Mexico - Anyone Investing in coastal Resi,Multi, Hotel, Commer,+
Denver · Member since 2019 · 3 posts · 3 votes
I'm a RE Investor in Denver, AZ, and now Mexico. I'm looking to connect with other experienced investors doing deals in Mexico such as hotels, Multi-Unit Flips, Luxury Flips, Multi-Unit Holds tourist/non-tourist, Construction/Rehab, etc. I'm interested in Merida, Puerto Vallarta and its coastline north and south personally, but open to discussion on anyone's experiences and deals they may be doing in Mexico for sake of networking, information, and experience sharing.
@Kevin G Abruzino, I’ve done several personal investments is Mexico City, Guadalajara, and the southern coast: Holbox and Xcalak. Buy and hold, residential and co-living. If I can be of any assistance let me know. Cheers.
Hello Kevin,
You don't know it yet but you just hit the jack pot. I have been in mexico for two years investing in hotels, Multi-Unit Flips, Luxury Flips, Multi-Unit rentals. I work with a few developers. Right now we are working on 4 big deals. I would love to show you everything and see what you think. thanks, Ricky
@Kevin G Abruzino My wife and I invest in buy & hold properties in Arizona, Texas and Florida. We have also purchased a preconstruction condo in Tulum, Mexico with a good developer.
@Ricky Hale which areas of Mexico do you invest in?
@Kevin Smith I’m friends with a developer that has so much land all over. Puerto Vallarta, Mazatlan, Mihto and Ensenada. Right now we are building a very large project of 30 condo buildings, each building has 96 condos. We are in pre sale but we are looking for investors.
Thanks @Ricky Hale. That is a very large project. For now, we are focused only in the Riviera Maya. If we ever look over there in or around PV, I will be sure to reach out.
I also have a two bedroom condo on the golf course I am selling for $120,000 if you know anyone.
@Kevin G Abruzino, I’ve done several personal investments is Mexico City, Guadalajara, and the southern coast: Holbox and Xcalak. Buy and hold, residential and co-living. If I can be of any assistance let me know. Cheers.
I'm also in Denver and have invested in Tulum, Mexico. I'm also considering another investment in Mexico. Happy to discuss what I have learned.
I've been buying several properties in the Riviera Maya and am directly connected to developers and other real estate professional people in various parts of the country, including Merida and Puerto Vallarta. Happy to discuss and exchange as well.
I will be down in PV March and April. If anyone is in PV then and would like to connect regarding their experiences and/or opportunities big or small I would be open to hearing about them.
@Luis Tinajero would love to connect and learn more. Looking for opportunities in Mexico.
@Ricky Hale I’d be interested in learning more!
@Luis Tinajero I’d love to pick your brain! I’m just jumping into this game and can’t even imagine going international, but mexico just seems like a smart place to start real estate investing!
I am a US developer in Riviera Maya, have just completed a project in Tulum. Went through all the process from locating the land to permits, construction , marketing, sales recruiting local professionals as architects, lawyers, brokers accounts etc. It was a difficult but very interesting and profitable venture. I would love to connect and share my experience. Moving forward, I am in a process of locating land for new projects. This time I won't relay solely on my own capital but will syndicate the investment with other US partners. In any case it's going to be i n Riviera Maya, occean front or close by, perfectly located for Air BnB. I would love to exchange ideas with anyone who is active or interested in that area of Mexico.
Would love to hear from anyone who owns Mexico property and their experience and how it differs from buying in the US.
How did you find the buying process?
What are some rules / regulations that are different than in the US?
What was unexpected?
What do you love most about owning in Mexico vs the US?
These are the kinds of general questions that would be easily answered if we knew what your objectives are and why you'd be considering investing in Mexico. So, I'll try to do my best to provide general answers here. Feel free to reach out if you need a more detailed answer.
For me, the buying process was easy because I have access to off-market deals and the right connections. I can imagine that it'd be different for somebody starting from scratch and doing everything on their own. In that case, it's important to have the right people on the ground. It all starts by getting the right lawyer and the right real estate agent if you need one.
The legal, banking and tax systems are different so it'd be a good idea to learn about those. They have an influence on which strategies work and which ones don't. See further below regarding short-term rentals.
What was unexpected at first? The fact that there are two real estate markets in Mexico. There is the market for western standard properties, in which the buyers are foreigners and wealthy Mexicans and properties are traded in US dollars. And then, there is the "local" market, which is by far the largest and in which properties are traded in Mexican pesos. Nowadays, newly built western standard properties that are initially targeted at the wealthy Mexicans also trade in Mexican pesos. I'd only buy western style properties there.
