All Forum Posts by: Mikael S.

Thanks for your input @Jon Klaus 

I´m studying these stats at the moment and it is a bit all over the place really - Playa Del Carmen at least for VR is not soo streamlined...

I can build 4 floors and to make it profitable I should squeeze in at least 10 studios which will be difficult if I go a lot above 32-35 m2 or 375 SF

Hello BP.
I have purchased a lot which is 220 m2 or 2368 square feet in Playa Del Carmen, Mexico and are now gone into construction mode.

The plan is a 4 story building with studios for vacation rentals.
My builder says I can go as low as 28 m2 / 300 square feet per studio and put in more and increase the ROI. But I see a big part of the business from colleagues in the industry comes from repeat customers and I am afraid the size is simply too small to be comfortable to live in for a week. the rental price would more or less be the same for the end customer if I make it a small studio or slightly bigger.

So my question is would you be happy with a 28 m2 / 300 square feet studio for a weeks vacation or should I go bigger and then fewer studios ?

Thanks a lot for your input 

Yes most likely he is breaking the lease contract between him and Airbnb or you by working from your condo so it should be straightforward to have him evicted 

@Susan Gillespie - Thanks a lot of the link - I will read it asap.

Yes, it is around this area and further north. At least to a lot of locals me included, the first part of 5th avenue is not an area we frequent very often - All the vendors, souvenir shops etc. does not make it very attractive while the other end of 5th avenue is slowly becoming more trendy. 

Big developers are building a lot around C/ 34 and C/ 38 which brand new very beautiful condos and shopping areas...

Please let me know if you come to Playa and want to meet up !

Dear @Susan Gillespie - Yes, I totally agree - Playa Del Carmen is a great place :)

Our target customers are price conscious, adventurous, none-mainstream couples or two-three friends travelling together.
Our studios will be fairly high quality but still very much in the low end of the price range here in Playa Del Carmen. 
Since the studios will take 2 people comfortably but can be stretched to 4 people then it´s couples, couples with kids or two-three friends travelling together.

When I write the "adventurous, none-mainstream" I mean it will be people that might want to live more like a local and tend to avoid the standard tourist resort feel where you and 500 other foreigners are stuffed into a resort/hotel and never gets to see any of the locals or areas outside the standard tourist areas

Our building will be clean, cheap, decent location and in the new chic area of Playa Del Carmen. We will have a person sitting in the reception most of the day which will guide all our guess on anything they might wanna do here-  It´s also a great way to earn extra money on our clients selling them tours etc. Matt Landau mentioned the same and really the goal is that the person in our reception knows as much as possible about the local area.

We are planning to do BBQs every sunday and invite local friends so we can enforce this local feel that we hope the guests that are looking for that will experience.

Hello @Evan R. ,
Thanks a lot for your analysis...

The sweet spot you mention is exactly what most people tell me down here. Playa Del Carmen has A LOT of 2 and 3 bedroom condos since thats all the con developers were building during the boom days so studios that accommodate 2 people comfortably and 4 if necessary is what I think is the way to go.

Regarding the vacancy rate - My understanding is that you can choose to use the calendar on AirBnB to show where you are booked or not and a lot of users choose not to because they are listed on all the other sites like HomeAway, FlipKey etc.

But where do you get the 79% ?

When I play around in my Excel sheets I can still make decent money if I keep my vacancy rate at 50% or above. This is calculated at a weekly price of the studios at $500 USD per week year round. That is some of the lowest prices here in Playa for studios and since it´s year round I do not calculate the high seasons where I can charge almost double.
So in reality my vacancy rate could be lower but the high season rates would adjust for that.

I put of 40% of my rental income to expenses like staff, maintenance, taxes etc. Wages are low here and I would go for one cleaning lady, one manager and a half time fix-it guy.
I dont know if that is too low - I read that it should be 50% ?

So if I can keep those numbers then it should be a fairly profitable business.

But again I have never run a building full of studios for vacation rental so I could and most likely are wrong :D

Thanks a lot to all of you for welcoming me to the website - Very welcoming crowds I must say :)

@Mehran K.  - thanks for the advice on the podcast, I will listen to it asap. 

Hello Fellow Bigger Pockets members,

My name is Mikael and I have lived about 4 years in Playa Del Carmen Mexico. I´m completely new to real estate investments and have joined this forum in hope of finding some answers before I plunge in and start on what could be my dream or a potential nightmare.....

I have sold my business some years ago and have lived here long enough now to know I will be hanging around for quite a while and I have slowly gotten an idea about how things work down here and feel I´m getting more and more ready to start on my dream project.

I would like to build a building here with mainly studios and rent them out to tourists using AirBNB and this should be my retirement or at least a good stable income.

I have lots of questions and lacking answers and guidelines to do a good analysis of this project and I would like to post in the Deal analysis forum and would like to write as useful a first post as possible so what info should I add in ?

I got the building costs worked out more or less but the main problem is to analyse the potential rental income so I really need help trying to analyse it...

So thats me and my real estate project :)