All Forum Posts by: Patrick Sullivan

Hello Bruce.

On the construction problems/delays - yes.  It is just a fact of life down here that needs to be incorporated in the thought process.  It is still an amazing area around Tulum and I'm happy to have property there.

Tulum is definitely a hot market for STR and that is what we will be doing. I used cash financing mostly, but there are mortgage/bank finance options in Mexico. Finance options to purchase in Mexico are not good compared to the US. Very high interest rates (2x the US), high fees, etc. US banks generally will not loan for property purchased in Mexico. ROI is very different depending on the unit characteristics/area. But overall it is good.

Some information that I wish I had known 5 years ago...

I have now invested in a few properties in Tulum and the surrounding area. One thing for N. Americans to note is that you are REALLY taking a chance if you buy pre-construction. They NEVER finish on time and there are always problems with the construction quality. I highly recommend looking at re-sales and getting a good inspector to do due diligence on the property. I still love the area and will continue to invest in it, but this is the biggest thing I have learned in doing business here and thought I would share for those who originate outside of Mexico. For example, you can have a binding real estate contract that stipulates penalties for late delivery or construction defects. Lawyers will tell you before signing that you are protected by the contract. However, actually suing someone in Mexico takes minimum 3 years and then you only get the award for the specific item (no lost income, lost interest, etc). What ends up happening in pre-sale is that, even though you have done due diligence to get a contract that protects you, de-facto it is too difficult to sue so you end up accepting all the problems you wanted to avoid and the contract language is superfluous. As a result, I advise not buying pre-sale unless you are ready to factor in a minimum of 6 month delay and a minimum of 10-15% cost additional to fix things the builder won't fix.

Also, "reputable" builders are the only way to go for pre-sale. However, "reputable" builders will still reneg on contracts and can just as likely be extremely late in delivery as well as provide a building with many construction problems. 10 fold more than what you would expect in N. America and N. Europe. For example R4 is a very well known builder in the Riviera Maya (Tulum, Cancun, Playa del Carmen) and realtors will tell you that you can't go wrong with them. I can assure you that they are more corrupt and incompetent than any builder in N. America. So it is a matter of re-setting expectations.

Hope that helps.

I have now invested in a few properties in Tulum and the surrounding area.  One thing for N. Americans to note is that you are REALLY taking a chance if you buy pre-construction.  They NEVER finish on time and there are always problems with the construction quality.  I highly recommend looking at re-sales and getting a good inspector to do due diligence on the property.  I still love the area and will continue to invest in it, but this is the biggest thing I have learned in doing business here and thought I would share for those who originate outside of Mexico.  For example, you can have a binding real estate contract that stipulates penalties for late delivery or construction defects.  Lawyers will tell you before signing that you are protected by the contract.  However, actually suing someone in Mexico takes minimum 3 years and then you only get the award for the specific item (no lost income, lost interest, etc).  What ends up happening in pre-sale is that, even though you have done due diligence to get a contract that protects you, de-facto it is too difficult to sue so you end up accepting all the problems you wanted to avoid and the contract language is superfluous.  As a result, I advise not buying pre-sale unless you are ready to factor in a minimum of 6 month delay and a minimum of 10-15% cost additional to fix things the builder won't fix. 

Also, "reputable" builders are the only way to go for pre-sale.  However, "reputable" builders will still reneg on contracts and can just as likely be extremely late in delivery as well as provide a building with many construction problems.  10 fold more than what you would expect in N. America and N. Europe.  For example R4 is a very well known builder in the Riviera Maya (Tulum, Cancun, Playa del Carmen) and realtors will tell you that you can't go wrong with them.  I can assure you that they are more corrupt and incompetent than any builder in N. America.  So it is a matter of re-setting expectations.   

Hope that helps.

I'm also in Denver and have invested in Tulum, Mexico.  I'm also considering another investment in Mexico.  Happy to discuss what I have learned.

Playa del Carmen and Tulum, Mexico are incredible destinations with all the warmth and beauty of the Caribbean and access to the huge cultural mainland of Mexico.  Despite the headlines, these areas of Mexico are incredibly safe and highly protected by the government to ensure a steady flow of tourists. 

@Mike Lambert  and @Kevin Smith this is a very interesting dialogue - thank you.

I have been looking into investing in property in Tulum and have had good luck with my agent. PM me if interested in his name. Very fluent in English, Mexican native and very knowledgeable and connected.

Also, I am interested in Essentia by Artia. I think the builder is R4 Group.

Does anyone have any insight into the quality/reputation of this builder or this development in particular?

@Mike Lambert very well said and very balanced.  If you have ever been to this region, the police presence is pervasive and you really do feel safe.  One gets the feeling that nobody wants to do anything that would decrease the enthusiasm of the tourists.  Riding the local bus, going to local stores, etc. I always felt respected and safe.  I'm sure this is not the case in other cities - the Riviera Maya is likely an exception, but I can't comment on other areas.  

@Mike Lambert that sounds very interesting.  Please keep me posted.

Johanna, that sounds great.  Please let us know details.  I have been looking at buying a pre-sale 3BR condo or house in Tulum for vacation rental income.  I love the idea of buying a plot of land and building to our specs but am so unfamiliar with Mexico that I would hesitate to undertake the process.  How difficult was it to manage this process?  What type of experts did you rely on to help guide you through the process?

Very exciting for you!

Patrick