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Purchasing for Investment

What are your investment criteria? If you are a seasoned real estate investor purchasing solely for investment it doesn’t matter the area: it’s just the numbers have to make sense. Puerto Vallarta and Riviera Nayarit offer some excellent options with stable rental demand. The market is rising, so there is appreciation potential. Mexico is not a fix and flip market. Closing costs are significantly more here (approx. 3% of the purchase price in government taxes plus another $7K – $8K USD dollars equivalent in set one time fees paid in pesos). Also, repair work or renovations can take longer than expected but labour is inexpensive. However, in Mexico you don’t pay these closing costs when you sell, and your cost to hold an asset will be a fraction of a similar property in the USA or Canada. For example, property taxes are 0.05% of the tax assessed value (meaning most properties are $100 – 300 dollars or less for the entire YEAR).

You may want to consider the following questions:

  • What is the real estate market doing? How as it performed in the past?
  • What areas have higher rental demand?
  • What are the peak seasons and what can I expect for rental occupancy?
  • What are the regular expenses you can expect, including monthly fees and what they cover?
  • What timeframe are you planning for the investment? 5 years? 10 years?
  • What is the price range you are comfortable spending including furniture and closing costs?
  • Expected Return On Investment?
  • What is your minimum acceptable CAP rate?
  • Do you want to focus more on rental investment (ongoing gains) or appreciation potential (future gains), or a combination of both?

Your Buyer’s Agent can assist with introducing you to a property manager, information on rentals, and can put together a ROI scenario with estimated revenues and expenses.

Here is an overview of the top 5 reasons why investors choose the Puerto Vallarta / Riviera Nayarit area:

1) The weather:  this region is protected from storms with the natural Bay, surrounded by mountains and boasts some of the best reliably good weather in the World with over 330 days of sunshine
2) Easy access(direct flights from many cities, reasonably priced flights, can also drive if you feel like it, or take a cruise ship)
3) Lower costs to hold an asset: property taxes are typically less than $300 dollars a year, home insurance is typically half or less than most places in Canada or the USA, monthly fees are typically the same or less for greater amenities, water and gas are typically a few hundred dollars a year, property management starts at about $60 USD a month, with a-la-carte services can be chosen for check in/out and cleanings, fresh flowers or cold beer can be stocked in your property for arrivals at a reasonable price, a complete turnover service $50 – $80. High season rates will make you smile, with rental income in USD and costs in pesos.

4) HIGH rental demand: some owners get 50% – 80% occupancy renting shorter term, or 100% occupancy renting longer term.

5) Wide variety of activities and amenities:from 9 championship golf courses, 3 marina’s, 17 shopping malls and plaza’s, sunbathing on a nice beach to surfing, tuna fishing, hiking, zip lining, horseback riding, sea turtle rescuing, ATVing, Seadooing, whale watching, and tequila factory visiting, to delighting in the symphony, dancing in the street festival, going to the local markets, learning Spanish, attending a fundraiser, visiting old colonial towns, and going to see a Hollywood movie, this region offers just about everything and anything you want to do. For more info on activities and area amenities, visit our Locations page or contact us.

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