All Forum Posts by: Sebastian Papworth

Hello @Brian Amacker

Congratulations on your investment at Edena! 
I can share a couple of insurance agents' contacts in the area, so you can get quotes and compare coverages and prices. 

Basically, the agent will send you a form asking you for the value of the property, the contents of the property, electronics and appliances, glass breakage, how many stories the house/condo has, the distance from the ocean, etc. 

The price will vary if you hire coverage for hydrometeorological damages, which I strongly suggest you do even though Edena is on the other side of the highway. 

For example, on one of my properties in Tulum, I pay around $1,500 USD a year so approx. 125 USD a month, curious to know how much on average insurance for a 3 or 4-bedroom property in the US or Canada costs. 

@Mike Lambert

 I understand if you felt attacked by my comment. I agree to let us maintain respectful and constructive attitudes in all forum exchanges.

I thought your comment to @Edgar DeLeon: "The era of building and selling anything in Tulum is over" was a very extreme statement and didn’t account for the nuances of the situation.

There is rarely an absolute truth in investing, we should be cautious with our opinions as they are just that, opinions, we don’t have a crystal ball and cannot predict the future with 100% accuracy.

The pandemic has certainly thrown a curveball in the real estate market, and it has been difficult to predict its long-term effects.

I appreciate your suggestion to focus on the substance of our conversation and have a healthy debate while respecting each other's opinions.

Investing involves some degree of speculation, but we should try to base our decisions on solid data and analysis, this is a big challenge in the real estate market, especially in a place like Tulum where data can be scarce and unreliable.

Allow me to share my thoughts regarding some of the points you have made:

• * There are large hotel chains that have announced they will build hotels in Tulum this could be due to a variety of reasons, from increased demand to strategic planning for future growth. Just as a comparison Playa del Carmen (Solidaridad) had 285 hotels with 43,771 rooms and Tulum had 159 hotels with 9,000 rooms in 2021.
• * Absorption in Tulum has a healthy demand, we make market studies done by Softec which I really recommend for any developer that wants to build in Tulum, they are costly but they give us great indicators to have solid data for our clients and developers, I can share the data with anyone interested, they send the total number of projects, the total number of units, minimum, average and maximum prices, prices per sqft, inventory of units in the market by the number of bedrooms, average sizes, we have them for both Tulum & Playa del Carmen.) I will be doing a video with all the data on my YouTube channel next month, I uploaded a video with my Airbnb rental income data that could also be helpful.
• * As I mentioned it's important to use reliable and accurate data sources when analyzing the market, Point2 homes is not reliable (exercise caution when using Point2 as many listings are clickbait), unfortunately, most agents upload the same property multiple times I would say more than 3/4 of the number of listings on Point2 are duplicate listings, once these pre-sale listings get built supply in Tulum will be similar to Playa del Carmen which we have seen has increased rental demand.
• * There are other definitely important factors to consider when analyzing the real estate market here especially the occupancy drop in Q2 & Q3 2022, for example, USD - EUR exchange rate, Europe opening up with record occupancy, sargassum, recession, flight prices increase, remote workers and most kids back to school, etc.
• * It's important to consider all types of rentals when analyzing the market, there is a high demand for longer terms and more units are being taken out of Airbnb for LTR, especially the smaller studios & 1BDS.
• * That being said, I do agree that there are some units that are not renting as well as they used to. This could be due to an over-saturation of specific units or a specific target price in the market. It's hard to say when Tulum´s absorption will slow down and become a more stable market, like PDC, as there are still massive infrastructure plans in the works. We know that types of units, locations, and projects are still renting really well. In the past few years, the rental market had properties being rented faster than they could be listed, now we have heightened competition, and now it takes more than just a great property to succeed, we must be strategic and innovative to stand out.
• * It's important to have concrete data to support any claims we make about the market, how could we get the number of visitors or at least the number of bookings? Not sure if demand has decreased or the supply has increased or both, I can calculate the increase in supply on Airbnb and the total presale projects & units but I'm having difficulties calculating the demand for Tulum (apart from the AIRDNA rental demand growth score).

FUTURE PROJECTS & DEMAND:

• * The train is an exciting development that's designed to connect the entire Yucatan peninsula, opening up access to amazing places like Calakmul, Palenque, Bacalar, Izamal, and many archeological sites that many readers may not have heard of. This could lead to longer stays and visits to more tourist attractions, I will be watching these areas closely since they are expected to grow significantly, like some of the Yucatan coastal towns like El Cuyo and specially Bacalar that should be a 1-hour trip from Tulum on the mayan train. It's expected to bring 3 million more tourists.
• * Regarding Tulum airport, it's being built as we speak. In fact, the number of passengers it's expected to have has recently increased from 4 million to 5.5 million, it will be located in Chunyacke very close to Muyil only 25-30 minutes away by car and it should be a shorter ride on the mayan train.
• * There are several large infrastructure projects currently under consideration, although they have yet to be confirmed.
• * It's important to draw your own conclusions and not get caught up in analysis paralysis or fear. While there will always be a risk, the higher the risk, the higher the potential reward.

