Many people buying Mexico real estate as a vacation property or for retirement like to see their property as an investment; while there is a very strong aspect of lifestyle investment, as well as the large savings enjoyed in comparison to owning a vacation property or retiring in the U.S. or Canada, a true investment should do more than just bring you savings; it should generate an income. With Mexico real estate, this is a relatively strait-forward step to take.
With only a slight shift of focus, and a relatively minor short term sacrifice of lifestyle, the same property you bought for vacationing or future retirement can become a first step towards lifelong income from solid real estate investments.
As a buyer you usually choose your vacation or retirement property based on comfort, convenience, proximity to the beach, shopping, a lake, attractions, activities and fellow expat residents. These same features are attractive to vacationers and other renters; Mexico’s large tourism industry offers many small groups of vacationers and even long term renters. As an owner of vacation/retirement property in Mexico you can consider the following possibilities:
Rent out the property to vacationers. This takes effort. One developer once pointed out that you could have the best hotel in the world, and it would sit there empty if it didn’t have a clear plan for active promotion. Property management companies can help; but you should do your homework, investigate occupancy rates in their area, and evaluate the results from the company. Personal promotion can work if you have access to a network of people with a need to rent a vacation property. Internet social networks and promotion can also be useful. Good rental agencies will use these tools as well. The real estate office through which you bought the property may also offer rental services, and if not should be able to recommend good rental agencies, or even promote the property informally to future clients visiting to make their own purchase.
Use the property only during the low season. If you have decided to take this step towards making your property a real investment, put investment at #1 in importance. This doesn’t mean you have to stop enjoying the property for personal use, but it does mean that you should use plan your use of the property during the regular low season, when the property may be empty anyway. If you are truly dedicated, you may even consider changing plans if a renter turns up. One couple who successfully carried out this kind of plan stayed in moderately price hotels for their own visits rather than jeopardizing their rentals. Remember that any happy renter is a potential returning renter.
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Rent out the property long term. Mexico also has a healthy market for long term rentals. While the monthly rate is usually lower, the income is consistent year round, and usually requires less effort to constantly find a new stream of renters. This idea has also proven successful in actual practice in places like Playa del Carmen.
Buy another property. Once you’ve established a steady income from your first property, invest in another, and follow the same process. If you are renting out your properties for vacationers, then owning multiple properties will also give you more options for personal use during off-seasons.
Buy through a mortgage. Acquiring Mexico property through a mortgage directly in Mexico is becoming easier and more common. Using a mortgage directly from a Mexican bank also allows you to leverage the same property you are buying, rather than a property back home. This way you don’t have to wait to generate enough cash from your first property to step into the second. This can help to speed up the process.
Cover monthly payments and expenses rental income. Real life examples have shown that is possible to generate sufficient income from a rental property in Mexico, either for vacationers or long-term, to cover all expenses, such as utilities, repairs and taxes, as well as the monthly loan payments if careful planning is done.Your first property will give you an indication of how much income can be generated and how much is available for use after other expenses. Speaking with mortgage specialist, or even some real estate brokers, will help to gain an estimate of the monthly payments. Some easy math will show you if its possible. If the numbers don’t look like the work out, try tweaking your first rental project to see if you can bring the income up to the necessary level.
Of course, these moves aren’t carried out overnight, but the final result will be that you are the owner of several high-quality vacation properties. One very important plus is that it isn’t necessary to start on a large budget; lower budget properties will generally bring a lower income, but the same concept can be applied with successfully.
Once more than two have been acquired, one can be mostly or even entirely dedicated to personal enjoyment. When retirement arrives, one property will become a retirement property, and the others will continue to provide a constant income substantially boosting financial resources. Since the cost of living is considerably lower in Mexico, especially in large expense areas like health care, using one of the properties for retirement is an ideal move; the funds will go considerably further in Mexico.
Consider changing your Mexico property into a lifelong investment.