Hello, I am new at this but here goes my question. I have an opportunity to buy in a developing resort in Mexico. I am Mexican so I qualify to get a loan there. Here is what I know. the property on pre-sale is 309,000 USD. I have a down payment of 75,000 with possibilities of borrowing an extra 24000 from my 401 K. The condo is on a luxurious apartment complex with marina access, dock access, pools etc. The idea would be to buy it and rent it out. The interest rate on a loan from Mexico for the remaining amount (210,000) is 10%. Does this sounds like a crazy investment? I will be taking a tour of the place tomorrow and will find out about HOA and maintenance fees. The location is Puerto Aventuras, an exclusive community in the riviera maya. My idea is to let it pay for itself and use it when ever I want to go on a vacation. what are your thoughts? I know I am able to deduct any taxes paid in mexico when I file for taxes here in the US. Is there anything else I should be considering? any help is appreciated. thank you
You should probably find out the rental rates for similar properties, occupancy\vacancy rates to determine if its going to have a positive cash flow. Additionally, since you aren't living in Mexico you may have to consider additional cost of a management company that will take care of renting, cleaning and maintaining the property. Finally, you should check with a Tax Consultant on the additional income you earned outside the country and how that impacts your taxes. e.g depreciation, interest etc
Would you traditionally rent this or vacation rental it, or a combination? You should run the numbers and see if it will break even once you see the property and know the numbers better. Condos make me nervous, you don't have as much control of costs.
I think that's awesome that you love Mexico so much. I myself have a passion for visiting Mexico, the Mexican people, and the culture. I have been to 16 of the 31 (32 including CD de Mex) states in Mexico during 17 different trips there, I speak fluent Spanish, and I lived there for 2+ years. I have also looked into buying RE in Mexico many times. This is my conclusion......buying in Mexico is generally not as good of an idea as buying RE in the US for many reasons and I'm not going to get into all of them but I think we know the obvious reasons. Vacation rentals take either a lot of time or a lot of your income to pay a property manager. I think you could break even or possible even make a little bit of money renting it out when you're not there, but I would say it's only going to be worth it if you are going to use it 30+ days a year. If you are only going to go down for a week or two every year, pay for a hotel. I am all about investing in RE that's all I do and that's where 95% of my money is, but I would highly recommend not touching your 401k to invest in RE in Mexico. I love Mexico but there are a lot of problems politically and with crime. One of my favorite cities San Miguel de Allende in Guanajuato literally used to be the safest city in Mexico, I have been there twice. Over the last 10 years the crime has increased and now I don't know that I would take my wife and kids due to the crime (including murders and kidnappings of not only nationalists but foreigners). I love Mexico but it is breaking my heart what direction the country is heading and so I would say keep your 401k where it is. Just my humble opionion....
Thank you for your reply, the deal didn't work out as there was problems getting the loan. Now I am thinking on something here in the us. Thank you anyway