Top

Tough times are temporary. Knowledge is forever. Sign up for short-term rental tips, news, and motivation from TDG!

Buying A Vacation Rental In Mexico: When You Don’t Live There

This post may contain affiliate links or sponsored content for products we've tried and loved.

Sayulita, Mexico buying a vacation rental in Mexico

Well, it’s been a wild ride over the last year or so. Back in 2022 (on Cinco de Mayo, no less!), I made a non-refundable deposit on my next vacation rental dream—this time in gorgeous Sayulita, Mexico. I closed on July 25th, 2022. On one hand, it was a spontaneous decision, but on the other hand… if you know me, you know I did my due diligence first. 

In this post, I wanted to share with all my industry friends the lessons I’ve learned so far, in the early phase of this adventure. Hopefully this will be particularly helpful to those of you who have considered purchasing a property in Mexico. 

Here are my takeaways from the planning stage of this investment:

My Spanish is spotty at best

I’m going to need to work on that. 😂 But I did manage to learn a few key words and phrases, like: No hay necesidad de impresionarme con tus habilidades de conducción.  Por favor, no pase a otros vehículos para ir más rápido. [No need to impress me with your driving skills. Please do not pass other vehicles to go faster!]

Support is essential

Despite my decades in real estate and over a decade in vacation rentals, I was filled with doubt about this purchase. After all, I was buying in a new country, with many unknowns and political risks involved… and you simply don’t know what you don’t know. But then a dear friend reminded me to believe in myself, and trust that my years of knowledge and skills prepared me for this moment. After that reminder, things started to flow like agua.

And so is the right real estate agent

Like most markets in the world, the Sayulita real estate market was con fuego in 2022. The few properties that did come available quickly went under contract. But thanks to the  incredible agents that assisted me, Abigail Fernandez and Gabriel Jones, I was able to scoop up my little gem before it even hit the market. Don’t settle for just any agent, because they can truly make all the difference! 

The key to life is to be unflappable (And hire your own experts)

This deal was not without its thorns, of course. Let’s just say the property had not been well-maintained over the years. Plus, the seller did not want to provide any disclosures. But where else can you get an ocean views like this?! When I worked in commercial real estate, we never got disclosures, anyway, so I was a little more comfortable going without them. I was also comfortable with walking away if I needed to. In fact, I did walk away from this deal at one point. But it came back! 

Sayulita Mexico

Another reason I was comfortable moving forward without disclosures? I hired my own experts. A lot of them. Home inspector, Structural Engineer, and Electrical Engineer, to start.  

My agent also hired contractors to inspect all of the mechanical systems separately (HVAC, Electrical, Solar, etc.). And I had her collect bids for work and deferred maintenance, including removing the hot tub (water does NOT belong on a roof…fight me!), as well as roofing, painting, and flooring bids.  

Through that process, I learned that I will need to replace the palapa roof…a $15K expenditure that may have been a big surprise during the rainy season! But thanks to due diligence, I was able to budget for this up front when running my numbers.

So, in other words, do what you can to assess the pitfalls… then take the leap! 

Run the numbers!

My favorite part 😊.  Here’s the down and dirty math on my initial deal…

Location: Sayulita, Nayarita, Mexico
Details: 4 Bedroom/4 Bathroom Condo
Purchase Price: $795,000 USD
Rental Rates: Worst case, $400/night. Base case, $500/night. Best case, $600/night
Occupancy: Worst case, 50%. Base case, 60%. Best case, 70%
Cash on Cash Return: Worst case, 5%. Base case, 7%. Best case, 10%

UPDATE: I was pretty conservative with my initial numbers, which were based on the property’s condition to start. Here’s where I think they’ll end up post-rehab: 

$695/night and 80% occupancy during peak season 

$495/per night and 50% occupancy non-peak 

Not too shabby! 

P.S. If you’re looking to run your own numbers and need a little help, check out the TDG Blueprint for Beginning Rentalists, which covers—in detail—the buying process, along with handy charts for due diligence that covers all your bases! 

Consider your exit strategy upon acquisition

I was lucky to purchase two investment properties during a market low, but that’s not the case this time. I’m confident I’m purchasing this property at the peak—and I am totally okay with that. Why? First, I plan to hold this property between 7-10 years (thank goodness for patient money!). Second, other 4 bedroom/4 bathroom condos in the area that are maintained and well-furnished are currently selling for $1.1M.

With the TLC I put into the property over the past few months, I could flip it. Worst case, I sell at a loss, but let’s be real….it can’t be worse than most of the losses we are currently experiencing in the capital markets. 

Again, buying a property in Mexico is a leap of faith, not without risk, and not for everyone!  But where in the world are you able to get an ocean view like that and a 10% to 16% return (because I do plan on hitting my best numbers)?! 

