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Updated 2 days ago, 12/12/2024
Investing in Tulum, Mexico
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!
Hello Vivian, there are a lot of opportunities to invest in Tulum downtown, the beaches are occupied only by hotels and restaurants, this is the best time to invest in a pre construction unit at lower price than the finished units with a difference of 25 to 30% bellow market price, check this website to view some opportunities www.tulumrealty.net
Hi Rosa,
2 questions.
What kind of minimum down payment is required there for apartment buildings if a buyer is a United States LLC (or does it require a Mexican IBC (International Business Corporation) to be the buyer)?
Scott...
Hello Scott, developers require a minimum down payment of 30% and the balance in to 9 months in a pre construction condo. As a foreigner it is recommended to buy tru a bank trust https://www.tulumrealty.net/Buying_In_Mexico/page_2481994.html,
@Rosa-Maria Victoria
Don’t foreigners have to use a bank trust in a restricted zone? I would guess most of Tulum would be part of a restricted zone?
@Vivian Huang Town or beach it depends whether you're buying for investment purposes or for yourself or both.
I'm buying mostly for investment purposes. I want my occupancy (and revenue) to be maximized so, for me, it's very important to have something unique that the other places don't have so my condos will stay rented throughout the low season and in case of a downturn in tourism. In the hotel zone, boutique hotels charge between $500 and $1500 or more a night. They're not connected to the electricity grid and don't have air conditioning or amenities. So I'll be buying closest to the beach. We'll have two private beach clubs (most developments in Tulum have none) and amenities at least as good if not better amenities than any other development in town. the great thing is that being close to the beach fits my lifestyle and vacation style so my goals are congruent. If you prefer to be close to the restaurants, bars and nightclubs, you might be better off in or closer to the town although Tulum isn't that big so you have access to everything from the beach area as well. A the town and amenities expands towards the beach, there is a real risk that properties on town side will relatively lose value in my opinion.
I've been looking at Tulum myself. And Puerto Aventuras, just up the road. I guess my main concern with the Tulum area is it seems there are soooo many new developments going in (an agent told me 151 new developments over the next 4 or 5 years), I think the competition for vacation rentals will end up like Playa del Carmen (saturated and cut-throat with competition). Still seems like it could be a great place to invest regardless. I'm trying to go down there this Summer.
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.
@Mike Lambert Good points. Thanks Mike.
Hi Vivian,
As a point of reflection for your consideration, please allow me to tell my story so far in the Tulum property market.
I am a British architect living and working in Berlin, Germany. In 2017 I met a Mexican woman from Tulum through mutual friends who was looking for design advice for a property she was developing in her neighborhood, the Vileta district (Region 15, south west of the main town). Long story short, she insisted that I come to Tulum to “see for myself” the exciting pace of development in Tulum. Whilst at first skeptical, I did book a flight for a weeklong midwinter holiday. What I saw in terms of development there convinced me that it is an exciting growing market, and I decided to get involved myself. To cut an even longer story short, I now have a business partner in Mexico City who is a British chartered surveyor, and has been working on development projects in Mexico for almost fifteen years and is a Member of the Royal Institute of Chartered Surveyors. He brings with him an internationally active legal team, as well as building engineers and facility managers. I am leading the design side of the projects. We have already finished speculative designs for a typical quarter hectare (2500m2) 12-17 unit boutique holiday and residential apartment complex on the south side of Tulum on the Kukulkan Road connecting the town to the beaches. You can see our Kukulkan project, here:
Tulum, Kukulkan “The Art of Living, together” project introduction video
I was in Tulum for a second research visit and to meet my partner in february this year (2019). While there I met three other architects developing properties in and around Tulum, as well as brokers and land agents, and facility management companies. In my professional opinion Tulum is a fantastic investment opportunity, with over 2 million(!) holiday makers visiting every year, and a shortage of rental properties. Add to this the new rail link from Cancun to Chetumal stopping at Tulum which is planned to open by 2025, at which point property values will soar, making right now the optimal moment to get a foot in the door.
Back to us, Lichterman Rogers Development Partners (incorporation pending): We are all set up and ready to roll offering design, management, legal and facility management services, and are looking to find individual investors as well as major equity partners to get our first development off the ground. All investments would be though a bank owned trust fund, or fidecomiso, which we will set up on a project by project basis, and I would advise is the best mechanism for property ownership in Mexico. Following the first project we aim to expand through the region. This is an exciting moment, and through perseverance and with a little patience, we know we will land the right investors to get our show on the road!
Hi guys, this is a really interesting forum, also the other topics, however I hesitate to pay ca.350/yr to use it’s full functionality. What would you all advise/what’s your experience with the site? Any thoughts gratefully received. Cheers, Tory
Originally posted by @Aaron Logan:
“Still seems like it could be a great place to invest regardless. I'm trying to go down there this Summer.”
Hey Aaron, did you get down to Tulum this summer? I’ll be over in January or February, to meet my business partner in CDMX, and also continue building connection with building companies, and checking what land prices are doing ... well, that’s my mornings planned out. The rest of the day will be seen as Benchmarking exercises: beaches and good food!
