Canadian interested in purchasing in Playa Del Carmen, MX

[Ryan Mattis]

Hi all,

As the title suggests, I am a Canadian interested in purchasing a condo to use as a STR / Vacation property. Initially, I would be looking to rent the unit out most of the year with the odd vacation, and use the property in retirement (approx 15 years from now) to escape the Canadian winter. This would be my first investment property, this is all very new to me.

I've done some research and am familiar with the Fiedesicomo.  It looks like most transactions are cash in that area, so I'd probably be looking at using financing in Canada using the current equity in my home to purchase. I've travelled there a few times, but never in an airbnb type scenario. I am looking to try that in the fall and hope to look at some properties while there. I am going to Cancun in a few weeks and I'm sure the weather will help me speed up the purchase.

Some general questions I had are:

Has anyone here from Canada purchased in Playa Del Carmen? Is this a terribly challenging process or can it be fairly straightforward?

Are there local realtors / lawyers that you trust? (I find this part initially challenging, is there somewhere I can vet people out, outside of google reviews)

Is there a full service brokerage or real estate company that would be able to basically handle the entire process? (documents, money transfers, etc?)

Areas to avoid? Initial research has led me to be close to 5th ave / beach. I'd be looking at a 2 bed, 2 bath condo as my ideal place. 250-350k USD being the price range. 

If you have experience in the area, what is the rental market like in the summer? Am I looking at a lot of vacancy outside of peak travel season in Mexico? Ideally we have cash flow and appreciation but breaking even on a purchase by the time of retirement is fine. It appears that area will have decent growth over the next while but that's just what I've come across online, I could be way off. 

Any reputable property managers in the area? Obviously I won't be able to tend to things from Canada.

Thanks for any info you all can provide,

[Zorya Belanger]

I know @Kevin Suarez Sabugo and @Mike Lambert can help!

[Mike Lambert]

Hi Ryan,

I'm a fellow Canuck who own several properties in beautiful Playa del Carmen.

Your plan makes total sense. Instead of buying in 15 years at a much higher price, you buy today at a much lower price and you profit handsomely by generating strong rental income over the next 15 years. Not to mention the potentially huge paper capital gain you'll have in 15 years. So, by the time you retire, you could have made much more money than the initial price of your property.

You could get bank financing in Mexico but the conditions are less favorable than in Canada, hence people oftentimes pay cash if they have it. You also have the odd seller financing opportunity. I've sold a property that way and have offered financing at much better conditions than what banks offer and I'd do that again for the right buyer. Using home equity comes down to the same as paying cash from an investment point of view but it gives you the cash if you don't have it otherwise. Many Canadians are doing that. It makes sense if you don't need to use the equity in your home for any other purpose. Picture this. You can get much higher returns than on a similar property in Canada and you can finance the purchase at the same super low interest rate you'd get in Canada.

You can generally trust realtors and lawyers but still I personally wouldn't deal with many of them. It's best to work with professionals recommended by people you trust. When it comes to realtors, they won't scam you but you have to understand that they will try to have you buy and get the highest possible commission. A realtor in your home city in Canada can't be very aggressive with you because they have to be careful with their reputation and they might want to build a relationship with you. Mexican realtors don't have to be on their best behaviour as far as you are concerned because you're a foreigner and it's likely they won't have the opportunity to do repeat business with you. Therefore, I take everything the realtors tell me with a pinch of salt and I form my own opinion. Of course, it's easy for me to do since I know the market very well and better than many self-improvised and newly established realtors.

There's no need for a full service real estate brokerage. Your lawyer will handle anything.

Your initial research is correct. In Playa del Carmen, it's all about being close to the beach and the 5th Avenue and I'm talking walking distance here. Go further away than 2 blocks from 5th Avenue and your potential income will typically drop like a stone. You can definitely something in your price range in the right area, although many properties will be way more expensive.

One of the great things about the rental market in Playa del Carmen is that seasons have become less pronounced over the years, as the market isn't only dependant on Americans and Canadians, which still form the majority of tourists. The majority of them come in the winter. The majority of Europeans and South Americans come in the summer so the summer isn't actually part of the low season. Mexicans typically go for the holidays around Easter and during summer. Israelis typically visit in September.

