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Types Of Real Estate Investments In Mexico

18 March, 2023

There are different types of investments that can be made in Mexico, depending on what you want to achieve.

In the field of real estate investments, there are several options for those who are looking to get started in the real estate world, or have experience and want to diversify.

Below we explain what are the types of investments you can make in Mexico.

Investment in Vacation Rentals

Perhaps one of the most popular investments in destinations like Los Cabos, Puerto Vallarta, Yucatán and the Riviera Maya, vacation rentals are an excellent option for anyone looking for passive income and a high return on investment, without much risk.

Investments in vacation rentals are the purchase of real estate with the exclusive use of renting on platforms such as VRBO, Airbnb, among others, to tourists for short terms from a weekend to a maximum of a month.

Depending on the type of property in which you invest, and its location, you can consider a return on investment of up to 15 percent per year.

This is why vacation rentals are the safest investment for someone starting out in real estate.

Long Term Income Investment

As with vacation rental properties, investing in real estate for long-term rental is an excellent option in places where there is a lot of job opportunity, especially for recent graduates or young people looking to start a career.

By investing in long-term rental property, you ensure that you have a steady monthly income, a cost-absorbing tenant, and fewer worries.

It is important to consider that if you invest in this type of asset, you will not be able to use it until the contract you have with your tenant expires.

A long-term rental is considered three, six, twelve or more months.

Investment in Residential Land

When you invest in residential land, you are buying the land to build.

For this, you should consider buying a land that already has the necessary services installation of water, electricity, gas, Internet, among others so that later it can be used.

  • A residential lot has the following development options:
  • Build a house to inhabit
  • Build a house to rent (vacation or long-term rental)
  • Resell the land when the capital gain has generated an interesting capital on your investment

In the latter case, depending on the area where you invest, you can wait a couple of years and achieve up to 30 percent annual yield to sell it.

Therefore, you must think about the types of investments to make the best decision.

Investment in Offices

This is more recommended for people with more experience in investing and reselling real estate, as it involves more advanced legal knowledge than the short or long term rental of a property.

However, it is an excellent way to generate an income if you know all the procedures that are required to rent the offices.

There is a high demand for office rentals, especially in destinations where industries such as Monterrey, Guadalajara, Mexico City, Querétaro, among others, are developed.

Office rentals usually have contracts of at least one year, and if you rent to a company with capital and with a future of growth, you can improve your income on it.

Remember, however, that office rent depends a lot on the economic development where your properties are located.

Commercial Investment

Commercial premises are similar to renting an office, since you will be renting your space for a business.

Unlike offices, it depends on the business itself and its success.

Commercial premises can be a very profitable investment in the long term, especially in destinations where the economic development of small businesses is important.

There are many commercial areas that are growing in key parts of the country such as Mérida, Cancun, Puerto Vallarta, among others, and investing in a place to rent there can be profitable for you.

In general, the investment of a commercial premises is usually much more accessible than that of a property, and it will depend on you if you rent it as a white canvas, or you prefer to invest in fixing it before offering it for rent.

Flipping inversion

House flipping is a very popular concept in real estate, and it has become a very profitable business for experienced investors.

This is a business where you buy a house at a very low cost, but it involves a greater investment to remodel before selling it again.

Generally, the benefit is selling the property at a higher price than the purchase and remodeling investment.

You have to consider that investing in houses for flipping is not a simple business, as it requires a lot of research, investment of time and money, and many calculations to know which opportunities are worth it and which are not.

If you want to enter the world of house flipping, enter knowing that some investments will be very profitable, while others will make you lose money.

But if you do it as a constant business, your profits will be greater than your losses.

You decide your investment

If you are new to the world of real estate investing, we recommend that you do your due diligence to determine what type of investment is best for you.

Not everyone is looking to invest for vacation or long-term rentals, and they are looking for something more profitable, but riskier.

The best thing is always to investigate, know what your risks are, and know your financial status well to weigh which option is best for you.

Author

Maya Ocean

Maya Ocean Real Estate

We are a company dedicated to the Sale of Real Estate and we also offer the option to Manage, Promote and Rent. Our real estate inventory and area of operations extends to the Riviera Maya mainly in the cities of Playa del Carmen and Tulum...

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