Short term rentals in Mexico

[Sean Harris]

So we go go to mexico quite a bit and everytime we are down there the thought of owning something there is always brought up. Just wondering if anyone else on here has done this? We are focused om Cabo San Lucas and San Jose del Cabo. I know alot of the homes we are interested in are in HOAs which can be sketchy as they can change the rules and tell you no vacation rentals. Just curious of what people's thoughts are and experiences. 

[Michael Baum]

Hey @Sean Harris I have no experience with this, but there are several posts about it if you do a search.

I do know that there are some things you need to do to buy real estate in Mexico.

https://www.liveandinvestovers...

[Luke Carl]

We stayed in a made-for-airbnb building in Tulum one time that was run so efficiently that I stole many of their ideas and systems to use in my own business. I've got 2000 5 star reviews. 

Just goes to show you.... find someone who is good at it and learn from them! 

[John Underwood]

Would it not be better to buy vacation rentals in the U.S. and use some of that income to visit places outside the U.S.? Seems safer to me.

[Derrick Grahn]

Hi Sean. I would be happy to assist you. My wife and I (originally from Chicago and Southern Florida) moved time and lived full time in Cabo San Lucas for over 14 years. Our two children were born in Cabo also. We still reside in Cabo, but we recently began splitting our time between Cabo and Scottsdale AZ.

We enjoy real estate investing in both markets also. In fact our primary business is a real estate brokerage in Cabo ... www.thecovetedgroup.com. In addition to real estate, we own other businesses in Cabo too, including restaurants, brick and mortar stores, and a manufacturing facility. When we moved there in 2005, we didn’t know anyone there and knew basically nothing about the market. Looking back on it, we were a little crazy. And for that reason, none of what we accomplished came easy in Mexico and especially Cabo. We have loved it, but have also hated it at times. We had to navigate through many Los Cabos and Mexican obstacles through the years, and have learned a LOT in the processes. With some decent guidance, it can absolutely be far less painless.

Anything and everything is as possible in Cabo as it is within any market in the US, as long as you have the proper guidance, as my wife and I wish we had when we first moved there in 2005. We are both happy to give you our feedback, as we do for hundreds of other people, friends, and clients on an annual basis. Regardless if they are clients or not, we truly enjoy helping people with real estate both the USA and in Mexico, especially in Cabo.

The question you asked is important and the answer depends mostly on the property type that you are considering. To better assist you, I would enjoy learning more about what you are considering. The primary questions that come to my are... what is your goal? Or, what are you hoping that this Los Cabos property can do for you? Do you want to own it strictly as an investment? Do you want to enjoy it also? If yes, how many weeks or months would you personally use it? Would you pay cash? Or are you hoping to finance it? What's your budget? Do you want to own on the beach? Is an ocean view important? Or are you looking for something more urban and creative? Multi family or single residence? Condo or stand alone home, etc? Perhaps you do not want an HOA(yes that is possible)... or maybe being in a gated community is a preference for you?

I am happy to guide you more here... or we could catch up via phone some time too. Whichever you prefer. Have a wonderful day.

[Sean Harris]

Thanks for the replys everyone and Derrick I will send you a PM later today, thank you

[Benjamin A Ersing]

@Derrick Grahn Would love to learn more. Both about your developments in MX and about your entrepreneurial journey. Have a few minutes to connect?

[Derrick Grahn]

Originally posted by @Sean Harris:

Thanks for the replys everyone and Derrick I will send you a PM later today, thank you

perfect.  

[Derrick Grahn]

Originally posted by @Benjamin A Ersing:

@Derrick Grahn Would love to learn more. Both about your developments in MX and about your entrepreneurial journey. Have a few minutes to connect? 

I am happy to share. I am running crazy for the next few days. But shoot me a text so we can try to connect later this week. +14807095113

[Benjamin A Ersing]

@Derrick Grahn much appreciated! Will do.

[Matt Ayoub]

Hi @Sean Harris - I am an owner of a single family vacation rental Airbnb in a community called Rancho Cerro Colorado on the San Jose corridor near the Palmilla. We picked ours up In 2016 - 2 years after Hurricane Odile (good time to buy) and I am sure there are deals to be had as business has ground to a halt with Covid and the economy is heavily dependent on tourism.  I am sure we have some VR owners sweating right now as it went to zero (I have had two new bookings in 3 months). You should note that days on market when selling can be very high so if you are looking for a more liquid asset this might not be the play.

Overall we are very happy with our property and operating model (we manage the front end and a PM takes 12 percent) to manage the operation on the ground, supervise staff, bills, taxes, greet guests, deal with emergencies, etc. You definitely need someone you trust on the ground.

