impact hasn't been what I initially feared, as you can read from this very recent article: https://www.riviera-maya-news..... Mind you, if its was to become a more serious problem, it would be a disaster for your state of Florida, which is being hit as well (in particular the Atlantic side).
The potential oversupply issue is a serious problem for Tulum. The path of progress has been moving from Cancun to Tulum through Playa del Carmen. When I decided to invest in the Riviera Maya a few weeks back, Playa del Carmen was pretty much "done" and Tulum was supposed to be the next best thing. Yet, I went first for Playa del Carmen. Part of it was for lifestyle reasons but I thought it was a better investment.
Like in the US and everywhere else for that matter, real estate investment is about location, location, location. And there is no more land available in Playa del Carmen proper. I had the opportunity to invest in the last plot of land available and we'll be almost right by the beach and 5th Avenue. This is absolute prime location. Even, if, for any reason, the overall occupancy rate for short-term in Playa del Carmen would drop (for example as a result of an increased supply), we'll probably still get rented. And new construction occurs further and further from downtown, which is much less short-term rental friendly.
In Tulum, there is no 5th Avenue and there aren't any condos or villas close to the beach. So, unlike Playa del Carmen where it's about being close to the beach and the 5th Avenue, it's about being in the jungle in Tulum. The problem is that there's already a huge amount of condos under construction in Tulum and there's a huge amount of jungle left to be built out. So, yes, there is a potential oversupply problem there. Moreover, what people liked about Tulum was its hippie bohemian chic character that is fast disappearing with the huge developments taking place there. As Tulum becomes more like Playa del Carmen, it will lose its attractiveness to these people. But it will never be as Playa del Carmen because of the building restrictions so it won't be a viable alternative to the Playa del Carmen-style people like me either.
Many people have been discovering Tulum recently but it's nothing new. The best time to invest there was a few years ago. When buying a new property today, I'd definitely be conservative when it comes to rental income projections.
Santa Clara, CA · Member since 2018 · 44 posts · 7 votes
4y
-> Purpose: Primary Rental/AirBnB investment (with a few 1-week vacation)
Hello Mike,
I find your Tulum posts informative. Would you please assist and share a few aspects further:
> A. Process:
In US, each process is well-defined (Buyer/Seller representative, Notary, Loan etc ). Is Buying process in Tulum(Quintana Roo) similar.
> B. Asset Protection:
In US, there are Living Trusts/LLCs to pass the assets. How could this be handled in Mexico? Are there Mexican laws for asset-protection?
What happens for unclaimed RE-asset. Is it taken by government/ condo-hotel?
Could a Buyer agent also assist in providing lawyer to provide asset-protection?
> C. Buying Process: Are all discussions (pricing, clause) documented? Is purchase process/notary possible remotely?
> D. Taxes in Mexico: Can they be filed remotely without having to visit Mexico in-person.
> E. Can HOA, Property Management be done remotely?
> F. Are you also a Real-Estate professional and can assist in Buying process? Or, is there a referral?
> G. Is there a way to find crime-statistics..
A. Yes. The process is similar but different but there is a process. Regarding the loan, note that most buyers pay cash because 1) they often have the cash available given low price tags of the properties in Mexico compared to the US (and especially California), 2) while it's possible for a foreigner to get a mortgage from a Mexican bank, it can be difficult and the conditions are much less favorable compared to the US and 3) a property you pay 100% in cash in Mexico can be more profitable than a property you buy with a mortgage in the US.
B. You can buy property in Mexico using a fideicomiso (bank trust). In the registered/forbidden zone that includes Tulum, foreigners actually have to use a fideicomiso, unless they use a Mexican corporation. The fideicomiso de facto provides asset protection and it looks like it might fit your purposes but you should check with a lawyer to be sure.
C. Yes and yes
D. Yes
E. Yes
F. I just answered on the referral question by DM.
G. I've seen statistics quoted in various articles but not in an organized database. They're not as relevant as you think because they're substantially lower in the areas where visitors go and not many of them are victims of crime. The number of foreigners visiting, moving to and/or buying property in Mexico keeps increasing year after year so that gives you a qualitative idea. That probably tells you what you want to know.
