Hi all! Newbie here, and first time looking into investing in Tulum! To be used as short-term vacation rental and personal vacation spot for a couple of times a year. Understand Tulum has been a “thing” for the past few years and growing insanely although the investing ship probably sailed already. Beach area full of hotels and súper pricey and the downtown and Aldea Zama packed with new construction by the minute, too much competition. That’s why I came across the beach area north of the Archeological site, 6 miles from Tulum City and probably about 8-10 miles from the beach hotel strip. It is a new construction to be finished in 2022. Studio probably around $330k investment. (Plus probably about $25k in lawyer fees, bank trust, etc.) . It’s on the beach, literally steps from the ocean, and the Unit has ocean view. Pool overlooking the ocean too. There are a few boutique hotels in the area, and it seems more exclusive expensive boutique hotels are opening up nearby. Would you consider this a good investment? Thinking oceanfront will always retain it’s value even though it ain’t cheap! It’s my first buy... so nervous and excited! Any advise would be much appreciated! Thank you! @Mike Lambert
Great info @Mike Lambert! Heidy, I am also looking for opportunities in the area but personally I have ruled out Tulum. Have you considered other nearby areas that are perhaps just as nice but don’t carry the Tulum price tag?
Heidi, I'm going to respond to your about the specifics but, since you posted and tagged me here, I'm gonna reply here first, for everyone's benefit.
I almost fell of my chair. $330,000 for a studio! Are you serious? This is Mexico, not Miami or New York City! Granted, it's by the beach but it's not in Tulum. Personally, I want to be in Tulum. If close to the beach, I'd rather be on the other site, not 6 miles North. If it was for my own use only, maybe, except for the price tag. But who's gonna rent a studio there? You could maybe rent a villa there for a group of friends who stay together and go out on the town from time to time but a studio? If I rent a studio, I want to spend most of my time outside of the studio so I have to be in Tulum. Imagine having to do the commute for everything and anything! Moreover, people who go to the beach in Tulum want to be in a beach club, not in a deserted beach in a condo development.
I have been offered 2-bed condos in Tulum itself for $200,000 or less from developers I know personally. While these are deals retail clients don't have direct access to, you can imagine my reaction when learning about a $330,000 studio in what I think is a wrong location for a studio.
Even with the competition in places like Aldea Zama, an investment there would be much more profitable I think.
That's my two cents. Obviously you'd need to do your own due diligence.
Appreciate the quick reply Mike! The developer also goes by Confector.mx (I was able to find online info on them) and the owners of the project are “Básicos Alimenticios y Maquinaria”. They sent over invoices and construction license in the city of Tulum for the latter for the construction of the condo.
The area I’m taking about is Tankah Bay. I’m going to be there this weekend so hoping to gauge distances and the vibe in person. From photos and video it’s a calm and beautiful bay and probably the target wouldn’t be the hipsters looking to party at the beach clubs but maybe couple/ friends getaway who want a private beach and if they feel like some city action can head to Tulum city/beach hotel area. This condo I was told is in Tulum, or the area considered still Tulum.
I felt the price was steep for I was also offered a $240k 2b 2b at the corner of Ave. Coba and the street of the beach hotels with beach club.
Probably the same development you talked about in other posts. But my concern was that it has 250 units, also that whole Aldea Zama area is getting super crowded with lots of competition.
I live in LA so you can imagine what oceanfront property’s cost here, that’s why maybe $330k didn’t seem so terrible! I’ll do some further investigating and most likely the in person visit will help me decide. Appreciate your feedback!
Heidi, great job about finding more about the developer.
If you're from LA, I get that you'll find that the property is inexpensive but the outskirts of Tulum isn't LA and won't be any time soon. More importantly, for an income property, it's the profitability that counts, not whether it looks expensive to you or not. The profitability of your property in Tulum will be the same whether you live in LA or anywhere else in the world.
I travel regularly to the Riviera Maya to look at properties. When I'm buy myself, I'm out and about most of the time and so I'm not too fancy about the short-term rental I'm staying in. Yet, I refuse to cramp myself in a studio, especially if I can just pay $20 extra and get a nice 1-bedroom condo. People who go there on holiday want to enjoy a nice vacation and will pay $20 a night extra to be in a condo rather than a studio because they want to make the most of their vacation. Moreover, tourists vacationing in Tulum are rather well-to-do so they can afford to get a condo.
