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Mexico Real Estate: Making Money Part 2 - CASH FLOW

30 July, 2013

My first “Making Money” blog was about conservative long-term investments. “Making Money 2” explores the vast ways to take advantage of the real estate industry in terms of cash flow and appreciation with income producing properties. In this blog I am going to break down the different strategies best used to maximize profits.

Since the global recession people have been looking very carefully at their investment strategies and portfolios,leading them to be extremely conservative.  Just now are we starting to see a considerable increase of cash flow investors making their mark in the Riviera Maya. As I hit on in my first “Making Money” blog the stock market is just not doing it these days,between its instability and volatility,earnings have been diminished substantially. Mutual funds,which are everyone’s go-to conservative investment have lacked substantial returns in 2011,85% of fund mangers couldn’t even beat the S&P 500 in 2011 … 85%!!

Diligently learning from the market crash of 2006,I believe everyone has become more educated and business savvy. Many now understand that one should never rely and base his or her investments purely on appreciation; that is why a cash flow investment allows you to stay conservative while having appreciation solely as a perk.

For an example,I had clients from Colorado that came down last year to look at income producing properties. The couple followed the “Rich Dad Poor Dad” model and intelligently understood the difference between playing the markets for appreciation opposed to obtaining consistent cash flow from a conservative asset. They had just finished purchasing their first investment property in the BVI. Not yet satisfied with their portfolio they came to Investment Properties Mexico looking for their next income producing property and to diversify. They understood that consistent residual income was important. They had lost nearly 60% of their investments in the stock market over the last 5 years and were extremely skeptical of were to put their capital.  I helped them analyze every inch of the market throughout the Riviera Maya. After spending four straight days looking at various areas and countless hours on the phone discussing different strategies,we finally found them a brilliant income producing condo in Puerto Aventuras real estate. The property has now grossed them twice as much revenue as their property in the BVI. 

Over the last 12 months Investment Properties Mexico has had a plethora of diversified investors buying in the area. These investors range from CEO’s,doctors,and lawyers to mechanics,contractors,and proprietors. We have seen a large demographic going after this investment strategy that essentially acts as a cost effective and low overhead annuity.

Why you ask? Because it works,it works for everyone. Whether you make seven figures a year,50k,or have a standard IRA or retirements account this is a way to always have steady residual income. Robert Kiyosaki said it best “Don’t work for your money,have your money work for you”. It is a full proof business model that has worked for decades proven by some of the most successful businessman and entrepreneurs to date.

Now down to brass tax. The two main questions I come across are ...Why the Riviera Maya? and Why Investment Properties Mexico?

These are great questions that I have to answer on a daily basis,so let me sum it up for you in 5 easily understood points.

We named our company Investment Properties Mexico for a reason; we here at Investment Properties Mexico specialize specifically in income producing properties. We only deal with the most reputable developers and properties around in the most highly sought after locations. 

We (Investment Properties Mexico) are experts in the area and know where the high demand rental markets are along with which properties are best suited to fit that criterion. We have analyzed and researched different areas throughout the region,pinpointing where the tourists and renters are going. With a $52 Billion dollar industry at our fingertips we had no choice but to take advantage of the fastest growing city in Latin America.  

The market in the Riviera Maya is booming. It has made it safely through the economic crisis unshaved (named the fastest growing city in the world in 2006),development and construction is still in full force,foreign investment has never been higher with billions being invested into the country,and tourism is up 30% this year fueled by Felipe Calderon who is aggressively pushing the envelope by trying to adduce Mexico to the 5th largest tourist destination in the world. 

Due to high demand from our clientele we have inaugurated an in-house property management company catering specifically to our cash flow investors.  We have established a well-coordinated and professional team to overlook and manage your property. 

With this investment strategy you are risk free. We at Investment Properties Mexico will guide you safely and securely through the initial process showing you previous rental numbers and projected occupancy rates.  One way or another you have an appreciating asset due to the cash market that has proven itself to be one of the most conservative in the world. 

