How to acquire funding for investment properties in Mexico? (Canc

[James J Young]

After moving to Cancún I found a 3 apartment deal fully furnished already cash flowing on ABNB for $115,000. We have been able to raise $70,000, which leaves us needing an additional $45,000. Part of the funds we have raised is with a loan through a Mexican bank @ 9% APR. I have the other part of the funds through a loan and savings. I'm Looking into DSCR but am not sure if they'll do cross border lending. Also I have a low income about $2000/month. Any suggestions on how I could raise the other funds would be helpful. Moxi's min loan is $250,000 with like 30%-40% down.

[Mike Lambert]

@James J Young

I wasn't suggesting it's too good to be true. Like you said, there are plenty of $50,000 apartments and they're not cheap for the average Mexican. So you can acquire these properties. The question is what are you going to do with the apartments. You were talking about cash flow so I imagine the idea is to rent the apartments. Short-term? Long-term? To whom.

Not knowing any morte details, short-term renters who pay great money typically want better quality in a location where foreigners go. And, most visitors to Cancun go to all-inclusive resorts, not short-term rentals who can't compete for obvious reasons. For the little that I know, these apartments would be more suitable to locals long-term renters. Personally, I would never rent a property in Mexico that way and that's why I suggested to make sure you understand what you're getting into.

To expand on this, there are two property markets:

A. The market in which the buyers are foreigners or well-to-do Mexicans and property are traded in USD and which are in specific (types of) locations.

B. The rest of the market, in which the properties are typically traded in pesos.

I wouldn't touch any property in B but that's me. In any case, its buyer beware.

Finally, I'm not sure how you can investigate a safe location at night. If the area is bad, it doesn't mean it's bad every time or something necessarily will happen to you. Also, it isn't only the reality. Perception matters.

For years now, I've been encouraging people to not be overly fearful about investing in real estate in Mexico, with the caveat that it's important that buyers/investors know what they're doing. I've seen many foreigners making investments that don't make sense because they don't understand how the local market works, which is oftentimes very different than how it works in their home country.