Is Tulum Mexico a good place for investing?

Question

For the past year I have been looking for a place to buy as an income/airbnb to buy in Mexico and have inquired about Playa del Carmen and Tulum and keep coming back to Tulum as it seems like it has the potential for growth with airport coming and simply more infrastructure. I'm going to go there in March and Im thinking of just pulling about 150-175K equity out of my primary I have and paying cash. Any thoughts or is Tulum not the place? If so where is the next beach vacation/investment place at?

Sebastian Papworth · Answer

Hello Matthew,

I am a real estate investor, developer and I own a buyer's agency in Tulum and the Riviera Maya. I moved here a decade ago and have been in the real estate market since so I can share data that can help you make a safe and informed investment decision. You can go to my BP profile and see the posts I have shared, I made a side-by-side comparison of PDC and Tulum, they both have pros and cons, and it all depends on your needs/wants and expectations.

Apart from the Tulum airport, the Mayan train is also a huge project I would say the biggest project of the federal government this term. I have some STR data on the entire market of Tulum and I can share my personal numbers on my properties so you can get an idea of what to expect. There are some great opportunities out there but there are also some cautions you need to have, not everything has the occupancy and the high ADRs that we saw a couple of years ago, there are still some money-making machines but you need to invest in something that's not a commodity and make sure your investment really stands out from the competition, there are more units coming into the market in the next couple of years. I can share what I think is the recipe for success to select an investment that delivers high ROI. My properties are in the double digits and still generating high incomes.
I can also share the local contacts I have made in the past decade for all the services you will need if you decide to pull the trigger ie: Notary, CPA, Real Estate law firms, photographers, property managers, financing, developers, etc.

Sebastian Papworth · Answer

Hello @Michael Weigum,

Hope you are doing well! I'm pretty sure the person you talked to didn't know how to explain it properly.

Not sure who told you you didn't own the land and the government could take it from you, but this is totally FALSE. There are over 1,000,000 foreigners that own property 30 miles to the coast or 50 miles to the border. If you are this close to the border or cost you need to purchase through a corporation or through a bank trust (Fideicomiso - Think of this trust to be similar to an inheritance trust or a living family trust in the US.)

At all times you are the legal owner of the property, the best way to see it is as a permit or license that allows you to purchase, use, enjoy, rent, renovate, inherit, etc. a property in this zone. Neither the bank nor the government owns the property you purchased or can take it back from you! I actually made a video about this on youtube. And you can find plenty of information online.

If you want more info on costs, terms, and suggestions on when to choose a trust or a corporation, let me know. @Matthew Swearingen

Congrats on your STR in Myrtle Beach!

Benjamin Canyon · Answer

I think there are still great opportunities in Tulum, @Matthew Swearingen. And @Sebastian Papworth is a great advisor to be in touch with. Personally, I've bought 2 properties with him as my agent! I did exactly what you're describing with the first property. Got a HELOC on my primary residence and put some additional cash into the investment to customize it. It's had pretty incredible returns. With that amount of money to invest, you just need to be careful because the market is flooded with studios and 1-bedrooms. And in terms of demand, I can tell you from experience that 2-bedrooms have lower occupancy than 1 bedrooms, so it's not worth the extra money if you're after cash flow. I think the best opportunities right now in Tulum are 4+ bedrooms. Next best are 1-bedrooms and studios IF it's an exceptional and also small development, good location, etc. Then you really need to trick out the design so you stand out on Airbnb.If you're game to hold the property for a while, I think Bacalar is also an interesting place to invest in the area. Has the chance of experiencing solid growth over the coming years. Let me know if you have any other questions.

Mike Lambert · Answer

@Eric Ticas

Hi Eric,

No bank from one country will take a mortgage in another country so you're limited to Mexico when it comes to banks. Beware that 1) some lenders might not lend in Tulum because they deem it too risky given the oversupply situation and 2) other lenders won't lend if the purchase price is below $750k because you can't get title insurance in Tulum specifically.

Finally, beware also that there's a huge difference between a lifestyle purchase and a (profitable) investment purchase, the latter being all about numbers. I'm sure you can still buy in Tulum and cover your costs if you rent when you're not using the property provided that 1) you don't use the property too much of the time and 2) you pay 100% in cash so you don't have a mortgage payment to cover. In that case, my advice is to try to find a property as unique as possible as the competition for rentals is going to get even more intense given the huge amount of supply that's going to hit the market in the coming years.

When it comes to Mexico, I'm first and foremost an investor. However, even if I wanted to spend time in Tulum, I'd buy a property in a more profitable area (of Mexico) and use the cash flow to rent for cheap in Tulum to get money and lifestyle together.

Michael Weigum · Answer

Hey @Sebastian Papworth,

Thanks for the clarification. I really like Tulum and spent a lot of time there. Biggest downfall was the drive from the Cancun airport. It's exciting to hear there is going to be an airport in Tulum. That would make it a lot easier to get to. Frontier Airlines used to fly a straight shot from Denver, CO to Cancun. Is Aldea Zama finished? I looked at property in there. It had great potential, but was in the beginning stages of construction.

Michael Weigum · Answer

Hi @Matthew Swearingen

I was looking in the same area a couple years ago before the Pandemic. We love the PDC and Tulum area. I even met with a developer down there and looked at a lot of properties. One of the downsides to buying property in Mexico for me is that you don't ever own the land. The Government owns all the land and they can take it whenever they want. Not sure if that is still the case, but that was a deterrent for me. Still love the area and will visit, but instead of buying my first STR there, I bought in Myrtle Beach, SC and it's performed very well.

Pradeep Prasad · Answer

Thanks for your insights @Sebastian Papworth. Yes I agree with you. Not a fan of high density projects myself. I will surely try and connect with you when I am in Tulum sometime this year. Can't wait to see the changes in Tulum!

Best Regards,

Pradeep Prasad · Answer

How are you doing @Sebastian Papworth

I personally love Tulum and travel there atleast once in 2yrs for vacation. Been seeing the growth first hand for about 8yrs now. And, the last I was in Tulum was prior to the pandemic. At one point, I was close to buying a condo in region-15 but dropped out due to lack of infrastructure. My goal is to retire in a low density condo/apartment in about 10yrs from now and live in the place I buy for atleast 6-8 months of the year. Until then, maybe rent it out long term.

Having said that, how is Region-15 now? I mean are the roads any better. I know 2-3 years is not a lot of time to see difference. But you never know! I do see a lot of condo developments being built in region-15 now and mostly, high density ones.

So, was wondering if now is a good time to search a low density project in region-15 and invest in one of them. Maybe something close to la avenida kukulcan.

I read your previous post about selva zama, tulum-101 and region-8. Honestly, I have no clue about the first two. But region-8 I thought was pretty raw still. I mean similar to what I saw with region-15, 2-3 years ago! Lack of infrastructure etc.

I would love to know more about selva zama and tulum-101 areas and have these as an other option in addition to region-15. Probably, I will make a trip sometime this year and personally, survey these areas myself. And, hopefully, I will try to catch up with you if you are in tulum when I visit.

Have a great day ahead!

Best Regards,Prasad

Eric Ticas · Answer

Thanks @Mike Lambert.  I appreciate the information.

Is Tulum Mexico a good place for investing?

Most Popular Reply