I'm Canadian and I only invest in US real estate through stocks. So, rather than comparing owning in Mexico vs the US, here are some of the reasons why I love owning property in Mexico:
- Properties in Mexico are cheap;
- Mexico is already one of the world's biggest tourist destinations and getting more and more popular. An increasing number of North Americans are retiring to Mexico and that's likely to accelerate. Also, Mexico is very popular with digital nomads and the work from home crowd;
- Short-term rentals (my preferred strategy) in the right place can be much moire profitable. They can be very profitable even if you pay cash and can be even more profitable if you use leverage. And, unlike in developed countries (where strict regulations drastically limit short-term rental opportunities), the various levels of government in Mexico support short-term rentals as they need the tourism. Hotels have very high occupancy rates so they're not that bothered by the competition from short term rentals;
- The Mexican middle class is growing and this is a secular trend. This is causing prices to increase, sometimes irrespective of the economic situation. Buying from overseas helps too.
- Because the large majority of the buyers are paying cash, the market isn't artificially inflated by a huge amount of cheap debt. Therefore, there's hardly any foreclosure activity and no downward spiral in prices caused by such activity. Contrary to perceptions, this actually makes the Mexican market actually less risky than many others that are propped up by cheap debt.
- There is little competition contrary to what's going on in North American markets. No bidding wars in Mexico.
- Last but not least, I love the opportunity to having to go and inspect my properties in Mexico and get the cost of the trips off my taxes.
@Mike Lambert
Thank you for the detailed reply.
What I’m looking to do is purchase a vacation home that I can rent out most of the year as a short term rental.
I’m currently eyeing La Paz and Ensenada as potential locations.
I’ll probably pay cash as I’ve heard the mortgage process for foreigners is achievable but rather difficult.
As the cities I’m looking at are in the restricted zone - I’d like to learn about what are the differences between owning in a bank trust (as required for foreigners) vs your personal name. Ive learned that you have all the rights to the property and can pass the property down as inheritance. I’m curious to know though if there’s something else that is not as common knowledge.
How are the laws in terms of short term rentals?
Would you recommend owning a condo with an HOA or a stand alone property?
You mentioned about building your team (real estate agent, lawyer) - Ive heard that agents are not licensed and that simply anyone can be a real estate agent (is this true?) where is a good place to start with finding a reputable agent and lawyer?
Thanks so much for the info! Very helpful so far.
You're welcome.
You can in theory get a mortgage in Mexico. However, the LTV will be maximum 50% and the interest rate will be in the double digits. My understanding is that it's not easy to qualify though. I'd be happy to pay 100% in cash for properties in Mexico. Indeed, short-terms rentals can be extremely lucrative in the right markets. In Playa del Carmen for example, some owners have been making up to a 30% rental yield by renting short term part of the year when they're not using the property (don't expect that kind of return in La Paz or Ensenada though). Even if they paid 100% in cash, they got a more profitable deal than if they were investing in the US with a very cheap mortgage. And, with such rental yields, I wouldn't mind paying a double digit interest rate on a mortgage either. I personally can't pay cash because I'm buying multiple properties (with investors). However, I haven't had to use mortgages as I have used seller/developer financing instead. My understanding is that it's not easy to qualify though.
If you want to buy in the forbidden zone, you have to use a bank trust or a Mexican corporation. The latter is only worthwhile if you buy multiple properties. If you own through a bank trust (which has to be renewed every 50 years), you have exactly the same rights and obligations as if the property was in your own name. You have to pay a small yearly fee to the bank, which is the only (small) disadvantage. There is actually an advantage: you get asset protection. As you might now, the wealthy like to own assets but not in their own name.
There are no (or very insignificant) restrictions in short-term rentals and this is unlikely to change anything soon, unlike in North America and Europe (where the risk of additional regulations is very high). There are two main reasons for this:
1. Mexico wants as many tourists as possible and there has been a tourism boom for years now. They know that many tourists don't want to stay in hotels and, besides, hotels alone already have a high occupancy and wouldn't be able to cater to all the tourists.
2. The only parties interested in regulating short-term rentals are the hotels, the long-term renters and the neighbours. The hotels are not an issue for the reasons mentioned above. The long-term (local) renters cannot afford to rent the properties offered in the short-term rentals and they don't live in the same neighborhoods anyway. Finally, the neighbouring properties are most likely short-term rentals themselves so they don't want any regulations, even if some neighbouring short-term renters make a bit too much noise from time to time.
