How Much Rental Income can I Expect from my House or Condo?

ventanamagazine.com
Author: 2009 Raúl Jaime


One of the most important considerations on people’s minds about their purchase of property in Mexico is whether or not they will be able to rent them out and have some income from these rentals. Although there isn’t one simple answer that would fit every individual case and there are several factors that influence the results, here are some points to take into consideration.

First of all, like in any other real estate investment, location is perhaps the most important factor that will determine the demand for rentals. If you have a beach-front property that is in a brand new building that also happens to be within a short distance of amenities such as restaurants, shops and entertainment, the demand to rent your property will be high. As you get farther away from the city’s core attractions it is more likely that the demand for rentals will drop. Older buildings or those far from the beach and/or golf courses are also less desirable to rent.

You must keep in mind that the high season is when the demand for rental properties is highest and you will be able to rent them at a higher rate during this time. So, if you plan to stay in your property during the winter, you are taking away some of the most valuable weeks when you could be collecting rent.

When renting out your property, be aware of the normal expenses incurred by tenants while they are there, including electricity. While short-term vacation rentals are more profitable, they require more involvement from the owner than long-term rentals, and you can end up with a high utility bill if your tenants run the AC at full blast all day. Also, keep in mind that you might need the services of a property manager to do a walkthrough before and after the tenants stay there.

I have come across sales people who tell their potential buyers that they can expect to rent out their units for up to 70% of the time. Frankly this is just an over inflated estimate that they use in hopes of closing a sale. However, vacation properties in Mexico still produce very good income if you know how to exploit them properly. In order to play it safe, I recommend a more conservative estimate for the average number of weeks you will be able to rent out your property. For example, you could expect to rent a 2 bedroom unit in a high demand area for roughly 20 weeks a year. Considering that a condo of these characteristics usually rents for over USD $1,000 per week, this could mean an annual income of $20,000 minus expenses. You should also consider including your property in the rental pool if your building has one, but do it in a non-exclusive manner so that you can still advertise and promote your property independently.

Investing on a Second Home or Vacation Rental Property

ventanamagazine.com
Author: Roger Vales & Diego Garcia

 One of the key decision-making factors when considering and investment in a foreign country is to have someone you can rely on to solve all of the different aspects of owning a property while you are hundreds or thousands of miles away. This is when Property Managers come into the picture.

Property management is the operation of real estate, the range of functions that a manager does, include but are not limited to: maintenance, provision of services, supervision of staff employed for services, payment of outgoings, payment of property taxes , together with negotiations with tenants and prospective tenants and the collection of rents.

Finding a good property manager could be the difference of you truly enjoying your second home or vacation rental property or having a very disappointing experience. Imagine coming to your beautiful new condo on the beach in Mexico and dealing with receiving furniture, installing satellite tv or cable, internet and not being able to communicate with providers because you do not speak Spanish or having to wait for hours when you could be at the beach relaxing.

If you do not have someone taking care of your property, on your second visit to your condo to hopefully relax because your first trip you worked more than you would have wanted to, you find that there is mold everywhere, your plants are dead, and you have no hot water, so you spend your “vacation” working and fixing problems so maybe, just maybe on your next trip you will be able to relax and enjoy.

Once you have a property manager with the local knowledge you will not only feel more comfortable with going forward with your investment, but will also have the peace of mind that you will not need to deal with any of the problems yourself, and when you arrive to your house you will find it in pristine condition. Additional benefits of having a property manager could be having a housekeeping service during your stay, concierge services, airport pick up, etc.

If you are using your property for vacation rentals most property management companies provide the service of offering your property in the vacation rental market, but not all of them have the infrastructure to aggressively market your property and provide hotel like services to the vacation rental guests. Although renting your property could be just to have some money in return to pay the expenses, paying the mortgage or making a business out of it, it is important to consider the infrastructure behind the property management company to truly understand their capabilities and therefore make a wise decision.

Having a property manager will also help to increase the value of your Real Estate, because a well maintained property with an attractive vacation rental record will make it a strong candidate for an easy sale.