San MIguel De Allende Investment

[Bejoy Nair]

Hi BP members - I am interested in learning your opinion about the rental market for San Miguel De Allende in Mexico. I did a trip from Mexico all the way to Puerto Vallarta last year and did stay at San Miguel for 2 nights. Met few expats and learned about the art and culture scene in San Miguel. With so many expats calling it home, I was wondering why it does not show up in the preferred destinations for investment in Mexico. Would San Miguel not be a good place for Long term rental potential?

I look forward to hearing your opinions.

Thx,

[Mike Lambert]

@Bejoy Nair

It's an interesting place indeed. You just have figured out if that's for you. You'd have to calculate what rental yield you can make and then you'll know if it fits your criteria.

Why is it less popular than other places like Cancun, Playa del Carmen, Tulum or Puerto Vallarta? It's pretty simple. In Mexico, the money is in short-term rentals rather than long-term rentals for pretty obvious reasons. While San Miguel de Allende is a tourist city, it doesn't have mass tourism like the others have (mind you, I'd still rather rent short-term than long term if I owned property there). Moreover, property prices are not cheap there and are much more expensive than in the other cities are listed. So, you can buy cheaper in Cancun, Playa del Carmen, Tulum or Puerto Vallarta and get a much higher rental income. There you have it.

On another note, you rightfully mentioned that expats rent long-term. In Cancun, Playa del Carmen, Tulum or Puerto Vallarta, most expats buy because buying comes cheaper than renting. In San Miguel de Allende, they rent because prices are so expensive it's cheaper to rent than buy. So rent is cheap compared to the purchase price. Do you want to be renting in such a market. On the other hand, there's a big (luxury) industry so it could work well if you buy a property that's not too expensive but the luxury standard is high enough that wealthy people would rent it short-term for their weddings.