All Forum Posts by: Sebastian Papworth

I have never had to use the translation but you are right a client from Montreal just sent me some screenshots of our website in French. Still wouldn’t recommend choosing an agent from those portals, most specialize on Mexican or Latin buyers and might not be fully bilingual or aware of the buying process for foreign investors. 

As usual @Mike Lambert, I appreciate the insight.  But I guess I wasn't clear enough in my original question.  I'm wondering, how do you find pre-constructions?  The only tools I could think of are google and facebook groups however I don't think either one is exhaustive or efficient.

 Hello Christian,

I hope this message finds you well. I'm reaching out to introduce myself as a developer, investor, and realtor with over a decade of experience in the Riviera Maya. Throughout my career, I've been actively involved in buying and selling properties in this region.

One challenge we face here in Quintana Roo is the absence of an official MLS. Many foreigners rely on platforms like Point2 Homes for property listings, despite encountering some misleading information. As Point2 Homes aptly puts it, while information is provided, it may not always be guaranteed accurate.

It's worth noting that most agents have access to the same pool of listings, leading to a proliferation of duplicate entries. While there are some exclusive pocket listings, my advice is to work with a realtor you trust and verify their licensing credentials. Sadly, licensing among agents here is not as widespread as it should be.

For those who prefer browsing in English, Mexican websites like Trovit, Vivanuncios, and Inmuebles24 might pose a language barrier. In such cases, I recommend utilizing Point2 Homes or reputable real estate company websites, where listings are vetted for accuracy and legal compliance. If you're interested, I can provide access to our curated listings.

As licensed agents, we have privileged access to comprehensive databases like Brokercenter and The Red Search, which encompass all projects in the area, including preconstructions at various stages. I'd be delighted to share information on ongoing projects, including those in the family & friends stage, across Tulum or any other part of Quintana Roo.

Additionally, as developers, we regularly conduct market studies encompassing factors such as absorption rates, price per square foot, square footage, and unit counts. If you're keen on delving deeper into market insights, I'm more than willing to share this valuable information.

Sunny regards,

Mike's perspective as an experienced investor in Mexico holds significant value.

As an investor in Tulum, it's crucial to conduct a comprehensive SWOT analysis (Strengths, Weaknesses, Opportunities, Threats) to gain a holistic understanding. I aim to offer a more balanced viewpoint.

Having resided in Tulum for over a decade, as a licensed broker/owner, real estate developer, and investor I have firsthand insights into the real estate and tourism markets. While Mike highlights legitimate risks, such as market saturation and seasonal challenges like sargassum, conducting a full SWOT analysis allows investors to evaluate the broader landscape and make informed decisions.

**Supply and Demand Dynamics:**

When I invested in my first STR, Tulum boasted around 2000 properties in 2017, ensuring high occupancy rates and lucrative rental returns on Airbnb. However, the market got saturated with the influx of investors and developers, particularly in the sub-$100,000 segment. Now, standing out on Airbnb requires creativity and a higher investment. Yet, Tulum's ongoing infrastructure projects, demand, and anticipated growth suggest long-term potential, especially with the influx of families and the upcoming projects.

**Infrastructure Development and Transportation:**

Tulum's infrastructure is evolving, with plans for shopping malls, cinemas, and major retailers. The Mayan Train project, featuring two stations in Tulum, promises to enhance connectivity and attract more tourists. Moreover, with the imminent opening of the Mayan Train stations this year, travelers will find themselves approximately 20 minutes away from downtown Tulum on the Mayan train. What's more, an increasing number of routes and airlines, including Delta, Spirit, American Airlines, United, Air Canada, apart from the ones currently operating, have announced their plans to fly into Tulum's new international airport. Often overlooked is the fact that the new airport includes an FBO with multiple private hangars for private jets. This amenity has attracted numerous buyers investing in million-dollar-plus villas arriving in private jets. Such luxury market clientele highly value every single minute they can save. Additionally, it's worth noting that this year alone, 130,000 people from 180 countries attended music festivals in the area in January alone. 