Hello everyone. I know this forum it has been here since covid started. I am from canada and I can tell that since then I help more client from here and the USA to buy in riviera Maya then in my local area. Now, I know I am fortunate that I have lived there and I am back and forth 5 to 8 time at year for the past 12 years. Therefore, I know all the inside out, speaking the language and understand the system. As an investor and agent licence I perfectly understand that in a new country you must know how the system work. Since then I started to help people to figure out and mostly giving pro, cons, market value, ROI, CAP, and help to get funds to purchase. Many of you here express their "feeling about Tulum" which is acceptable and everyone has the own test right? YOU must follow in Love with eh surround on Riviera Maya at first, and enjoy the peaceful time there. After, you like to invest I can guarantee the increment of pre construction and condo hotel that has been build that you want believe unless you there. Each time I go I see new development, hard to keep up and of course not all as in my satisfaction.
We interviewed the builder and check that all the legal documents are in order before we refer to our clients. There are many different opportunity in Tulum specifically for condo hotel, multifamily concept fro cash flow. If you do your own due diligence you find out that cancun is number 6 worldwide as travel destination. You find out the they going to open a new gran prix formula one. You going to find out new airport already start to be build in Tulum. You will see that cancun start to build terminal 5. You find out Lous Vitton build 45 M $ hotel. I can go on and on, so if you look for an investment healthy market don t hesitate. Plus, if the local beach has issue there are ton and tons of gorgeous beach in the Riviera Maya and out. prive still affordable to buy in pre sale, with more cash you can get extra discount. Always check if you buy a land what type of construction you can build, and ask several company to give an estimate about cost. We build an app that can get extra discount in material and you safe even more. But again, always due your own diligence and connect with right people that you trust. Lots to do and to build for other 20 years plus.
Real Estate Agent · Tulum Mexico · Member since 2021 · 65 posts · 62 votes
3y
Hello Daniele,
Good to see you around here, I remember together we helped one of your clients invest in the Riviera Maya!
It's good that you bring up the condo hotel operation here, this is an interesting topic that I would like to share my opinion on, first I want to make sure I understand what you wrote, are you saying condo hotels are a good investment for cash flow?
good to see here as well. As you know condo hotel start to been build as a concept, which the bayer can get more profit.
Now, if you talking about building a condo hotel for cash flow all depend on the structure you build the strategy. You know as well that joint venture and share option to purchase allowed to get fund and build, rent, and generate a cash flow.
From the point of multifamily/condo hotel in a small version people became more attract. Therefore, they ask us to search for a land to build one. Look in Playa del carmen how many there are nowadays, and how many in pre sale.
Of course more you share here more we can help people to define and answer their objective. See you soon.
I am a Real Estate Broker in Tulum and help my clients manage their properties as well. Been in the Quintana Roo (Cancun, Playa del Carmen, Tulum, Bacalar) market for 10 years. Most of my clients are from the US or Canada investing for STR or to retire and/or live here.
If you have any questions regarding, property management, buying process, violence, developments, etc.. Don't hesitate to ask, would love to answer some threads but I would never finish at this point. LOL
We have all kinds of investments and investment strategies. From STR to Land Banking which for me is the best investment HANDS DOWN. Also you can develop single family homes or condo buildings and more.
Happy to chat with anyone with questions or looking to invest in the area.
Investor · Member since 2020 · 49 posts · 23 votes
3y
Hey @Arwin - Curious if you ended up investing in Tulum. I own several vacation rentals there and also have a property management company there.
There are definitely some risks in the market there that are good to be aware of:
1. There's a lot of new construction, which can make resale of your unit challenging if you want to offload it in a few years. Would you rather buy a property that's 3-5 years old, or a brand new presale for more or less the same price? Most ppl opt for the presale.
