vacation rental in baja Mexico

[Angela Brinkhaus]

I'm considering buying a vacation rental in Cerritos, a small town in Baja Mexico about an hour north of Cabo.  I've read through some threads and I *think* I understand the basics.  It's a 2 bedroom, 2 bath new construction with a beautiful view of the Pacific.  We've visited the area 2x's and really love it there.  Since it's new construction were are estimating the average number of weeks it would be rented - but think we can at least break even or make a small profit if it rents 25 weeks per year at $175 per night.  I think this is a conservative estimate?  I would love any feedback / input any members have to offer!

Thanks!

[Mike Lambert]

I have been investing in vacation rentals in Mexico for a few years now so I'm happy share my input.

If I look at a pure investment, I'd invest only in the Riviera Maya (Playa del Carmen), Puerto Vallarta / Riviera Nayarit or Los Cabos. That's where the action is in terms of tourism, rental income and active market. I invest in the first two but not in Los Cabos because it's too small and expensive (read less profitable) for my taste.

If I was looking at a place I don't know, like Cerritos, I would wonder if there is an established rental market and an active resale market. Just based on where it is and the fact that it is a small town, I would assume that the answer is no in both cases. Based on what I know, your rental figures are way too high but who knows I might be wrong.

Again, if it's a pure investment, don't fall in love with your rentals, as the saying goes. The fact that you like the place isn't that relevant. The question is whether people with different tastes want to go there and stay in your place. If you want to have a place that you use yourself and rent it the rest of the time, this is a totally different story.

I buy pre-construction condos with my investors only from developers I personally know and trust because, generally speaking, you have to part with half of your money before you get anything else than a piece of paper in return. I do this because I'm very risk averse and I have the connections to do it. Of course, most people don't have such connections or don't have the opportunity to invest with somebody who has them. If I was in that situation, I'd do a due diligence on the developer. Make sure he has the required track record. Also, make sure you have a good lawyer, as Mexican law is different from US law.

Mexico is a great country for real estate opportunities so don't get discouraged by what I wrote. Like any market, it has its issues so just make sure you know what you're doing or surround yourself with people you do. This would be my best advice. Let me know if I can help further.