**Tourism Trends and Market Expansion:**

Tulum's appeal extends beyond its beaches, with attractions like archeological sites, cenotes,  and the multicolored lagoons of Nopalitos, Kan Lum, and Bacalar gaining attention as well as good food, good year-round weather, and kind & polite people. Despite seasonal challenges like sargassum, alternative destinations such as Holbox and Cozumel offer clean beaches during the sargassum season, mitigating the impact on the overall Riviera Maya tourism sector. While sargassum may influence occupancy rates and average daily rates (ADRs), it's unlikely to overshadow Tulum's overall appeal, all the Caribbean destinations including Florida are impacted and working to find a solution or workaround to this environmental situation. 

**Investment Potential and Property Performance:**

Despite the increasing supply of properties, well-designed investments can still yield significant returns in Tulum. For instance, one of our properties generated $34,130 USD in December and $29,021 in January, showcasing the earning potential with strategic management and investment in property enhancement. We have more than 5 properties yielding double-digit returns. I am happy to share my numbers with any interested investor. 

In summary, while acknowledging the risks highlighted by Mike, conducting a comprehensive SWOT analysis is important, Tulum is a massive tourist destination. Investors can staill capitalize on Tulum's growth trajectory by leveraging market insights and strategic investment approaches while mitigating associated risks. Some interesting emerging markets are starting to grow here in the Yucatan peninsula and we are also investing there.

Quote from @Lexi Blevins:

Hey y’all, strongly considering buying my first airbnb outside the US. I am looking at both the Dominican Republic and Mexico. Was curious if anyone has invested in these areas and how your experience was investing outside of a country that you live in? The houses I can get in both of these locations are mind blowing to me for the price. Thanks in advance!

 Hello Lexi,

As a seasoned realtor, investor, and developer in the Riviera Maya, I don't have direct experience in Punta Cana, but I've reached out to colleagues with brokerage firms there for insights. Punta Cana does offer the advantage of not having to pay taxes, but keep in mind it receives less tourism compared to Mexico.

In Tulum, the market is becoming competitive, especially in standard studio, 1 & 2 bedrooms. However, there are unique penthouses, gardens, and villas with distinctive designs that are generating double-digit returns. Depending on your budget, if you're open to exploring new and promising opportunities under $400K, there's also an emerging market that opened up due to the Mayan train and the new tulum airport that is worth considering.


Greetings from the Mexican Caribbean! 

Quote from @KC Frank:

Hi there! My wife and I own 3 short-term rentals in the US and are considering buying something in Quintana Roo - Cancun, Playa del Carmen or possibly Tulum. Cancun is an easy flight from our hometown, we've visited those areas many times and my wife's family is from Mexico so she speaks Spanish.

Question - are there opportunities to buy in an all-inclusive resort? We've been to many and really love the feel and amenities. I'm just curious if there are options in those types of resorts or not. I understand that there are condo/apartment opportunities but am more curious about the larger all-inclusive resorts.

Anything else we should be thinking about when investing in that region? We don't need assistance with financing and will very likely use a property management company (even though we self-manage in the US).

Thanks!

Hello KC Frank,

Greetings! I'm a seasoned developer, investor, and realtor with over a decade of experience in the Riviera Maya. I’ve had some experience with all-inclusive Condo-Hotels in the region. While they might not provide the highest ROI, if you're looking for a more lifestyle-oriented investment, there are options available that offer full ownership with returns covering expenses and could provide cost-free vacations for you and your family.

I would caution against most timeshares, private residence clubs, and fractional programs, as they often come with limitations and challenges in resale. Instead, I can share properties that have proven to be lucrative in the short-term rental market, including those benefiting from the new Mayan train and Tulum International Airport developments.

If you're interested, I'll send you details on available all inclusive condo-hotel properties in Quintana Roo, along with price lists and availability. Feel free to expect a DM from me soon.

Best wishes from the Mexican Caribbean,
Seb. 