2. Supply may be outpacing demand, particularly for certain types of units. Take a look at Airdna to see number of studios compared to 1 bedrooms compared to 2 bedrooms. Depending on price, studios or 1-bedrooms can still get you a good return, but I suggest focusing on 4+ bedroom units and having a really special design to stand out in the market.
All this said, there's incredible opportunity in Tulum for a high ROI from the kind of cash flow only vacation rentals can offer.
Let me know if I can answer any other questions for you!
Another newbie here, bought in the Tao development of Edena. Mostly STR with a management company. Looking for information on what type and how much insurance I need to buy to protect me from rental liability and replacement costs of the unit. Have gotten a lot of different information. Any replies will be appreciated.
Congratulations on your investment at Edena! I can share a couple of insurance agents' contacts in the area, so you can get quotes and compare coverages and prices.
Basically, the agent will send you a form asking you for the value of the property, the contents of the property, electronics and appliances, glass breakage, how many stories the house/condo has, the distance from the ocean, etc.
The price will vary if you hire coverage for hydrometeorological damages, which I strongly suggest you do even though Edena is on the other side of the highway.
For example, on one of my properties in Tulum, I pay around $1,500 USD a year so approx. 125 USD a month, curious to know how much on average insurance for a 3 or 4-bedroom property in the US or Canada costs.
Hi all, newbie here with a few questions regarding investing in STRs in Tulum. I’ve been evaluating a few different recommended markets for STRs (Florida panhandle, Smoky Mountains etc) and I’ve found that from a numbers perspective, Tulum has the most potential for returns, here’s why:
1. You can buy a pre-sale hotel-condominium with resort like services and property management features for 100-150k. These have potential to easily go for $100+ a night. I don't know much about management fees, but from what I've found is that they rival HOAs in popular STR markets
2. Tulum is growing very quickly and it’s easy to find developers who are building new condo-hotels left and right. I know that supply must meet demand but it seems like the growth in Tulum has a ton of potential to aid in appreciation
3. Real-estate in Tulum has been heavily impacted by Covid thus slashing prices.
I’d love for someone to point out what I’m missing in my current analysis and let me know what the risks are
Hi arwin, did you ever buy in Tulum? Would like to hear about your experience!
Thanks, Sebastian, here in texas a 3 bedroom 2 bath home on 1/2 acre costs around $1200 per year for insurance. With a replacement cost around $265000.00 usd.
I have another question about how to find if a business is legitimate in Mexico. I’m thinking about using an interior designer but can not find anything more than a website. They were recommended by a property management company.
I'm new to this forum and am looking for potential investment properties in Tulum. I got engaged there back in 2009 and boy have things grown. I have a few questions and am going to "@" some people who seem to have a lot of knowledge here also.
1. What is your opinion of the Samsara development? I've recently been offered 2BR mezzanine, garden and penthouse opportunities there through RETA. Prices are from $242k for mezzanine, $292k for garden (1,244 sf w/plunge pool) and $343k for the PH condos (1,475 w/492sf rooftop terrace w/pool and palapa). How do you feel about that location and property?
The units come with a 5 year vip access to the Ikal beach club. How valuable would this be for potential renters?
2. I've also been looking at houses. I know the La Veleta area is desirable but I'm just wondering what's the smart/best value there.
3. A few of the houses are located on the other side of 307/Avenida Tulum close to town. Is this desirable or less desirable? One in particluar is on Avenida Tulum and Calle Osiris Sur.
I don't like to comment about Tulum here anymore but I kind feel I have to do it when I'm tagged so you got me LOL. I wouldn't buy anything in Tulum for investment purposes as the area has serious issues, being completely overbuilt being one of them but not the only one. If you want a lifestyle property, it's another story but think about what lifestyle it's becoming. Everywhere else I go in Mexico, I hear "We don't want our city to become another Tulum" and the early Tulum lovers have moved on.