 Hello @Maksu Ize

The costs associated with selling your property in Mexico are the following: 

1. Capital gains - 30% of profit (if you need help I have a very knowledgeable CPA with a Ph.D. in Mexican taxes that can help you make deductions for capital improvements, or do a one-time tax allowance exception you can do this every 3 years but you have to be a Mexican Resident) 
2. If you decide to pay a realtor to sell and promote your property. The average commission is 6%.
3. Public Notary Costs (I can also share the Notary I work with he is very experienced as well) 
4. If you purchased through a Trust (fideicomiso) you will need to pay a trust cancelation fee which is around $1,000 USD. 

So as a capital gains example: if you purchased a property for $500K USD and you sold it for $800K USD you have a profit of $300K USD your capital gains could be 30% of the 300K USD so $90K USD, however, you can exempt this once every 3 years as a resident or submit official receipts of improvements you made to the property and you can deduct them, and lower that amount significantly. 

I have seen some investors do a transfer of rights of the promissory agreement and not have to pay the closing costs of the property, however, I have only seen this happen in a presale and it has to be approved by the developer.  

If you need help selling your property let me know I know several realtors that do resales in the area. 

It's not very different than the US...

@Mike Lambert
You just wrote: "The era of building and selling anything in Tulum is over" This is tottaly false, not sure who shared this with or how you came up with this conclusion but its not true. This is a public forum and we need to be cautious of what we share. I have been following BP for over 5 years now and I remember 4 years ago you posted something similar, you wrote: "I have been investing for a few years in the Riviera Maya and was recently presented with a private condo deal in Tulum, I turned it down as I believe it is now too late to invest in Tulum." You posted several similar comments. 

The past 4 years were the highest income-generating years in the history of all of Tulum, I feel sorry if someone actually read your post and didn't pull the trigger 4 years ago. I honestly hope no one followed your advice. Specially 2021, I made more than 120K that year on STR, I recovered my total investment in less than 4 years. I can share all my numbers to whomever is interested. I invested in a second property two years ago and making double digit ROI.
I agree there is more competition now, not all properties are making money, I wouldnt suggest buying a small cookie cutter in a location far from the beach. 

However there are so many reasons why Tulum will keep growing, maybe not at the surreal pace it grew the past years, however it will continue to grow. 
There is staggering Federal and private development in the region, the government has made it a key national priority to develop the yucatan peninsula. Quintana Roo has the 4th largest airport in Latin America by volumne of passengers (15M), and now a second airport in Tulum is being built with the capacity to serve 4 million pasaangers. 

The most ambitious project of the current government is the Mayan Train, a railway system connecting the largest tourist attractions of the southeast of Mexico, almost 1,000 miles of lenght with 20 stations, with a projected cost of 20 Billion USD. This will open the door to other really interesting developing areas. Both scheduled to be completed by 2024.

Nobody can predict the numbers going forward, I know the Tulum market extremely well because I have skin in the game and I am constantly running market studies to see where the market might be shifting, I am happy to share them with the BP community. I am currently looking at a couple of really interesting projects that I expect will perform really well, its all about having something unique that stands out. 

@Edgar DeLeon
There are some growing pains and risks like any investment of course, however, I see Tulum real estate as a secure diversification investment option with reasonable cashflow and an incredible lifestyle, amazing architecture, wellness retreats, parties and nightlife, amazing beaches & cenotes. I am sure you can get a really nice property that can offer 8% ROI, and you can use it a couple of times a year.

Hello @Pradeep Prasad

Thank you for your patience, its high season down here and its super busy.
All is great, thank you for asking! How about you? 
Wow, 8 years I'm going to send you a picture of the growth of Tulum from 2015 to 2022 so you can see the change. 

Some parts of Region 15 and la veleta are now really nice you have really lovely cafes and restaurants, and in some parts of R15 there is still a lack of infrastructure, the private sector is going faster than the public infrastructure. Some people have made a very high appreciation in R15 and R8, some higher than the privately planned masterplans like Aldea Zama, Selvazama, and Tulum 101, It depends on the investor some prefer buying at a higher price per sqft with all the infrastructure already in place and some will try to get a better deal and wait for the infrastructure to arrive, it all depends on your risk tolerance and your goals, needs and wants. I can talk and share my personal opinions privately I wouldn't like to speculate on a public forum. 