Quote from @Ala Yuhya:

Selling my luxury 4 bed/4.5 bath villa located in Tulum, Mexico. Exceptional property with impressive financials over 3 years (gross profit of 219k USD this year). Property is being sold completely turn key with all STR platforms and all future bookings (71 k worth so far). Sales price 1.1 million USD

Message if interested in seeing the full business proposal with proof of income/ expenses.

Hello Ala, 

I am a broker/owner of Jungle Realtor a licensed real estate agency in Tulum. We might have a client for your villa. Will send you a DM.

All the best!  

Hello Kevin,

I am a developer, investor, and realtor in the Riviera Maya, I have been buying and selling properties down here for more than 10 years, and I have some of experience in Condo-Hotels.
In my experience, I haven't seen a Condo hotel that can get double-digit returns in Tulum yet, those numbers don't look very conservative to me.

I would have several questions for the developers:

1. 1. Will they have one rental pool for all types of units or one pool for each, since there is a larger supply of studios and 1 Beds in the area, if you invest on a larger unit you should have a higher return.
2. 2. Make sure they send you their hotel operation agreement signed by the developer and the operator with the rules and regulations before you sign the promissory agreement and wire the initial payment. (IMPORTANT, dont sign without this, I have seen situations when they change the rules of the game after you already purchased)
3. 3. Is the hotel operation mandatory? If so for how long? What if they dont achieve the returns they are projecting?
4. 4. Who will take care of the ware and tare of your condo?
5. 5. Do they pay HOA, utilities, etc?
6. 6. What happens if an owner wants to leave the hotel operation and manage it themselves to lower down rates and get higher occupancy?
7. 7. Do you have parking & storage space in your deed and title or is it part of the common areas?
8. 8. Have them add the Beachclub agreements as annexes to your purchase agreement and rental agreement
9. 9. Is it a presale or immediate delivery?
   

Resale is more difficult because you will need to find a buyer who is open to restricted usage of their property.

I know most developers and projects in Town if you want to tell me the name of the project in a direct message I would be more than happy to give you my honest opinion of the project and the reputation of the developer. 

Hope this helps!! 

Ill be there for sure!! 

Quote from @Mike Lambert:

@Artur A.

Hi Arthur, I'm not sure where you got those figures but I've been investing in Mexico for many years and I can tell you the following:

1. Capital appreciation statistics for Yucatan and the Riviera Maya don't exist (because price statistics don't exist - they're not registered or tracked) so we don't know for sure. But any statistic you read about is therefore inaccurate. It's either somebody guessing, repeating what they've heard or read from another source or lying (if they want to promote a destination).

Given what I just mentioned, I don't know what the appreciation rate has been in Merida/Yucatan but there is no way it's been 15% an it doesn't come close. By the way, if that rate was accurate, investors, including myself, would have bought the whole town by now. That's 5 times the capital appreciation used by deal underwriters in the US!

The figure you mentioned for the Riviera Maya seem more realistic. Bear in mind though that past performance isn't a guarantee of future performance. For example, in Tulum, we now find ourselves in an oversupply situation, which is going to get much worse so I wouldn't surprised to see prices going down in coming years.

In Baja California Sur, price appreciation was actually well above 10% during and right after the pandemic but it has returned to normal levels now.

2. When it comes to short-term rental ROIs, the same applies. There are no official statistics so again, any statistic you read or hear about either somebody guessing, repeating what they've heard or read from another source or lying.

However, in this case, you can compute your own statistics using Airdna and that's the only source I would trust. If you do that, you'll find out the following:

a. You mentioned a "potential" 18-20% return for Baja California Sur. If you buy the right property at the right price, you could get that return but that would be the exception rather than the rule. You can still get great ROIs in the area provided you buy the right kind of property in the right location but it's going to be significantly lower than 18 - 20%.

b. For the Riviera Maya, the days that you could get 8 - 12% are gone, alongside with the pandemic. It's lower now and significantly so in certain areas as a result of higher prices and too much competition.

c. As for Merida/Yucatan, you don't have the mass tourism there to give you an 8-12% return on average.

Of course, in any of these areas, if you buy the right property at the right price and manage it (or have managed) in the best possible way, you can get a return substantially higher than the average, whatever that average happens to be.

