Mexico has been on investors’ radars for a while now. Live and Invest Overseas named Playa Del Carmen, in the Mexican Riviera Maya, as one of the 10 best places to live and invest overseas in 2017. Those lucky enough to have snapped up real estate in what are now prime locations in Mexico have made a healthy sum from their foresight. However, the opportunities are still aplenty. And thanks to current legislation, it’s now easier than ever for foreigners to invest in a vacation rental in Mexico.
Investing in Mexico Real Estate
Non-Mexican citizens can currently buy property anywhere in Mexico, however different rules apply for non-restricted zones and restricted zones. Restricted zones are anywhere within 50km of the coast and 100km of a national border, whereas non-restricted zones are anywhere outside of these areas. If you wish to buy property in an unrestricted zone, you can do so directly. However, if foreign investors wish to buy property in a restricted zone the easiest way to do so is through a trust. A bank holds this trust, and the buyers become the trust’s beneficiaries. If for any reason the bank can no longer hold the trust, it is transferred to another bank in order to protect the beneficiaries.
While Mexico welcomes foreign investment, investors that use their property as a vacation rental are still expected to abide by tax laws. If you decide to purchase a vacation rental then the easiest way to avoid any tax issues is to consult a tax attorney in Mexico. For a long time, it was easy for revenue generated by vacation rentals in Mexico to fall under the radar, but that is no longer the case. Nowadays there are tax laws in place and owners of property investments in Mexico must abide by and these are relevant whether the property is used as a vacation rental part-time or full-time.
Vacation Rentals in Mexico
One of the most fruitful ways to profit from your real estate in Mexico is to turn it into a vacation rental. Vacation villa rentals are becoming a popular accommodation choice for the growing number of tourists that choose Mexico as their destination. With Mexico experiencing rapid growth in the tourism industry, the demand for vacation rentals will also continue to rise. Last year saw a 9% growth for the industry, which is more than double the worldwide industry average. In popular destinations such as the Riviera Maya, this has created near constant occupancy rates of 70% + even in low season.
Of course, a major factor for investing in a vacation rental is the potential income. Mexico vacation rentals are generally advertised in USD and enjoy premium rates, especially during high season. Moreover, running costs remain low as all rates are paid in pesos. Couple this with the unusually high occupancy rates and investors can make a solid return on investment even before factoring in your property’s appreciation in value.
The cherry on the cake? Being able to make the most of your vacation rental. The best part of owning a property in one of the most beautiful countries in the world is using it! Unlike your esteemed guests, your home-away-from-home is there whenever you need a break from the fast-paced life north of the border.
Things to Consider:
- Location: from the specific region of Mexico you want to invest in to the particular area of that location - it’s important to consider the existing vacation rental market and which location will make your investment the most profitable.
- Potential Income: it’s also important to research average nightly fees, average seasonal occupancy rates and average monthly costs to you. This should give you an idea of the potential income your property could generate
- Management: crucially, you will need to decide how you plan to manage the property. Do you have the time and resources to dedicate yourself to running the vacation rental, or will you hire a professional property management company?
What are you looking for in the ideal Mexico vacation home rental property? Share your questions and thoughts in the comments section below and join the conversation!
So, if high ROI, low costs and access to your very own piece of paradise don't convince you that a vacation rental in Mexico is the way to go, then maybe the tacos and tequila will? There’s only one way to find out… Click here to see how vacation homes can be income-producing rental properties and learn how to buy a vacation home rental where you’ll make lasting memories and excellent return on investment!