Investing in Mexico, Puerto Vallarta

[Mazen Al Ashkar]

Hello BP,

I have a friend of mine who's enjoying his condo investment in Puerto Vallarta, beach front condo for ~100k USD. With short term rentals, he's making healthy returns. I have some cash set aside and was wondering if anyone had any experience in Puerto Vallarta or Playa Del Carmen since i hear those are the hottest 2 spots to consider as an investment. I don't have much experience in the Mexican market. Would love to get your input

Cheers

[Mike Lambert]

@Eric James

Most buyers North Americans are happy to pay cash for several reasons: 1) they can get a higher return on their cash than with most other "safer" investments, 2) they buy in Mexico / Puerto Vallarta in order to diversify their investments overseas in a market where prices aren't artificially held high buy leverage and artificially low interest rates and 3) they realize that, when real estate prices in their home markets become too disconnected from rents (who can't grow to the sky) and interest rates inevitably go up, prices can (significantly) drop like they did in 2007-8. 

You can get financing in Mexico to "turbocharge" your returns but don't expect LTV, interest rates and fees to be anything close to what they are in the US and you have to qualify. However, you could still cash flow under those conditions if you buy the right property. Also, since the unleveraged returns in Puerto Vallarta are (significantly) higher than in most places in North America, you don't need the lending conditions to be as good to get an equivalent return.

Many North Americans have a third option, which is to take a HELOC on a US property and bring the cash to Mexico.