Interested in Quintana Roo Short Term Rentals - All Inclusive Options?

[KC Frank]

Hi there! My wife and I own 3 short-term rentals in the US and are considering buying something in Quintana Roo - Cancun, Playa del Carmen or possibly Tulum. Cancun is an easy flight from our hometown, we've visited those areas many times and my wife's family is from Mexico so she speaks Spanish.

Question - are there opportunities to buy in an all-inclusive resort? We've been to many and really love the feel and amenities. I'm just curious if there are options in those types of resorts or not. I understand that there are condo/apartment opportunities but am more curious about the larger all-inclusive resorts.

Anything else we should be thinking about when investing in that region? We don't need assistance with financing and will very likely use a property management company (even though we self-manage in the US).

Thanks!

[Mike Lambert]

@KC Frank

Sounds like it'll be for a large part a lifestyle purchase, which makes it easier. However, when it comes to cash flow and appreciation, there's something important to understand. In such a vacation market, cash flow and long term value oftentimes go hand in hand. It's not like in the US where you have the cash-flowing low appreciation Mid Western-style and the negative cash flow high appreciation Californian-style market. If there's no cash flow, there's not much long-term property value increase because very few of the kind of properties that you'd buy are primary homes and therefore they don't have that intrinsic value. This is especially true in a resort, in which no home would probably ever be a primary home. So, the long-term value is closely tied to the cash-flow potential.

When it comes to the whole area, that ship has sailed in my opinion. Of course, I don't know what your time horizon is. The long term price trajectory will partly depend on whether the sargassum issue can be contained or whether it gets worse and on how much overbuilding eventually takes place.

If you want to be in a resort, the resort is more important than the location in my opinion. Most people won't care if it takes 10 minutes longer to go to a resort if it is better. I tend to put my mouth where my money is so, if you don't want to be in a resort, I'd go for Playa del Carmen, which is easy access from the airport.

Something important to understand is that your guests (and yourself) typically will have to pay to use the resort facilities. If they want to use the resort more than once or twice during their stay, it's probably gonna be cheaper for them to take the all-inclusive package. In theory, this could work if the resort is for example close to Playa del Carmen, your guests want to use it once or twice and go to town the rest of the town. Problem is I'm not sure how many people would do that since you typically have the resort lovers and the resort haters and people who want to enjoy Playa del Carmen typically want to be downtown and take advantage of the walkability. So, if I was to buy in a resort, I'd want proven cash flow at the very minimum.