All Forum Posts by: Alex Scattareggia

Quote from @John Underwood:

Quote from @Alex Scattareggia:

 Mexico!  I know this is primarily a US investor focused forum, but there are truly some things we never worry about down here that I see people in the states dealing with all the time. 

 Drug Cartels, kidnapping or worse?

Statistical anomalies in the majority of investable markets in this country.  When I say that, people always recoil because news and stigma would have people believe that is commonplace

Nothing derails discussion better than this topic, so I won´t really go too deep. But if you filter out 3 or 4 of the 31 states in this country (none of which are investable) the crime numbers are insanely different and way better than any major US city.

Quote from @Rachel Shi:

@Alex Scattareggia Big fan of the insights you've been sharing here about the Mexico market. Thank you for sharing. My business partner and I are actually looking at a Tulum property. It will be one of the few developments right along the beach where there isn't much development currently and doesn't seem like there will be at least due to the building regulations. Do you think there's a risk of over-saturation? Part of our decision is also due to the airport and train system that are forecasted to be built there in the next year.

1.Simple answer to the saturation question is yes. 
That being said, the best operators will win out no matter how dense the market is.  In Mexico we still get an ungodly amount of very amateur listings that are not really competition. That is slowly starting to change as more and more professionally managed listings and good PM companies start as well. But overall, yes, I think Tulum is or will shortly be over saturated.

2. Building regulation in Mexico only lasts until someone pays the right amount to change the regulation.  Do not count on regulation to last.  In each of my markets there have been official regs against building over a certain # of rooms/homes and they have obliterated the numbers every time.

3. Oceanfront is always good! This is a huge generalization, but the thing I see there isn´t so much location based its more the homogenous nature of the listings. So much of the marketplace is indistinguishable from each other. Boho everything, macrame hammock, brand new build Modern Mex, exposed rock etc. etc. Just looking different might give you a good head start

4. Tren Maya- I hope it drives traffic your way!

Good luck with your search, in my experience the positives far outweigh the negatives in this country! 

 Yes, it is what I did and actually still do!  With a little time ¨in the trenches¨ you will find out what you like/dislike and what you might need some help with.   

However, if you are not going to be living in the market, this definitely becomes more difficult and probably not worth it. Especially starting out. Pay the 20-25% and hire someone who has had success in the particular asset you are buying. I misread and thought you said you are also moving to the place you buy the STR. Good luck!

 Mexico!  I know this is primarily a US investor focused forum, but there are truly some things we never worry about down here that I see people in the states dealing with all the time. 

Insane story. 

One of the hidden advantages of investing in a place where 90% of guests have to get on a plane... people have to leave their weapons at home. 

One cool thing about the east coast of Mexico is that you are really tapping into multiple tourist markets. 

1. US and Canada

2. Europe 

3. Domestic tourism 

I wouldn´t stress too much on the 100% tourism issue because of the overall size of your market and the fact that you are this very unique little part of it that is much different than a lot of your competition.  I feel better about a cool place on the water in Isla Mujeres vs. a brand-new construction condo in Tulum (as an example) surrounded by 10,000 similar listings. 

Not sure about the specific tool you are talking about, but talking to a well recommended property manager that specializes in Short Term Rentals in that area will prove invaluable.  It sounds like you want this to be a passive investment which means that the day to day running of the business and the cost that comes along with it will be in the hands of a third party.  

If you can handle the analysis on the fixed costs: mortgage, taxes, insurance all you have to do is plug in the last cost which is the total cost of running a STR. Whether that is in the form of an all-encompassing property management fee or piecemealed together will be up to you but a good PM will be able to provide you with more a accurate snapshot and potentially shed some light on the viability of the purchase. They are going to have a more specialized and local focused view of what your costs will actually be.

Hope that helps and good luck on your journey!

Quote from @Brooklyn McCarty:

You should never use one single data source. Use several and average them together. 

This is the best strategy I have found.  Get as many data points as possible and average it out to get as close to accurate as possible. 

If you are local to the area, there is nothing better than talking to a fellow investor who is succeeding and get some reliable information on what works and what doesn't.  If you approach this correctly you can get invaluable information on the specific market.  

There are STR markets where a two-block distance can make a huge difference in income, which is not always accurately synthesized by Airdna or any of the other data scrapers.

Quote from @Taylor Pyles:

Are there any recommended methods for searching for properties? I have seen a few here and there that have pulled my interest in state and out but I am not sure if general real estate listing sites are the way to go?

 All the same places you would look for any other kind of real estate.  You are just applying a new lens to analyze it. 

Sorry for derailing the book conversation but I think this topic is pretty interesting especially with the way the market is changing. 

I know this next part isn´t popular in the STR world, but..

I would never buy a STR if the deal didn´t have either of the following, in addition to making sense as a STR:

A. an obvious pivot (LTR, MTR) as my safety net if the market moves against me or 

B. have some additional RE benefit that would make it a deal using a different strategy ex. (substantial value add opportunity, significant appreciation potential etc.)  

Curious to hear what some of you with bigger portfolios think of that kind of analysis. 

IMO a big reason why so many people are hurting right now is because the underlying asset only makes sense using this one strategy STR. Even really skilled operators are left with no back up plan because they can't pivot to LTR in that market, can´t fetch the price they paid because the STR has lost some steam and was bought using nightly rate numbers etc. When things outside of our control as investors change, (macro-economic factors, saturation, disposable income etc.) and there is no safety net, that's when investors can get really hurt.

This is way more conservative than a lot of people I talk to and has definitely meant that I lost out on opportunities, but it gives me bigger peace of mind and in shifting markets I feel better prepared to adapt if need be.