Short-term Vacation Rentals Abroad?

[Scott Ginther]

We talk a lot about vacation rentals within the States, but how about abroad?

Me and two friends are starting to look at  resort areas in Mexico and the Caribbean. We've run a few calculations and NPV projections, but there are a lot of "unkown unknowns" - especially when it comes to tax implications, arbitrage, and international law/regulations. Does anyone have good recommendations as a start point for research and source material?

Thanks!

[Mike Lambert]

@Scott Ginther

We can't possibly give you any advice if we don't know what your rationale is for investing abroad: is it diversification, higher investment returns, higher capital gains potential? If you don't mention it, people might be telling you what they would do themselves but their situation is different.

As mentioned by Sarah Kensinger above, it's no secret that Mexico has an issue with gang violence in certain places (and so does the US for that matter) but that's nothing new. Yet, the amount of Americans travelling and moving to Mexico keeps increasing because it's extremely rare that anything bad happens to them. Speaking of Cabo, the murder rate in the US is 3.5 times higher than that of Baja California Sur, which is even lower than Canada's! All the Americans I've met in Mexico who have moved there I've met will tell you they feel safer than in the US.

If you want to invest in the Caribbean, I would inform myself about they issue of sargassum (which is hitting Florida as well by the way).

For tax implications (and the other subjects), you can find plenty of information online easily and then you can corroborate with a tax advisor. The legal system is different but that isn't an issue. STR regulations are generally non-existent and will stay that way as the governments welcome the STRs unlike in many places in North America. Arbitrage generally won't work because the inventory of LTRs and STRs is different.

I've answered hundreds of questions (sometimes with a lot of details) on these topics over the years so you might find what you're looking for by searching through my profile. If you don't find what you're looking for, you can always send me a direct message to see if I can help you further.