Guide to Buying Vacation Rental Properties in Mexico (as an American)
Owning vacation rental properties in Mexico is a smart move, but there are some drawbacks.
Real estate investing in Mexico is generally considered safe and lucrative, especially in tourist-driven locations such as Riviera Maya Mexico.
Investing in vacation rental property in Mexico can be a great way to build up your knowledge and experience as an investor. As well as give you a nice place to relax on the weekends.
If you are interested in real estate investing in Mexico, buying a vacation rental can help you start.
It’s not only an opportunity to see your investment grow, but it’s also a great way to relax and enjoy yourself.
But if you’re thinking of buying a vacation home to rent out for extra cash, you should consider the full range of pros and cons before taking the plunge.
The benefits of owning a vacation rental in Mexico as an American
There are many advantages to owning investment properties. It’s why platforms like Airbnb and VRBO have gained exponential popularity over the last decade. It’s probably why you’re reading this article in the first place.
Let’s examine the benefits of investing in vacation real estate in Mexico.
You’ll earn extra money from your investments.
Making money is the biggest benefit of investing in vacation rental properties in Mexico.
You can earn a lot more money if you choose the right location and market yourself effectively.
Here are a few of the top vacation rental platforms in Mexico for you to consider listing your properties on:
You will have somewhere to go when you need a break.
If you own a vacation rental property in Mexico, you can use it for your own vacations.
Which means you get to vacation in the place you own whenever you want to escape and relax.
Owning Vacation rentals in Mexico can help you get away from it all, provide a vacation for your friends, family, and business associates.
Those expenses can be used to lower your taxable income.
If you travel to Mexico for the purpose of renting out properties, you can write off a lot of the expenses that are associated with this.
Write off your expenses
If you rent out the property for more than 14 days, it’s considered a business. That lets you write off many of your property’s expenses.
If you’re renting your property on Airbnb, you can save time and money on utilities by deducting the cost of renting out your home.
Here’s the list of items that you’re allowed to write off as a rental investor:
- Hosting fees.
- Cleaning costs.
- Occupancy taxes.
- Insurance premiums.
- Utility costs.
- Lawn maintenance.
- Property management fees.
- Mortgage interest.
This is not a comprehensive list, so check with your Mexican accountant about the deductions you can claim.
You have a new source of income — or even a future retirement home in Mexico.
A vacation home can be a great way to build long-term wealth because you can sell it and use the cash to cover your future costs of living, travel, healthcare, and more.
Or you can keep it and enjoy the relaxing retirement you deserve.
If you’re considering investing in a vacation home in Mexico, make sure to weigh the potential benefits against the potential drawbacks.
Let’s talk about the cons of vacation rental investing before we dive in.
You have to make sure the property is maintained or maintain it yourself.
If you don’t manage the property yourself, then you will need to trust that someone else is doing it right.
Real estate in Mexico presents a great opportunity for investors, but it does require work, and you can’t expect to sit back and collect profits without doing anything.
Every time someone rents the property, you’ll be responsible for cleaning, preparing, and stocking it. Plus, if you get lots of guests, you’ll have to do all that extra work every time.
However, if you don’t want to worry about administering your investment, you can hire professional property management companies.
Some investment properties even have in-house rental property management companies who take care of your property.
But these services don’t come for free.
According to industry estimates, short-term rental property managers in Mexico charge between 15% and 40% of your income.
You also need to market it and find guests.
You need to get creative by finding ways to attract potential customers.
You need to understand who your customers are and what they want, then communicate directly with them in a way that motivates them to buy.
You’ll probably pay more to finance a property in Mexico
You will pay a higher interest rate on your investment property loans in Mexico.
For an investment property, many lenders need a down payment of at least 40%. On a $220,000 home, you would have to pay at least $88,000.
If you’re considering a vacation rental property as an investment, it’s important to plan ahead for the expenses involved and to assess your skills, time, and personal resources.
First, make sure to get a handle on the basics of vacation rental real estate in Mexico.
Next, get a plan together for how you’ll operate your rental property in Mexico. The more you plan now, the easier it will be later on.
We suggest chatting to a real estate agent in Mexico to help guide you in the process of finding vacation properties and also answering all your questions in regards to investing in Mexico.
If you are interested in investing in Riviera Maya Mexico Real Estate (Tulum, Playa del Carmen, etc) then contact our Real Estate agents today. Click here to contact our real estate agents today.
Are you interested in receiving the best listings in Riviera Maya Mexico? Click the links below:
Read more helpful articles below: