San MIguel De Allende Investment

10 Replies

Hi BP members - I am interested in learning your opinion about the rental market for San Miguel De Allende in Mexico. I did a trip from Mexico all the way to Puerto Vallarta last year and did stay at San Miguel for 2 nights. Met few expats and learned about the art and culture scene in San Miguel. With so many expats calling it home, I was wondering why it does not show up in the preferred destinations for investment in Mexico. Would San Miguel not be a good place for Long term rental potential?

I look forward to hearing your opinions.

Thx,

@Brandon Goldsmith - The place is popular with expats, artist and with the wedding industry. I have a close friend who is an artist and she moved to Allende 3 years back and speaks highly of the town. It seems to be safe, pleasant weather and folks rent out there for the long term.

Post COVID, I see an opportunity but would like to validate it with experts on this forum. Not everyone wants to go to Cancun/Tulum or Puerto Vallarta. With an existing base of expats, I would like to believe more folks to move down there for art, business and vacation.

Hoping we can get some more info from resident experts on this opportunity.

Thx,

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@Bejoy Nair

It's an interesting place indeed. You just have figured out if that's for you. You'd have to calculate what rental yield you can make and then you'll know if it fits your criteria.

Why is it less popular than other places like Cancun, Playa del Carmen, Tulum or Puerto Vallarta? It's pretty simple. In Mexico, the money is in short-term rentals rather than long-term rentals for pretty obvious reasons. While San Miguel de Allende is a tourist city, it doesn't have mass tourism like the others have (mind you, I'd still rather rent short-term than long term if I owned property there). Moreover, property prices are not cheap there and are much more expensive than in the other cities are listed. So, you can buy cheaper in Cancun, Playa del Carmen, Tulum or Puerto Vallarta and get a much higher rental income. There you have it.

On another note, you rightfully mentioned that expats rent long-term. In Cancun, Playa del Carmen, Tulum or Puerto Vallarta, most expats buy because buying comes cheaper than renting. In San Miguel de Allende, they rent because prices are so expensive it's cheaper to rent than buy. So rent is cheap compared to the purchase price. Do you want to be renting in such a market. On the other hand, there's a big (luxury) industry so it could work well if you buy a property that's not too expensive but the luxury standard is high enough that wealthy people would rent it short-term for their weddings.

@Mike Lambert - Thank you for your insight. I am working on getting more details about the market.

I do have a follow up question about your statement - “You will rent short term compared to long term”. The strategy for San Miguel that I had in mind is to rentshort term during the high season and long term during the off and medium busy season.  I working on numbers to confirm this but as remote investor (who is investing for the long term), I am looking at decent rental income profit and property appreciation in the next 5-10 years.

I know this is a rookie question but would like to learn from other experience. If there is an existing chat within these forums about this topic, please do share it with me.

Thank You,

@Bejoy Nair

I'm not sure what exact topic you're referring to but there's no other chat thread that I know of that seems to be fitting what you're talking about.

Your strategy makes total sense and is possibly the best in that situation. It's commonly used in many places.

Do you live in Mexico? It might make a difference regarding the opportunities you'd have with this.

@Bejoy Nair I know someone selling condos in San Miguel right now. They would be able to answer that question.  Send me a message if you would like an intro.  I know the markets in Tulum and Los Cabos well but am not familiar with San Miguel.  Long term rental market in Cabo is strong.

I know this thread is old but there's not much about San Miguel de Allende(SMA) out there and I have some insight.  Been visiting and renting there short term for 20 years. We love it but the real estate market is dominated by mostly wealthy Americans, Canadians and Europeans(Gringos). There's a pattern that goes on there. People visit, fall in love with it, buy a house at an inflated price...then when the thrill wears off, if it does(it hasnt for us), they can't get back what they paid for it when they try to sell. Not impossible to sell but I know a few people that are stuck with houses. You can rent beautiful houses on the cheap if you know where to look. But, if you get a pretty good deal comparatively when you buy, and cultivate short term rentals as a business for the long term, not looking to sell, you definitely can make decent money. Of course you'll have SMA to visit and enjoy also, hopefully for a long time. My wife and I are looking into buying a place to do that soon. I'm sure some of the beach places in Mexico put up good numbers but it's not all about the money for us. We think SMA is fantastic. 

@Thomas Travers

As you suggested, rent is cheap compared to real estate prices. In the beach destinations, it's the opposite and, therefore, you need much less money to buy.

For me, it makes more sense to buy where the purchase prices are low and the rents high and rent where the purchase price is high and the rents are low. So I'd invest my money in the beach town and use part of my rental money there to rent in San Miguel de Allende. I'll get both the lifestyle and the money and I'd get to enjoy the beach lifestyle as well. And then, if I ever want to sell, I'll sell in a liquid market and I won't have to sell on the cheap. But that's me. I'm not trying to influence you here. You know better what works for you!