In my humble opinion, studios don't fit into Tulum's property mix. They have been "artificially" created by the developers so they can sell to those that don't have the money to buy a condo. The studios are actually a boon for the developer rather than the buyer. The buyers think they gets a good deal because of the "lower" price tag but oftentimes they don't realize that the developers make them so small that the price per square foot is much higher than that of a condo.
The decision is yours and I can always be wrong but you asked for my advice so I'm giving it to you.
That’s a very good point Mike! I didn’t think about the square footage breakdown and how that would be much expensive. I know for $330k I could even get a 3 bedroom in Zama or Tulum 101 which is development closest to the beach. But I’m afraid of too much competition over there. There are really no beachfront short term rentals in Tulum unless in this Northen Bay Area and I checked into the boutique hotels and Airbnb’s and they seem to be occupied. Anyways, you have brought up many good points and I will certainly investigate and compare more once I’m there in person this weekend. I truly appreciate your time and thoughts. Thank you!
Great info @Mike Lambert! Heidy, I am also looking for opportunities in the area but personally I have ruled out Tulum. Have you considered other nearby areas that are perhaps just as nice but don’t carry the Tulum price tag?
@Ori Skloot Well I was also looking into Bacalar, but understand access is limited. Also prices have also gone up a lot. Do you have any suggestions of where else could be a good market to invest in? Our other option was actually Big Bear/ Lake Arrowhead area. But homes have also skyrocketed in the past months due to the pandemic. Many people moving out of LA. Other options were Texas and Nevada. But again I’m not personally familiar with them so need to do more research. I have been to Tulum 3 times and I speak fluent Spanish, plus I love the place that is why it attracted me in the first place.
What markets are you considering and what areas do you feel could have potential?
You think that, because of the competition in short-term rentals in Tulum itself, you'd get a better occupancy in that studio outside of town by the beach. Even if that's true, you could end up making a less profitable investment because a condo in Tulum itself could still give you a higher ROI with a lower occupancy because the price tag is much lower. And you'll have spend much less money. And then, again, if the competition short-term rentals in Tulum itself is strong, it means that a renter can get a great deal there. So how likely is it that that renter will pay more to be in your studio outside of town and away from everything? And make your investment profitable? By trying to avoid the competition risk, you're considering going into a deal in which that risk is (indirectly) even bigger and your price tag will be much higher.
Yes, properties by the beach have a higher intrinsic value so you could expect higher capital gains. However, when you pay a very expensive price, it's gonna take long before you can make any capital gains. Also capital gains are speculative while rental income isn't. And, on the rental income / cash flow side, beach properties are generally the worst because of the high price tag.
Many people want to buy in Tulum because of Instagram and the Hollywood stars vacationing there. This has pushed the prices up. Tulum is years behind Playa del Carmen along the path of progress and yet condos are more expensive in Tulum. That makes no economical sense.
Personally, I prefer Playa del Carmen as a place to stay and invest for the following reasons:
1. Playa is by the beach whereas Tulum isn't. You can buy walking distance from the beach in Playa while you can't in Tulum.
2. Playa has the world-famous 5th Avenue with the shopping and world-class restaurants while Tulum has nothing like that, not even close and won't anything like that anytime soon.
3. Playa again has the luxury shops on the 5th Avenue but it also has the US big box retailers, including WalMart. Tulum doesn't.
4. Tulum doesn't have anything close the the nightlife that Playa has.
5. Playa (downtown) is already built out while Tulum still has a huge amount of land available so the risk of overbuilding and higher competition for short-term rentals is much higher in Tulum.
6. Even though Playa has nice beaches and the famous Mamitas beach club, it can be argued that Tulum's beach clubs are nicer. But then, even if you're in Tulum, you'd have to drive to go to the beach and Playa is just a short drive away from Tulum's beaches so you can easily stay in Playa and go to Tulum's beach clubs during the day if you like that.
