Investing in Rental Property

If you are thinking about investing in a rental property in Puerto Vallarta or Riviera Nayarit, there are some things that you need to be conscious of. An experienced real estate agent will help you, and here is a primer on what to consider.

Marina Vallarta

Consider the area that you want to invest and rent in

Each area has its pros and cons for rentals. Some areas are more conducive to short-term or vacation rentals (nightly or weekly) which generally yield a higher return but take more work on the owner’s behalf. Others lend themselves to longer-term rentals; while the return may be slightly lower, there is less work required and less wear and tear on the unit.

Also, consider the competition in the area. Some areas or buildings will have a lot of competition and this could impact your nightly or monthly rate. Ask your agent questions concerning these items and see if they can provide you realistic rental projections. These rental projections should include rental rates (during both high and off-season), occupancy rates, and costs such as property management and utilities.

If you are lucky enough to purchase a property that is currently rented, ask your agent to see if they can get the rental history and financial statements as this will provide great information to help you make your decision.

Determine how you want the property managed and the amount of time you want to personally invest

There are several options available for you if you cannot manage the property from abroad.

One option is to hire a full-service property management firm that not only manages your property (cleaning, repairs, paying bills, and purchasing supplies) but also finds and qualifies renters, and meets the renters when they arrive. There are many good full-service companies here in Puerto Vallarta; ask your agent for recommendations but also try to talk to others that have used the company before. And check out their rental site to ensure they are advertising other properties professionally and that the pictures and write-ups are professional and thorough.  They should be advertising on not only their website but also sites such as Airbnb, Homeaway, TripAdvisor, etc.

Investing in Rental Property

These property management companies usually charge around 20% of your rental fees for short term rentals or one month’s rental income for long term (1 year or more); these amounts vary from company to company.

The other option is to rent your place yourself. This can easily be done on Airbnb, Homeaway, TripAdvisor, Craigslist, Social Media, etc., but takes some work on your part to make sure you answer each inquiry. While this takes some time to manage you will make a better return, as the fees for these services are much lower.

If you are not here physically to manage the property or let renters in, you may still need a property manager which can be arranged. Many property management firms here have a checklist of services that they can provide. So, it will be up to you to decide your level of involvement in the rental process.  In all cases, make sure that the property management company provides you with detailed financial reports monthly of income and expenses.

Puerto Vallarta

So, you have bought an investment property but are not getting the return you expected. Now what?

Check out your competition and see what they are doing

Are your pictures professionally done? Nothing worse than iPhone pictures advertising a top-notch property.

Have you considered a virtual tour? Many renters are renting from a distance and cannot view your property prior to booking it so the more information you can provide the more comfortable they are choosing your place over another.

Also, make sure that your write up includes all the best features of your place and the area.

Finally, ensure you keep 5-star ratings for your place. Make sure it is clean and well maintained, all essential (and some luxury) items are provided and that you respond to all inquiries quickly and professionally. Maybe go that extra mile and leave your guests a chilled bottle of wine or a basket of fruit. All this goes a long way to motivate people to recommend you and even more importantly return in the future.

You have bought the perfect investment property, secured a great property manager and rentals are coming in. What about taxes on this income?

Taxes

By law, you are required to pay them. Of course, you can deduct expenses incurred for renting the property and many countries have agreements so you don’t pay double taxes. Our recommendation here is to talk to a Mexican accountant as well as one in your home country. And don’t panic, Mexican accountants are very thorough, reasonably priced, knowledgeable, and, in many cases in Puerto Vallarta, bilingual. Just ask your agent to recommend a couple of options they have experience and let them assist you.

 

Now you have your rental property all set up, sit back, and enjoy the income. And even better still, you have a place in paradise that you too can enjoy when it isn’t rented.

Mexican Pesos

If you would like further information on this topic or help, please find the link to our agency page here.  Our agents will be happy to assist you.