San Pancho Mexico Sayulita Vacation Rental

What’s next? First, hire staff (my home will be fully staffed with housekeeping from 8 am to 4 pm daily—yep, that’s right!) and get the property listed for guests to find.

I can’t wait to keep sharing my journey with you. My next post will include before and after photos, so stay tuned!! 

If you are considering purchasing a vacation rental south of the border, please feel free to reach out to me. It has been a journey, and I am so grateful for everyone that reached out to help me along the way. So it is my turn to pay it forward!

Leave a Reply

Your email address will not be published. Required fields are marked *

Client Love

In my experiences as a short term rental host, podcaster and founder of Host2Host, I have found Alanna Schroeder of...

Debi Hertert

Vacation Rental & Boutique Hotel Supplies
2021-09-22T09:27:40-07:00

Debi Hertert

In my experiences as a short term rental host, podcaster and founder of Host2Host, I have found Alanna Schroeder of The Distinguished Guest to be professional, ethical and informative.  She possesses great business savvy, offering views that express her knowledge and her caring.  I have seen Alanna go out of her way to help another host/owner achieve success.  In an industry that is continually growing, Alanna has developed an understanding of how our industry works and who works within it.  I trust her judgement and advice and have learned more from her than from almost anyone else in this field.   Alanna’s contributions and work with Host2Host have been invaluable. Her new course TDGs Blueprint for Beginning Rentalists includes comprehensive and vital information for the short term rental host.  Although it is designed for the beginning host, the course includes so much information it is also great for established hosts.  It’s comprehensive from the purchase of property, through the setup of rental space and navigating Online Travel Agency listings.  The TDG course modules will save headaches and missteps, increasing satisfaction as well as income!
If you own a short term vacation rental or are considering purchasing a vacation rental Alanna’s course, Blueprint For Beginning...

Melissa MacNail

Vacation Rental & Boutique Hotel Supplies
5
2021-11-01T12:23:59-07:00

Melissa MacNail

If you own a short term vacation rental or are considering purchasing a vacation rental Alanna’s course, Blueprint For Beginning Rentalists, is an absolute must. Alanna has gone above and beyond to lend her expertise in the hospitality business with several years of personal experience. This course is extremely thorough; complete with checklists and extensive resources, walking you through the process of finding a qualified realtor, to the ins and outs of running your business, marketing, and so much more. You will not find another course out there to match the quality of what this course has to offer. Coming in as a newbie myself I feel well equipped with the proper tools and know-how to run my business successfully and how to continue to grow in the future. In addition to the course material, Alanna holds weekly office hours via zoom where you can ask any questions you may have as well as connect with fellow owners gaining even more insight and knowledge to this ever growing and evolving industry. From personal help and feedback on website design, channel management, interior design, insurance and so much more. These are just a few of the many ways Alanna has helped me personally and I look forward to staying connected over the coming years through her office hours and private Facebook group as questions and scenarios arise. If you desire to create a profitable vacation rental investing in the Blueprint For Beginning Rentalists course will set you and your business up for success!
Alanna has been my go-to person as I've navigated the learning curves of running my vacation rental businesses.  She helped...

Cathy Scott

Vacation Rental & Boutique Hotel Supplies
5
2016-05-03T18:24:44-07:00

Cathy Scott

Alanna has been my go-to person as I've navigated the learning curves of running my vacation rental businesses.  She helped me re-brand my properties, market them effectively, and connect with other valuable industry resources.
Alanna at The Distinguished Guest has been an invaluable resource while setting up my first vacation rental.  I recently bought...

Robert Howell

Vacation Rental & Boutique Hotel Supplies
5
2020-11-01T08:47:41-08:00

Robert Howell

Alanna at The Distinguished Guest has been an invaluable resource while setting up my first vacation rental.  I recently bought a house in Hilton Head Island and knew nothing about what it takes to be a successful vacation rental.  Alanna has always been willing to lend a helping hand and responds quickly to all of my many questions!  If you're looking to set up a new vacation rental or refresh an existing rental, I would highly recommend contacting Alanna to help out.  She provides a 5 star experience!
Regardless if you are new to the industry or have more than a decade of being a vacation rental host,...

Celine Girard

Vacation Rental & Boutique Hotel Supplies
5
2021-08-30T08:38:31-07:00

Celine Girard

Regardless if you are new to the industry or have more than a decade of being a vacation rental host, this course is for you! The course covers a lot of information, delivered in easy to follow modules with a clear, logical and effective structure. Equipped with downloadable workbooks, checklists and resources; I am now confident and ready to be the best host possible for my guests.
5
4
Vacation Rental & Boutique Hotel Supplies