As to that development, instead of asking me for advice, you might just ask yourself a few questions. They came with that deal in 2021. It was the deal of the century, never to be repeated again (aren't they always?). The developer was supposed to sell to the rest of the world at higher prices. Since then, they've constantly come back with the same deal, presumably because the developer can't sell to anybody else? If it was such a good deal, shouldn't it have been gone a long time ago? Then, if all their people are buying, aren't they all going to rent and compete with one another, let alone compete with all the other empty units in town to try to make some rental income? If they conclude they were sold a pipe dream, aren't they all want to sell, presumably at a loss given the oversupply situation? Can you see a pattern there?
In any case, you can do your homework:
1. Imagine the unit was delivered today. Check how much you could likely make using Airdna. Then compare to what you're being told.
2. If you're happy with the result of step 1, check out how many projects there are in Tulum right now and how many are planned. Estimate the number of units. Ask yourself what's it going to do to rental rates. Up or down? How much down can you tolerate.
3. If you passed the two tests above, make sure you go there or have been there recently. Things have changed quite a bit.
If somebody was to put a gun on my head and force me to buy something In Tulum, it'd be a house. There is a bit less competition but they have started building houses hand over fist too. On the one hand, I'd say the more bedrooms the better because of the better but the problem is that I'd want to invest as less as possible given what I see.
Under no circumstances would I buy anything on the other side of 307 because there's gonna be too much on the "better side". As to La Veleta, as the city expands towards the beach, I'd assume it's going to become less attractive.
If you ask for my opinion, these details don't matter though. As one of Tulum's most successful realtor told me (in private) recently, Tulum isn't investable anymore and only works for lifestyle (for those whom like it), which sounded like music to my ears.
Hi all, newbie here with a few questions regarding investing in STRs in Tulum. I’ve been evaluating a few different recommended markets for STRs (Florida panhandle, Smoky Mountains etc) and I’ve found that from a numbers perspective, Tulum has the most potential for returns, here’s why:
1. You can buy a pre-sale hotel-condominium with resort like services and property management features for 100-150k. These have potential to easily go for $100+ a night. I don't know much about management fees, but from what I've found is that they rival HOAs in popular STR markets
2. Tulum is growing very quickly and it’s easy to find developers who are building new condo-hotels left and right. I know that supply must meet demand but it seems like the growth in Tulum has a ton of potential to aid in appreciation
3. Real-estate in Tulum has been heavily impacted by Covid thus slashing prices.
I’d love for someone to point out what I’m missing in my current analysis and let me know what the risks are
Heard good things 10 years ago, but never did it. So two months ago we looked into Roatan. Well we connected with a builder who's is offering seller financing with about 35% down. So now have 50 lots and are building STR for about 550- 650k. This time I am NOT missing the boat.
Investor · The Americas and Europe · Member since 2016 · 1k+ posts · 1k+ votes
3y
@Daniel Alvarez you're welcome. Not sure what your plan would be with Mahahual. As far as I know, there isn't much going on there and it isn't easily accessible. The main attraction is the beach and I think it gets lots of sargassum at times, like Tulum.
Real Estate Agent · Tulum Mexico · Member since 2021 · 65 posts · 62 votes
3y
@Daniel Alvarez Dismissing the entire Tulum real estate market based on an oversupply issue in one specific sector is an oversimplification that fails to acknowledge the nuanced nature of the industry. Just as encountering a faulty vehicle does not render all cars unreliable, the saturation of the 500 ft2 studio and 1-bedroom market in Tulum does not diminish the investment potential of other segments within the region. 3 bedroom + properties are still yielding solid returns (double digits). I own a 3-bedroom penthouse and a 4-bedroom townhouse and I can share my numbers so you can see how much properties are making, I can also share the paid Airdna version of the Tulum market in case you haven’t purchased it so you can make your own research.
It is essential to consider the current infrastructure projects in Tulum. One such project is the construction of a $13 billion train network, which is one of the largest infrastructure undertakings globally. Notably, Tulum will have two train stations, surpassing even Cancun. The federal government is also building an international airport projected to receive 5.5 million tourists annually. Tulum's strategic location between two national parks further enhances its appeal and limits its potential for growth. The city is situated between a UNESCO World Heritage site and the newly established Jaguar Park, which is three times larger than New York City's Central Park.