Location,Location,Location! The two main areas we concentrate on for income producing properties are: 

1) Puerto Aventuras – Being the only full service marina from Cancun to Belize boating enthusiasts,fisherman,and tourists alike have no other choice but to visit the beautiful 24-hour gated golf course community of Puerto Aventuras. The community draws a huge rental market with fishing charters,dolphin discovery,catamaran tour excursions,dive charters,and dozens of bars,restaurants,and shops within the town center. The community possesses a beautiful private beach where you can relax or go snorkeling in the crystal clear waste deep bay. It is the only place one can go throughout the entire Riviera Maya to get an all in one experience. It is an expat community with the Mexican feel,which makes it one of the safest communities along with having the traditional Mexican experience. 

2) Tulum – With over 3.3 million people per year visiting the Tulum Ruins and an emerging town that hit the map just over 5 years ago,Tulum has become one of the most popular tourist destinations in the world. The proliferation of the town has made it become its own municipality branching away from the popular Playa del Carmen. On top of that,Tulum has the best beaches in the world named by some of the most popular publications such as Conde Naste,Travel and Leisure,and the New York Times. Last but certainly not least Tulum is currently in the bidding process of a brand new International airport that is going to make the entire region one of the most accessible vacation destinations in the world. Tulum has swayed quite well for our business model by providing a huge rental market. The appeal in Tulum real estate right now is specifically the Aldea Zama community.  With only a few sub divisions constructed,Aldea Zama provides the first and only modern and contemporary housing in Tulum. Presently,tourist’s only option to rent in Tulum is on the beach road in one of the boutique hotels. During high season these hotels become 100% occupied leaving tourists no other options to rent. If one would like to come to Tulum for anywhere between one week to six months and are looking for a fully functioning turn key condo that has a complete kitchen,is affordable,and economical Aldea Zama is your only option. It is a cornered market and a no brainer. 

Placement: 

We at Investment Properties Mexico differ from any other real estate company in Mexico because we offer a promotion called Free Chill Weekends. What this entails is we place our most qualified prospective clients who are viewing property into our pre-existing clienteles condos. With over 30 clients a month deriving from a team of highly qualified and efficient salesman we alone can show a 30% occupancy rate through our efforts. This is just the tip of the iceberg and just what we as a company provide. Using social networking and modern technology to our advantage we can utilize the best websites to generate clientele. We will guide you through the process of putting your property on popular sites such as VRBO,Andele,and Turnkey to generate as much activity as possible. 

As we all know nothing is a guarantee in life except for death and taxes but what I can guarantee is that at the absolute least we will be able to cover any overhead including taxes,HOA fees,and any mortgage on the property through your rental revenue. 

Strategies/Returns:

When discussing returns I can confidently say that you will be looking at a conservative 10-20% ROI effective immediately. What I personally encourage my clients to do is acquire a lower price point property (150-350k) opposed to the higher end inventory (400-800k). I say this for a few different reasons; first you will get a better bang for your buck with the lower priced inventory obtaining the best value for your money. When looking at returns you will notice your profit margins do not differ much different from a 200k property to an 800k property. Now when equating that into a ROI formula you will see that your ROI percentage becomes much higher in the lower valued properties. In this market,rental rates are yielding $100 - $300 p/n. Whether it is vacation or long term rentals,we can keep your property 90% occupied during high season and 50% occupied during low season (100% if you place a long term renter)

Tax Shelter – Another great advantage in investing abroad is the tax shelter it provides. We tell our clients that you have two options when dealing with your returns. First,is the most popular route our client’s take,which is keeping your money in Mexico. What we do is help you set up a Mexican bank account where we will deposit your monthly revenue. Many let our management company allocate their revenue towards monthly HOA fees,taxes,or upgrades; others keep it in Mexico for spending cash when visiting. The second option is to send your money back home. We are currently using a third party facilitator called Monex,which in a very conventional and convenient way through a simple email you can send money abroad for a small fee. 

Last but certainly not least! This new investment that you will be embarking in is not only generating a generous amount of cash flow you but also a home away from home. Whichever way you would like to look at it you still have the best benefit any investment could provide … a tangible asset for you to use in one of the most beautiful places in the world. Whether it is your family,friends,business partners,or clientele you will always have a place for them to come visit and enjoy the Caribbean experience. 

Until next week … Hasta Luego! 

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