Do you own an STR in Mexico ?

Question

I'd love to chat with someone that already owns and rents an STR in Mexico.Ours will be ready in a couple months and I have a few questions around taxes, etc...Thanks!!

Alex F. · Answer

@Chris Gottshall Best of luck. We purchased a condo (new construction) in Isla Mujeres. After various delays, we finally took possession of the unit. The builder still has a few things to finish in the building, but our unit is ready. I'm really looking forward to spend some time down there. We will probably manage it ourselves like the other properties.

Alex F. · Answer

Yeah I first went to Isla Mujeres over 20 years ago. The island is a lot more touristy now but still a lot calmer than Cancun. Running the numbers, the market seems really good. During peak the island is at 80-90% capacity.....everything near the north side of the city gets booked. For PM we have a couple leads. We plan to use our existing setup with hostfully and just need a solid cleaning team + handyman. How hard can it be? :-)

Alex Scattareggia · Answer

1.Simple answer to the saturation question is yes. That being said, the best operators will win out no matter how dense the market is. In Mexico we still get an ungodly amount of very amateur listings that are not really competition. That is slowly starting to change as more and more professionally managed listings and good PM companies start as well. But overall, yes, I think Tulum is or will shortly be over saturated.2. Building regulation in Mexico only lasts until someone pays the right amount to change the regulation. Do not count on regulation to last. In each of my markets there have been official regs against building over a certain # of rooms/homes and they have obliterated the numbers every time.3. Oceanfront is always good! This is a huge generalization, but the thing I see there isn´t so much location based its more the homogenous nature of the listings. So much of the marketplace is indistinguishable from each other. Boho everything, macrame hammock, brand new build Modern Mex, exposed rock etc. etc. Just looking different might give you a good head start4. Tren Maya- I hope it drives traffic your way!Good luck with your search, in my experience the positives far outweigh the negatives in this country!

Mike Lambert · Answer

@Alex F. @Rachel Shi @Michael Baum The train has been announced years ago and I haven’t met a single person who will go to the Riviera Maya or go more often because of the train. Most people go there for a cheap beach holiday and are unlikely to bother. By the way, the purpose of the train is to attract people inland, not to the riviera itself. So, great if it has a positive effect but I wouldn’t count on it.As to investing in Tulum today, do your homework. There’s indeed already a huge amount of empty STRs and tons of others with mediocre returns, not too mention the unsold inventory while thousands more properties are being built. Why would you take the risk sof investing overseas in a market that has such bad fundamentals I don’t get it. How are you going to make money, let alone not lose any on resale? If the market tanks, it won’t matter where you bought The great thing about the law of supply and demand is that you don’t even need to know the market to get that one.The time to invest Tulum was years ago. Maybe investors should accept that they missed that boat on that one and instead look for the next boat about to leave.As to the airport, you might want to research the capacity and connectivity. Ask yourself how many additional renters or buyers that will bring vs the tidal wave of inventory on the way. You might want to do your own calculation. Could be wide opening.Hope this helps put things into perspective.

Alex F. · Answer

Hi Mike,Those are very valid points!! The area is 101% based on tourism...we should also add the hurricane risk. The units face the Caribbean Ocean and are maybe 40 feet from the water. At least mine is on the second floor, but not sure it would matter very much with a cat 4 or 5 hit....assuming no major world catastrophe, I hope to be able to live about 3 or 4 months there a couple of years from now to really experience the island life.....Keeping my fingers crossed the Riviera Maya keeps on growing with tourism. Time for a margarita....

Sebastian Papworth · Answer

Hello @Alex F.I am a Licensed Realtor, Investor, and Developer in Quintana Roo (Cancun, Playa del Carmen, Tulum, etc). I just interviewed a Mexican CPA with Ph.D. in Mexican Taxes, we covered the following topics in the interview: Individuals & Corporations / Residents & Non-residents Bank Trust or Mexican Corporation Closing Costs Capital Gains Property Taxes in Mexico Income tax on rental properties NAFTA Double Taxation Treaty Income Tax in Mexico vs USA Income Tax deductionsI know I can't post the link on the forum so, if you would like the link to the video send me a private message so I can share it with you. I can also share the contact of the CPA if you need to contact him direct for a personalized strategy. Best of luck!

Alex F. · Answer

@Sebastian Papworth Thanks a bunch for the info!! I'll message you offline.

Mike Lambert · Answer

@Alex F. As @Michael Baum suggested, I could help you with pretty much anything Mexico but, when it comes to taxes, 1) I'm not a tax advisor and 2) I don't pay US taxes. Due to the nature of my activities, I pretty much know the topic but, in my humble opinion, you'd need to consult with a tax advisor. Of course, anyone in the know could help to educate you so that you can get to the point quicker with your tax advisor and maybe pay less but I'd make sure I do this right so kudos to you to reach out.

Mike Lambert · Answer

Sorry meant to tag @Rachel Shi and @Michael Baum in previous post

Alex F. · Answer

My two cents is that the train will help a lot. Even with 10K + strs as long as the tourists are there there will be demand and there are only so many properties that can be beach front.......We have a house in Kissimmee, FL where there are also 10K+ STRs, but since it is in the Disney area, there are always tons of tourists - locals, usa, and international. A long as the property shows well, and is near the top of the top of the properties the bookings are solid.