You could own a condo or a villa. Bear in mind that the villa would be much more expensive if you'd want to have the same amenities (unless the villa is part of a development in a gated community that has amenities). Renters want amenities. Moreover, a condo would generally be more profitable. Of course, it all depends on the property.
What you heard about agents in Mexico is probably one of the many fake rumours about Mexico spread by people who don't know what they're talking about. Agents in Mexico are licensed by the AMPI. I'll send you a reference by private message.
@Ricky Hale: Is that property still available?
@Kevin Smith @Patrick Sullivan @Eric Delcol @Mike Lambert
Hello all would be curious to anyone's insight about tax advantages of investing in US vs Mexico (specifically Riviera Maya)... would love to connect and share info.
I'm new to the REI scene and initially started looking at Mexico as a possible retirement location for my wife and I. My goal is to build up enough passive income so that I can stop working so much and enjoy more time with my family, as I'm starting to feel
burnout from my day job. I caught the investing bug and purchased a beachfront property currently being built in Puerto Aventuras, and 2 in Tulum over the past year. However I having been taken to the cleaners this year cause of taxes and have been considering starting to invest in the US market due to tax advantages of STR like bonus depreciation, material participation to hedge against my active income, etc. Its my understanding bonus depreciation doesn't apply for foreign properties and you have to depreciated using alternative tax system over longer period. But with US market so crayz inflated now....Trying to wrap my mind around whether to keep investing in Mexico or switch to US for more favorable tax incentives. I'm a high income earner so need something to offset my W2 income! Brand new to this so sorry for any mistakes, wanting to learn as much as I can about US vs Mexico investments to see which makes sense...
If you can choose between two investment opportunities that are exactly similar except for the fact that one is more than tax-advantaged than the other, it would make sense to go for the one that is more tax-advantaged. In all other situations, like the one you are mentioning, I believe alongside many others that it's a huge mistake to make a decision based on taxation.
I'm taking an example that isn't real estate because it illustrates this point in such an obvious manner. Many people didn't want to take a huge profit on their overpriced and overvalued Netflix shares at the end of last year when they reached $701 in order to avoid paying taxes. Well, today, their shares are worth $218. Need I say more?
What matters is the ROI. I'm actually happy to pay high taxes because, all other things being equal, the higher my taxes, the higher my ROI so I'm better off and society is better off.
If however your main objective is to be paying the least possible amount of taxes, you might also take into consideration the fact that real estate taxes are close to 0 in Mexico and can be very high in the US.
I also have a two bedroom condo on the golf course I am selling for $120,000 if you know anyone.
I also have a two bedroom condo on the golf course I am selling for $120,000 if you know anyone.
Hi all, I know this is an old post but replying just in case. So I have lived in or been to almost every part of Mexico. And worked in the hotel indsutry. On the management company side. If I can answer any questions let me know. I tried to buy a hotel in Oaxaca but it fell throgh. Small, 7 key, boutique. So I am always open to hearing opportunities
I have now invested in a few properties in Tulum and the surrounding area. One thing for N. Americans to note is that you are REALLY taking a chance if you buy pre-construction. They NEVER finish on time and there are always problems with the construction quality. I highly recommend looking at re-sales and getting a good inspector to do due diligence on the property. I still love the area and will continue to invest in it, but this is the biggest thing I have learned in doing business here and thought I would share for those who originate outside of Mexico. For example, you can have a binding real estate contract that stipulates penalties for late delivery or construction defects. Lawyers will tell you before signing that you are protected by the contract. However, actually suing someone in Mexico takes minimum 3 years and then you only get the award for the specific item (no lost income, lost interest, etc). What ends up happening in pre-sale is that, even though you have done due diligence to get a contract that protects you, de-facto it is too difficult to sue so you end up accepting all the problems you wanted to avoid and the contract language is superfluous. As a result, I advise not buying pre-sale unless you are ready to factor in a minimum of 6 month delay and a minimum of 10-15% cost additional to fix things the builder won't fix.
Also, "reputable" builders are the only way to go for pre-sale. However, "reputable" builders will still reneg on contracts and can just as likely be extremely late in delivery as well as provide a building with many construction problems. 10 fold more than what you would expect in N. America and N. Europe. For example R4 is a very well known builder in the Riviera Maya (Tulum, Cancun, Playa del Carmen) and realtors will tell you that you can't go wrong with them. I can assure you that they are more corrupt and incompetent than any builder in N. America. So it is a matter of re-setting expectations.
Hope that helps.