And yet I invested in a group of 1- and mostly 2-bedroom condos in the best upcoming development in Playa, which is literally 400 meters (1,312 feet) from the beach and just one block from the famous 5th Avenue. I couldn't get anything close for the same price in Tulum by far, not even the small studio @Heidy Fu is looking at.
You also have Akumal, Puerto Morelos and Puerto Aventuras and you have places that are between cities too but you won't have a rental pool that's anything close to that of Playa or Tulum.
@Heidy Fu I love Bacalar. We stayed at the Me Querido Tulum Houses a few times. I know someone is building a house nearby and that it will be for sale (the guard told me). I love Puerto Morelos and the area around there. Holbox is amazing (no cars!).
Bacalar and Holbox are beautiful places to visit but, personally, I'd get bored very quickly. One of the things that made the Riviera Maya one of the world's biggest tourism juggernauts is the ability to flight directly into Cancun and then drive to Playa del Carmen in less than an hour, and to Tulum in 2 hours. Getting to Bacalar or Holbox is much lengthier and more complicated. Unlike the Riviera Maya, North Americans can't go there for a long weekend. The rental pools are very small. And as much as Bacalar lake is incredibly beautiful, most people prefer to be by the ocean and do a 1-day trip to Bacalar. Similarly, a 1-day trip to Holbox would just be fine for most people.
@Mike Lambert This is great advice. My sweetheart and I just got back from her 1st trip to MX (many more for me) and we are considering investing in a condo in the area. We visited PDC, Tulum, Akumal and Puerto Morelos. I would say out of all of those cities, PM is our favorite place to look at investing first. But of course we need to research the areas more for property values, rent rates, new development, etc.
You're welcome. If it's a pure investment, it's generally about the numbers and risks. If it's a lifestyle purchase or a mix of the two, your liking of the place carries more weight. Puerto Morelos attracts much less visitors than Playa or Tulum but the inventory is less too so, yes, check your figures!
@Mike Lambert Thanks. I would say more weight on the investment side longer term. I am looking at 2 factors: proximity to Cancun airport and proximity to beach, shops, etc. Also, there are not alot of hotels in the area so perfect spot for airbnb or long term rental right now.
They are selling brand new condos on the colonial side starting around 1.7M pesos. I would not buy anything on the colonial side as an investment which is why the beach properties to me are worth the additional investment for rental power.
They are building a high speed train network through the Yucatan peninsula that will link the Riviera Maya to Cancun International Airport. There will be only two stops in the Riviera Maya. The closest will be Playa del Carmen and then you'll have Tulum.
Condos sold in pesos are targeting a Mexican clientele. I'm not sure whether foreigners would rent those.
@Mike Lambert I hear that is a 5 or more yr project. I also heard that there is talks of an international airport in Tulum in 2 yrs, but all that seems aggressive. The new airport and rail will definitely change the landscape of property access in areas near Tulum. https://www.forbes.com/sites/jimdobson/2020/10/07/tulum-mexico-will-get-a-new-luxury-airport-in-2023/?sh=6b10a2c43f36
The train is supposed to be done much earlier than that but this is Mexico. At least they started the works. It'll take time for sure but most investors there look at a long term investment there, unless they're looking for a quick gain. Also, the lack of a train hasn't prevented visitors to come by the millions. There's a good highway along the coast after all. As to the airport, it's a plus if it gets done but the capacity will be limited and most people will still fly into Cancun. I wouldn't be surprised if the main users will turn out to be private jets.
@Mike Lambert This is great advice. My sweetheart and I just got back from her 1st trip to MX (many more for me) and we are considering investing in a condo in the area. We visited PDC, Tulum, Akumal and Puerto Morelos. I would say out of all of those cities, PM is our favorite place to look at investing first. But of course we need to research the areas more for property values, rent rates, new development, etc.
Puerto Morelos is a great spot! I lived there for several years. Property values will be more stable than Tulum given the limited development area (if you buy on the port side), and also its proximity to the Cancun airport (only 20min!). Keep in mind, however, that rental yields aren't as high as they are in Tulum. Pros and cons in every opportunity!
Hi @Heidy Fu! Just curious if you ended up buying anything in the Rivera Maya? I own a few vacation rentals in Tulum and would be happy to share any insights or advice if helpful.