No major issues with the HOA (about 3k per year including 24 hour security).
Pre Corona we were grossing about 125k / year with a 4.96 rating on Airbnb. We paid 800k plus renovations for the property. Financing is tricky locally. My wife is Mexican so we bought in her name and avoided the need for a trust for property on the coast.
Overall Cabo is a short flight from many west coast destinations has great weather, food scene, fishing, and golf. Peak season is Nov to April but you can get some renters year round. Lots of Americans and Canadians. We prefer San Jose to San Lucas as the latter is a bit more of a spring break cruise ship scene.

Feel free to DM if I can help with any questions or recommendations. Also happy to share a link to my place which is frowned upon in this forum.

[Mike Lambert]

Presumably you'd want to have access to amenities, whether when using the property yourself or when renting it when you don't use it yourself. So either you buy a multimillion dollar villa that has its own amenities or you'll need to have an HOA by definition. Since you've been looking at properties with HOAs, I guess you're not looking for a multimillion dollar villa.

HOAs can forbid short term rentals anywhere in the world and not only in Mexico or Los Cabos for that matter. Actually, the odds are that it's much more likely to happen in the US than in Mexico. Indeed, Los Cabos lives from tourism. Of course, there could be communities with only or a majority of long term residents. It is therefore still possible that the HOA would ban short-term rentals? Yes, in that case in theory. You can mitigate that risk by asking questions to whoever is assisting you in your property search. Are there short-term rentals in the community already? What percentage? Who are the owners?, ...

I invest in Mexico. I have access to private deals at below market prices through my connections with developers but I haven't had the opportunity to pull the trigger yet as there are other places in Mexico that are much more profitable. Of course, if you vacation regularly in Los Cabos, your objectives are probably different.

[Mike Lambert]

@Matt Ayoub

As you mentioned, there could be opportunities to buy cheaper as a result of Covid-19. However, properties in Cabo are expensive and property owners are not the typical "worst victims" of Covid-19 who need to sell, except maybe restaurant owners who'd need cash.

It seems you're doing a pretty good job with your property. Would you mind private messaging me the listing to your property? Thanks

[Matt Ayoub]

Have DM’d the link.

Interestingly Palmilla community right next door (same beaches below except ours are more swimmable) have properties 5x the price with 3-4x the HOA and way more rules / restrictions. Our community works because the villas all have private pools and you have direct beach access.

I don’t need the Concierge services, gym, tennis courts, restaurant, etc. I mainly need gated security and patrols,  a reliable water source, Maintenance of common area landscaping, architectural control / guidelines, and trash pickup. I definitely recommend Rancho Cerro colorado.

[Sean Harris]

Yea Rancho Cerro colorado looks great! Unfortunately I'm cant afford a 800k home at the moment. The thing I worry about is the financing aspect of it because I have heard it can be tricky and like Matt Ayoub said about how homes are on the market for quite sometime because they can sell was interesting and for sure something g to look into. The way I would get into something would be to utilize a 120k HELOC on my primary residence which means I need to do alot more research into the area because I obviously would want to pay that off as soon as possible. So if the returns are there then great, all I'm looking for is good cashflow and I feel now might be a good time to look more into because of all this Covid19 stuff happening. Does anyone have a good resource to search for properties in mexico? I have found a few but I would love some recommendations. Thank you

[Matt Ayoub]

The best site I have seen for Cabo is findcabohouses.com (you will need to register but you don’t need to use them as an agent). I have also seen a lot of listings offering seller financing (sign of slow market). I do think it’s possible to establish a strong performing VR (and place to vacation yourself) in a reasonable price range. Clearly though you need A clear value prop and a team on the ground to distinguish your service as my sense is there is plenty of inventory.

[Mike Lambert]

@Sean Harris

800 k isn't that expensive for a house in Cabo. Cabo is by far the most expensive beach resort town in the whole of Mexico. One of the main reasons Americans invest in Mexico is the much cheaper prices of properties but Cabo kinda defeats the purpose.

[Sean Harris]

Yea I can see that but where I live in California a 3bd 2b house with no land costs you 600k that still needs improvement. Rent is very high here but I would never invest in California just because of all the bs laws and regulations. Cabo "area" is great. I wouldn't necessarily invest right downtown cabo just that general area from cabo san lucas all the was up to san jose del cabo. Wherever the cashflow is great and people are wanting to stay is where I would want a house

[Fletcher Wheaton]

I have been in Los Cabos doing investments for expats for a while. We have a new condo development starting here soon, which I imagine will be 50% for living and 50% for investment.  We have our own portfolio of 5 properties in Los Cabos, 4 are rental properties.