While the numbers of tourists who rent short-term has substantially increased over the years, there's another huge market that is growing fast: digital nomads and remote workers. They rent long term (by the month). Why the nightly rate will obviously be lower than with short-term rentals, you get 100% occupancy. Your costs are lower and it's less hassle.

Picture this. In a building where I own properties, remote workers are renting long-term at Californian-style rents and we bought at Mexican prices. Even thought i's a very large building, I couldn't find any availability when I asked our Facebook group of owners for a friend recently.

If you're happy breaking even bye the time you retire, you might be surprised yourself by generating big profits instead.

Hope this helps. Feel free to DM me if you need any further help. I'm going to DM you about your property manager question.

[Ryan Mattis]

@MIke Lambert

Thank you so much for that reply. I did not expect such detailed information! I will absolutely DM you as I go on if any other questions arise. 

Again much appreciated!

[Sebastian Papworth]

Hello @Ryan Mattis

I am a broker/owner of a buyers agency based out of Playa del Carmen & Tulum. I know you have already received an answer to most of your questions however I can add some info, I hope it will come in handy.

Has anyone here from Canada purchased in Playa Del Carmen? Is this a terribly challenging process or can it be fairly straightforward? 

Most of our clients are from US & Canada, actually, one of our best advisors is from Vancouver, he has invested in multiple properties here and he used to be a realtor in Vancouver as well. 

Are there local realtors/lawyers that you trust? (I find this part initially challenging, is there somewhere I can vet people out, outside of google reviews) 

I am a licensed real estate agent so it's pretty obvious I am going to talk about the benefits of working with a trustworthy realtor let me give you some key points: 

1. NO MLS: Since there is no official multiple listing service in the area it's hard to know very important stats that really help you out in picking the best investment property and making sure your offer and negotiation get you the best deal. We have an internal MLS with historic purchases in the area and useful stats.

2. Off Market properties: Some agencies have access to listings that are not public and are not available to all investors. 

3. Developer track record: You might see a presale project you like with amazing renders and good prices however we have been in the area for over 8 years so we know which developers have a good reputation, have delivered projects on time, and with good quality finishes. 

4. Buyer's agent cost: The cost of a buyer's agent is paid by the seller so this service doesn't cost you anything, and it can save you a lot of money and problems if you get a good reputable licensed realtor. 

5. Buyers agent vs sellers agent: If you go directly to the developer they most likely will have an in-house agent that works with the developer, so his opinion will most likely be biased because most likely he can't sell anything else, plus in the negotiation, you wouldn't have anyone working on your side. 

6. Reputable realtor with a long term vision: I agree there are a lot of new real estate agents that are not licensed and might not have a lot of experience and information and only have their commission in mind and not your needs / wants and best interests, however, you can't judge all agents like this. There are very reputable agents with tons of experience in the area, I would ask anyone you decide to work with some basic questions: If they have a license if they are a part of a real estate association like AMMI, AMPI, or CANACO, if they have invested in real estate in this state, and how long have they been in business in the area. For a reputable realtor & owner of a brokerage firm, it's all about long term vision, we are able to close so much more business if a client is happy, most of our business is based on referrals and repeat customers so it doesn't matter how high the commission if I am going to risk my reputation which can bring me so many more referrals and the peace of mind of walking on 5th av. with my family.  

7. Contacts: As we know who the best developers and deals are we also have the best contacts for: Real Estate Law firms, financing companies, Premium bank reps to open Mexican bank accounts fast, Notaries, Inspectors, Builders, Accountants, Property Managers, photographers, furniture stores, carpenters, handyman & maintenance people, etc. 

8. Bilingual realtor: Make sure your agent speaks really good Spanish, remember that you are in Mexico and all the agreements and important paperwork you will sign are in Spanish, some are translated however it's important to keep in mind that the Spanish version will prevail. We always advise you to get a lawyer that represents you, he will take care of all the legal clauses, however, there are commercial clauses that some attorneys don't know that can be negotiated or don't know what amounts can be negotiated, like penalties, transfer of rights, etc. 

Any reputable property managers in the area? Obviously, I won't be able to tend to things from Canada: 

I know a very reputable property manager in PDC, he is also from Canada so I am sure you will be happy with him, I'll send you his contact via DM. 

If you are already working with a buyer's agent, great if not we can help out by sending you comparable properties, sending you a very useful buyer's guide. 

Safe investing!