Why do you think the federal government is massively investing in Tulum the answer lies in the city's projected growth.
I understand that investing in Tulum has become more challenging, but I still believe there are opportunities to make a profitable investment. It just requires looking at real estate opportunities from a different perspective. For long-term sustainable wealth, rather than short-term gains, there are still viable options available, especially for those who can envision what Tulum will become in the next 3-8 years.
I also want to share that there's another location I believe is on the brink of exploding as an emerging market due to the Mayan train. All the top players who made Tulum go viral are now opening their projects there (not Mahahual). If you're looking for an emerging market, this might be the right place to consider. I am happy to share in private.
@Daniel Alvarez Dismissing the entire Tulum real estate market based on an oversupply issue in one specific sector is an oversimplification that fails to acknowledge the nuanced nature of the industry. Just as encountering a faulty vehicle does not render all cars unreliable, the saturation of the 500 ft2 studio and 1-bedroom market in Tulum does not diminish the investment potential of other segments within the region. 3 bedroom + properties are still yielding solid returns (double digits). I own a 3-bedroom penthouse and a 4-bedroom townhouse and I can share my numbers so you can see how much properties are making, I can also share the paid Airdna version of the Tulum market in case you haven’t purchased it so you can make your own research.
It is essential to consider the current infrastructure projects in Tulum. One such project is the construction of a $13 billion train network, which is one of the largest infrastructure undertakings globally. Notably, Tulum will have two train stations, surpassing even Cancun. The federal government is also building an international airport projected to receive 5.5 million tourists annually. Tulum's strategic location between two national parks further enhances its appeal and limits its potential for growth. The city is situated between a UNESCO World Heritage site and the newly established Jaguar Park, which is three times larger than New York City's Central Park.
Why do you think the federal government is massively investing in Tulum the answer lies in the city's projected growth.
I understand that investing in Tulum has become more challenging, but I still believe there are opportunities to make a profitable investment. It just requires looking at real estate opportunities from a different perspective. For long-term sustainable wealth, rather than short-term gains, there are still viable options available, especially for those who can envision what Tulum will become in the next 3-8 years.
I also want to share that there's another location I believe is on the brink of exploding as an emerging market due to the Mayan train. All the top players who made Tulum go viral are now opening their projects there (not Mahahual). If you're looking for an emerging market, this might be the right place to consider. I am happy to share in private.
I'm not sure how Roatan would parallel the past success of Tulum. Also 550 - 650k to build STRs in Honduras sounds crazily expensive. Seller financing is great but make sure you get a good deal from him. And Honduras is no Mexico. By all means go for it if it makes sense but thread carefully.
As to the missing out bit, I've heard of so many stock market investors who missed out on the post-Covid run up, had FOMO and bought unprofitable tech stocks at the top and lost most of it in a few months as the market crashes.
It's good if missing out in the past pushes you to take action. Once you take action though, make sure that the same urge doesn't result in you making (big) mistakes.
I'm not sure how Roatan would parallel the past success of Tulum. Also 550 - 650k to build STRs in Honduras sounds crazily expensive. Seller financing is great but make sure you get a good deal from him. And Honduras is no Mexico. By all means go for it if it makes sense but thread carefully.
As to the missing out bit, I've heard of so many stock market investors who missed out on the post-Covid run up, had FOMO and bought unprofitable tech stocks at the top and lost most of it in a few months as the market crashes.
It's good if missing out in the past pushes you to take action. Once you take action though, make sure that the same urge doesn't result in you making (big) mistakes.
All the best!
Actually, similar props are 1.5 mill ++ Not my 1st BBQ :)
10 years ago you could buy ocean front for about 150k,
I could have mentioned in my previous reply that the reason I nowadays don't like to comment about Tulum in the forum is because some not so positive comments I made in the past resulted in undeserved personal attacks from local realtors. Frankly, I don't think I'm important enough to threaten their livelihood. I believe my personal opinion doesn't and shouldn't matter that. I think the best way I can contribute in this forum is by sharing information without any strings attached and suggest people ask them questions/comments so that they can come to their own conclusions.