Cheers,
Tory
@Tory Lichterman Hi Tory, sorry for the delayed response. Sounds like a good plan! I ended up not making it down there this year. Some things came up. I did end up going ahead with an investment in a hotel based out of the area down there (Kasa Hotels), but right now I shifted to focusing on some rentals in Alabama. Hopefully it will work out to make it down there at some point. Hope your trip goes well! Feel free to keep in touch! -Aaron
I will be going down there in a couple of days, and interested in building/developing/investing, I am a licensed Mexican Architect, I have friends living there as realtors, US investors, and US builders ready to pull the trigger.
From talking to locals, there's a couple of issues than need to be addressed, some are the non-ecological practices that some of those developers have, unfortunately, our government profits from this investors and allows them to destroy manglers (which are the natural water purifying system of that area) dismantling hectares of mangroves and degraded the habitat of resident and migratory species burying animals alive.
There's proof of fecal material floating beneath the city of Tulum, only 20% of the water is sent to the water treatment plant, there's no infrastructure for the exponential growth.
The landfills in the middle of the jungle that is leaking hazardous pollutants into the freshwater system and that something that developers won't tell you.
I love my country and it would be a disaster for everybody if this place ends up like some other great beaches around the world, that are completely ruined by greedy investors not following the rules.
There's no urban or comprehensive master plan, and one of the risks is that Tulum will be like Playa del Carmen is today, overgrown and with environmental devastation.
I will advise doing a lot of research before getting something in Tulum, different country, different rules, and practices.
I have been investing in your great country and the Riviera Maya for a few years now and I respectfully disagree with your comparison between Tulum and Playa del Carmen. The environment problems seem to be much worse in Tulum. From a pure investment standpoint, I hate the party pooper but I fear that, if you want to do property development in Tulum, you are too late to the party. Land has become very expensive and there is a already huge amount of condo projects in construction or planned, which clearly amounts to massive overbuilding. There are many more projects in Tulum than in Playa del Carmen, even though Playa del Carmen is 10 times the size of Tulum. This makes no sense. Today, Playa del Carmen has much more going for it than Tulum. People loved Tulum because of its isolation and nature but this is slowly disappearing with the huge development taking place there. They're basically shooting themselves in the foot. After investing in Playa del Carmen, I had the opportunity to invest in the best deal in Tulum at well below market prices and also at doing development there but I gave up on those plans as it became clear that there are much better opportunities elsewhere.
I am interested to hear about your experience investing at Kasa Hotels. I am currently looking for an opportunity at their Kasa Residences Ceiba. How did you handle the financing? I would appreciate your feedback. Thanks.
Martin
Originally posted by @Aaron Logan:
@Tory Lichterman Hi Tory, sorry for the delayed response. Sounds like a good plan! I ended up not making it down there this year. Some things came up. I did end up going ahead with an investment in a hotel based out of the area down there (Kasa Hotels), but right now I shifted to focusing on some rentals in Alabama. Hopefully it will work out to make it down there at some point. Hope your trip goes well! Feel free to keep in touch! -Aaron
Hi Aaron, how has that investment in Kasa been for you this far? I’ve been considering them for an investment as well with the newly planned properties.
@Delta Smith Hi Delta, well it's actually too early for me to have any numbers just yet, b/c they have to build the new hotels. My initial investment was directed toward the new Turks & Caicos location, but it's still in the developmental process. I knew it was going to take a while, so I kinda put it on the back burner in my mind. In the meantime I'm focusing on rental properties here in the states. I'm looking forward to seeing how it goes though.
That’s great. I suspected that much. I didn’t realize they have started the Turks properties? They told me Belize, the Turks and the others. It’s seems interesting but I need to think about it some more. Thanks for your input!
@Aaron Logan did you pull the plug on TULUM? Going next week to see land director owner.
@Mike Lambert are you currently investing in TULUM?
Originally posted by @April Molina:
@Aaron Logan did you pull the plug on TULUM? Going next week to see land director owner.
Hi April, I ended up investing in KASA Hotels down there instead of buying a condo directly. At least for now. Still may get something later. Would love to travel there more often & spend more time down there. Right now I'm focusing on building up rentals in the states & doing some flips to raise more capital. Still hoping to get something in Tulum, Playa del Carmen, or Puerto Aventuras eventually though.
@Aaron Logan I hear you! I am always looking to escape from the hectic lifestyle. My team and I are traveling next week to meet contractors; look at land for hotel development on the beach side. Landed on this thread doing research.
Originally posted by @April Molina:
@Aaron Logan I hear you! I am always looking to escape from the hectic lifestyle. My team and I are traveling next week to meet contractors; look at land for hotel development on the beach side. Landed on this thread doing research.
That's awesome!!
I invest in the area and I'm actually looking at an off-market deal in Tulum right now.
You want to do a hotel development on the beach side?? Have you been to Tulum before? The beachside is all "taken" and pretty much build out. And if there was any land available, it'd cost an arm and a leg.
Originally posted by @Aaron Logan:
Originally posted by @April Molina:
@Aaron Logan did you pull the plug on TULUM? Going next week to see land director owner.
Hi April, I ended up investing in KASA Hotels down there instead of buying a condo directly. At least for now. Still may get something later. Would love to travel there more often & spend more time down there. Right now I'm focusing on building up rentals in the states & doing some flips to raise more capital. Still hoping to get something in Tulum, Playa del Carmen, or Puerto Aventuras eventually though.
Hey Aaron, any movement with KASA since we communicated how many months back?