We try to advise investors not to purchase in over densified projects, there are some developers just trying to maximize profits for them and developing projects that in my point of view are not the best for the long term, it creates what I call nightly rates cannibalisim between owners lowering ROI, it also doesnt work on your favor if you ever want to flip it.
Proximity to Kukulcan avenue or Coba avenue is key because they are the only two beach roads. 

I would love to talk about the primary opportunity areas in Tulum and show you some real data on appreciation, STR and LTR, in Tulum and Playa del Carmen, and the other hidden gems in the Rivera Maya that not a lot of investors know about.

Let's connect! 

Yeah, the airport in Tulum is exciting, according to the government they plan to have 4 million passengers a year, and Cancun airport just broke the record last month of 30 million passengers in 2022.
Cancun airport to Tulum without traffic is 1:20 min, I don't think is that bad.
But yeah direct flights to Tulum will be awesome, I flew direct from Cancun to Denver with Frontier recently, that route seems to be still active.
Aldea Zama is built and now Aldea premium, the new phase is also built, the new hot areas are Selva Zama, Tulum 101, and Region 8 which are the closest areas to the beach. I photoshopped a Tulum map with the future master plans to get a feel for how Tulum will look in a couple of years... mixed feelings. 

There are some big plans and infrastructure projects coming to Tulum in the next couple of years. 

Hello @Michael Weigum, 

Hope you are doing well! I'm pretty sure the person you talked to didn't know how to explain it properly. 

Not sure who told you you didn't own the land and the government could take it from you, but this is totally FALSE. There are over 1,000,000 foreigners that own property 30 miles to the coast or 50 miles to the border. If you are this close to the border or cost you need to purchase through a corporation or through a bank trust (Fideicomiso - Think of this trust to be similar to an inheritance trust or a living family trust in the US.)

At all times you are the legal owner of the property, the best way to see it is as a permit or license that allows you to purchase, use, enjoy, rent, renovate, inherit, etc. a property in this zone. Neither the bank nor the government owns the property you purchased or can take it back from you! I actually made a video about this on youtube. And you can find plenty of information online.

If you want more info on costs, terms, and suggestions on when to choose a trust or a corporation, let me know. @Matthew Swearingen

Congrats on your STR in Myrtle Beach!

Hello Matthew, 

I am a real estate investor, developer and I own a buyer's agency in Tulum and the Riviera Maya. I moved here a decade ago and have been in the real estate market since so I can share data that can help you make a safe and informed investment decision. You can go to my BP profile and see the posts I have shared, I made a side-by-side comparison of PDC and Tulum, they both have pros and cons, and it all depends on your needs/wants and expectations. 

Apart from the Tulum airport, the Mayan train is also a huge project I would say the biggest project of the federal government this term. I have some STR data on the entire market of Tulum and I can share my personal numbers on my properties so you can get an idea of what to expect. There are some great opportunities out there but there are also some cautions you need to have, not everything has the occupancy and the high ADRs that we saw a couple of years ago, there are still some money-making machines but you need to invest in something that's not a commodity and make sure your investment really stands out from the competition, there are more units coming into the market in the next couple of years. I can share what I think is the recipe for success to select an investment that delivers high ROI. My properties are in the double digits and still generating high incomes.
I can also share the local contacts I have made in the past decade for all the services you will need if you decide to pull the trigger ie: Notary, CPA, Real Estate law firms, photographers, property managers, financing, developers, etc. 

Hello @Noelle Geeting

I have been living and investing in Playa del Carmen for 10 years now and I know pretty much every building and developer in town. 

If you give me more info on a DM I can share my opinion on the property and the long-term ROI and appreciation potential.

The current ROI seems good is that $3,000 USD a month net or gross? Long-term or short-term?

If you are feeling a bit worried about this investment maybe you should start with something smaller with a similar ROI and try the Playa market with a lower price point, that's an advantage here you have properties that start at around $100K USD.

Sunny regards, 

Hello @Andrew Reed

Thank you for your patience, it’s high season down here in Tulum and I have several clients in town, just had a moment to reply back.

I agree with what @Mike Lambert mentioned. I would add a suggestion to work with a NAR certified international buyers representative and a licensed realtor in the state of Quintana Roo, ask the agent to send you his license unfortunately very few brokers here are licensed.

Also make sure he/she is a native Spanish speaker or at least very fluent since the agreements and legal documents are always in Spanish, some are translated as a courtesy but the Spanish versión always prevails.