Since my comment about the oversupply situation got challenged without a personal attack this time, I'm happy to reply again to contribute to the debate and hopefully help you make your own opinion. Is dismissing the entire Tulum market based on an oversupply issue an oversimplification?
Although that's far from the only recent challenges Tulum has had to face, isn't that enough to dismiss the market as an investor? While so many have been in denial, the oversupply issue is now visible in plain sight for anybody who gets there. So now, we're being introduced to the concept of partial oversupply. As far as I know from my contacts on the ground, there's an oversupply in every single category but, yes, it's worse in studios than in 4-BR townhouses. However, because everyone knows this, developers are catching up building 3- and 4-BR townhouses so the oversupply is going to get worse there.
That's how economics 101 works. Now, let's assume that there is an oversupply in 2BR condos and not in 3 BR condos. What's going to happen? The price of 2 BRs is going to fall drastically and the buyers (who are mostly investors) will buy the 2 BR on the cheap, suppressing the demand on 3 BRs and creating or worsening the oversupply there.
Of course, like everywhere else, there are still some ST rentals that are operated at double-digit returns but isn't the best predictor the overall figures you can find on Airdna? If you're planning to spend $200k+ on a property, this little $50 or so investment might be worth it. I wonder how low in the single digit returns this trip will take you. So many unsuspected buyers have been sold the double-digit return as a standard based on pandemic-inflated figures. What is going to happen when all these buyers will find out that the reality is much different when they take possession of their property is anyone's guess.
As to the train and the airport, I would ask myself the following questions:
1. How many people are not visiting Tulum because they think it's difficult and long to get to. The current easy access through Cancun airport has been one of the main selling points of the Riviera Maya to tourists. By the way, the airport is going to be in Felipe Carillo Puerto, not in Tulum and it's not that much closer.
2. How many people are going to go to Tulum for the first time or going to go more often because of the airport? I've asked many people and so far I haven't found anybody. Maybe you can do better than me. To be fair, the airport could attract a few extra people who go for a very short time like a long weekend or something.
The reality is that the train and the airport have been used and abused to lure international buyers to Tulum, while that was never the purpose of these pieces of infrastructure:
The main objective of the train has never been to bring extra tourists to the Riviera Maya. It is to disenclave and develop tourists spots inland in the states of Chiapas, Tabasco, Campeche, Yucatán and Quintana Roa and have tourists who stay in the Riviera Maya travel to these places. The main objective of the Tulum Airport isn't so much a reply to the demand for an airport in Tulum but rather free capacity at Cancun airport.
Now, let me finish off with some unscientific anecdotal evidence of the oversupply. An American girlfriend friend of mine is a very successful real estate investor in the Riviera Maya. Just in Tulum, she owns 20 diverse properties. I was visiting before the Holidays at the end of last year. bear in mind that that's the highest season, as you'd expect and that we were/are in the middle of a post-Covid travel boom. At the end of November, none of her properties was rented for the Holidays, which never happened before. None, out of 20!
Since my comment about the oversupply situation got challenged without a personal attack this time, I'm happy to reply again to contribute to the debate and hopefully help you make your own opinion. Is dismissing the entire Tulum market based on an oversupply issue an oversimplification?
Thanks again for the followup. I know it's hard to explain every possiblity and situation and you were just giving me your high level opinion based upon what I've told you about myself.. I'm sure the most experienced investors are better suited to find any golden opportunities that may still be had.
You're most welcome. Even though it's sometimes inevitable, I try to give as little opinions as possible and rather focus on facts and trying to help people get to their own conclusions by asking themselves the right questions. Bear in mind that, when doing that, you might come to different conclusions/opinions than mine and there's nothing wrong in that. And you're right about experienced investors but bear in mind that none of us had any experience when we got started. By engaging in the forum and asking questions, you're putting yourself ahead so kudos to you. I trust you'll get this right.