Hello everyone, 
@Artur A.
@Mike Lambert

Thank you for sharing your perspectives, and I appreciate the insights provided by experienced investors in Mexico.

As a Mexican citizen, investor, and licensed buyer's representative in Quintana Roo, I'd like to contribute to the discussion by expanding on the topic. It's indeed valuable to consider the challenges associated with obtaining accurate capital appreciation statistics in certain regions of Mexico. While tracking real estate prices can be less straightforward compared to some other countries, Mexico has official government bodies that collect and report this data.

The housing price index, known as the "Indice SHD de precios de vivienda en Mexico," is one of these initiatives. You can find the Q1 - 2023 price index here: https://www.gob.mx/shf/articulos/indice-shf-de-precios-de-la-vivienda-en-mexico-primer-trimestre-de-2023-333210?idiom=es#:~:text=El%20%C3%8Dndice%20SHF%20de%20Precios,respecto%20al%20mismo%20periodo%202022

(note that the information is in Spanish). This index provides clear figures on an annual basis by state, offering insights into capital appreciation:

The highest states are: 

- Baja California Sur: 17.9%
- Quintana Roo: 17.1%

You can also find data for specific municipalities:

- La Paz (BCS): 18.1%
- Los Cabos (BCS): 17.7%
- Benito Juarez (Cancun municipality): 17.3%
- Solidaridad (Playa del Carmen municipality): 16.8%

The housing price index provides an average or generalized view of property prices within a specific area or category. While it offers a valuable starting point for understanding the market trends, it may not capture the full range of price fluctuations within that area. I always suggest doing a CMA of comparable listings which we can help with in Quintana Roo.

Additionally, some states have established official MLS (Multiple Listing Service) systems to track property prices systematically. However, it's important to note that these mechanisms may not cover all regions.

As developers, we collaborate closely with leading real estate consultancy, valuation experts, and research companies. While their services can be costly, they provide valuable tools and accurate information that aid us and our clients in making informed real estate decisions.

It's crucial to acknowledge the role of notaries in calculating capital gains based on the public registry, especially for taxation purposes. Although the availability and accessibility of this data may not be as extensive as in some other countries, efforts are underway to enhance transparency. The information posted by the Federal Mortgage Society (Sociedad Hipotecaria Federal) (SHF) on the Mexican federal official website is a positive step forward, even though it currently focuses on properties with mortgages which according to SOFTEC is 80% of transactions with Mexican buyers.

In terms of property classifications, consulting companies in Mexico often categorize properties into several price ranges, such as:

- Social: Minimum price: $8,824 USD to maximum price: $24,117 USD
- Economic: Minimum: $24,117 USD to maximum: $45,882 USD
- Medium: Minimum: $45,882 USD to maximum: $114,706 USD
- Residential: Minimum: $114,706 USD to maximum: $247,059 USD
- Residential Plus: Minimum: $247,059 USD to maximum: +

Most foreign investors tend to focus on the Medium, Residential, and Residential Plus categories, particularly in Class A and B neighborhoods. These are also the markets we specialize in. It's worth noting that the data from the SHF may encompass various property classifications, with potentially more information on the lower-priced segments.

I hope this additional information contributes to a better understanding of the topic. It is essential for investors to be well-informed and aware of the available resources for assessing real estate markets in Mexico.

Best regards,

Hello @Alex F.

I am a Licensed Realtor, Investor, and Developer in Quintana Roo (Cancun, Playa del Carmen, Tulum, etc).

I just interviewed a Mexican CPA with Ph.D. in Mexican Taxes, we covered the following topics in the interview: 

Individuals & Corporations / Residents & Non-residents

Bank Trust or Mexican Corporation

Closing Costs

Capital Gains

Property Taxes in Mexico

Income tax on rental properties

NAFTA Double Taxation Treaty

Income Tax in Mexico vs USA

Income Tax deductions

I know I can't post the link on the forum so, if you would like the link to the video send me a private message so I can share it with you. I can also share the contact of the CPA if you need to contact him direct for a personalized strategy. 

Best of luck!