Investing in Tulum, Mexico

[Vivian Huang]

Hi All,

I am currently exploring investing/buying a unit in Tulum, Mexico. Any advice or things to look out for would be greatly appreciated! I will likely buy with cash and not hold a mortgage. If you have invested in Tulum yourself, I'd love to chat with you! Currently looking at investment options in the downtown side. Thoughts on downtown versus the beach side? Thanks in advanced!

[Mike Lambert]

@Aaron Logan

The fact that there are 151 projects coming up can be seen as a good thing or a bad thing. You alluded to the "bad" interpretation, as this would be pointing to an oversupply situation pushing rents down. The "good" interpretation is that the area is booming and on the up. Mind you, both interpretations can be right, even simultaneously. There is increasing supply as a result of increasing demand but the real question you're asking is whether it's going to lead to oversupply and lower rents or not. Nobody knows so what I do is making sure I'm profitable, even at rock bottom rents. Then, having covered my base, I'd try to differentiate myself, by having the best located property, the best quality property (given the price of course) and offer the best experience. So I'd be doing my best to get the highest possible rent/revenue but without needing or counting on that.

What you refer as cut-throat competition exists in every market where you have demand. It's plain economics. If a market is abnormally profitable, it's going to attract more entrants, which will push profitability back to normal levels. You can find plenty of markets where nobody builds and you won't get competition but you won't get bookings either because there's no demand.

It has been proven that, with short term rentals, it's the really professional hosts that make the bulk of the money (think the 80 - 20) rule. So what you have to do is becoming part of that club and provide an amazing experience so that you can charge well above the market rate, irrespective of what the market rate is. Let those who just buy a property and put on Airbnb without doing much effort compete on price.