Is Playa del Carmen a good place to buy real estate?
If you have been to Playa Del Carmen before and had a good time, you might be thinking about living in Playa Del Carmen. This might lead you to the next thought, is Playa Del Carmen a good place to buy real estate? In this article we are going to answer this from many different angles because many people are in different circumstances. Let’s start with the different situations you might be in and what our recommendations are.
Who is looking to buy in Playa Del Carmen?
Here are different categories of people looking to buy in Playa Del Carmen and what are our recommendations for each circumstance.
- The Retired Couple. This can mean living full time in Playa Del Carmen or part time and splitting time between “home” and Mexico.
- The Investor. This person(s) is looking to buy a property mainly as an investment to rent out.
- The Young Family. This couple might have children and the adults are still working.
- The Digital Nomad. This person is doing well and can afford to buy something with cash or has a lot upfront.
Now let’s take a look at each type of situation for buying real estate in Playa Del Carmen
The Retirees
This couple or person is looking to live in a condo or property pretty much year-round. Maybe with the possibility to rent out the condo when away. The main focus is on comfortability, location and proximity to services, views out the windows, and who else is living in your building or area. This category is one of the easiest to make a recommendation. There are several advantages to this group when buying in Playa Del Carmen.
- You don’t need to worry about ROI. Your intentions are not to rent out your place.
- Buying real estate in Playa Del Carmen is not limited to tourists’ areas. So, you don’t need to buy in the hottest rental areas, and you can focus on just your wants and needs.
- You can choose to live in the downtown or if you will have a car, this opens up locations outside of the center that are quieter.
- Older condos are more spacious but less desirable as rental units. So, you have an advantage over investors. Older condos are often sold at lower prices per sq. meter.
So, with these details, the retiree has an advantage over other buyers in the Playa Del Carmen real estate market. You are also not limited to just areas that are easy to rent to visitors on vacation.
Our recommendations for buying in Playa Del Carmen
You will want to think a lot about the area you like and how it will change in the coming years. Playa Del Carmen is a young city and is always changing. Most likely you will prefer smaller buildings that are more residential and not all rentals. If you are looking for the longer term, it is important to make sure the climate works for you (not just visiting in the winter months). Playa does not fit all those looking to live near the beach in Mexico. Playa is more modern and less cultural of a destination than many in Mexico and it has a hotter climate than many are used to. Since your decisions are more binding, because you don’t want to keep moving every few years, take a good look at places and areas. Renting first to see how it feels because it is much different than just visiting on vacation for a week.
The Investor
This person wants to buy something to rent out. This means buying a condo in a very rentable area and in a popular building that has what tourists are looking for. Your main goal is looking at the return on your investment (ROI)and thinking about the short term and long-term effects of your purchase. This type of buyer needs to take the most care to make a smart decision. From about 2012-2018 the rental market in Playa Del Carmen was booming and demand was on par with supply. Airbnb and other booking services were making it a lot easier for owners to make money to pay for the property. Things do change and ROI is a hot topic in Playa among residents. In the past 5 years Tulum has outpaced Playa Del Carmen in terms of ROI. But there are still profits to be made in both areas, but you need to be much more selective and work with a really good realtor that knows what is coming online and what is renting.
Compared to many places in the world, it is fairly easy as a foreigner to buy an investment(s) in Mexico. It is often a better ROI than many places as well. It is not the peak of return on investment but still has something to offer.
Our recommendations to investors looking to buy real estate in Playa Del Carmen
You really have to work with a realtor that knows what is renting, works with your budget or is honest about your budget, and knows what things will affect rentability and popularity in the near future. We have seen over and over that the basic principle of the more you spend the more you make. Most “investors” that buy something under $130,000 or about there, do not make a lot of return. Most of the basic units are small, ground floor, do not have great views, and have a lot of competition.
If you can, buy for location, and two- or three-bedroom units or a lock-off are better options for renting. A good tool for investors to check out is the AirDNA (which is not related to Airbnb). This tool shows you rents and occupancy for areas across several platforms. This is a great tool for investors in addition to working with a good realtor.
The Young Family
This group of people has becoming more prevalent in the past 6 years. More families with children have started to move to Playa Del Carmen. The ability to work online or start a business in Mexico has opened more opportunities to families. Because this group is looking for more space, planned neighborhoods called fraccionamientos are an option. Most families want several bedrooms, a good community, parks or open spaces nearby, accessibility to services and a lower purchase price.
Fraccionamientos are a popular option for families. These planned developments offer low to mid-level entry properties. There are different levels of these types of developments. Some developments offer town homes, standalone homes and apartments. Location still is important since some areas are much further from things.
What is our recommendation?
Since fraccionamientos are usually sold by inhouse assistants of the developers, you will need to work more on your research and Spanish. These types of developments usually come bareboned, meaning you need to finish off the places yourself. This can include cabinets, closets, better doors, gardening, and decorating. This should be looked at a longer-term purchase. It is hard to buy one of these and make a profit in a short period of time. Also, if you invest a lot in your property, it will be hard to recoup much of the investment if you plan to sell in the future.
Fraccionamientos values rise slowly because the value is attached to the whole neighborhood and not just one house. If you are moving with a family, this should be considered at least a 5-year plan, meaning that you will hold the property for at least that long before moving. You will also have to do a lot of legwork. Not only for checking on different planned communities, but schools and services for your family to see if Playa Del Carmen works for you.
The Digital Nomad
This person or couple is young, but successful enough to have payment for a property or condo. Most of the time these people have some flexibility as to where they can live and have more freedom of movement. This means really falling in love with the location and a property. This person(s) needs to take into consideration services like coworking or just cafes and places to hang out. Often it is nice to have options to work outside your condo at times. It can also mean thinking about reselling your property in the future since these types of people can be open to moving in the future.
Our recommendations for the digital nomad
First of all, Tulum wins over more digital nomads than Playa Del Carmen. You might want to look at our article and video about the Tulum real estate market. Comparing these two destinations might be a good idea. Tulum is a little more high-end and Playa Del Carmen is more affordable. If you decide on Playa Del Carmen, the downtown, Colosio, Coco Beach and possibly Playacar are areas to look at. This is because they are central, have access to going out, grocery stores and afford the opportunity to meet other people.
Also buying in the downtown of Playa Del Carmen allows you to more easily resell when you are ready to move on. If you figure you will be around Playa for about two years or more, buying something does save you money over renting and you can even come out on top buy buying something. See our article comparing buying to renting for a two-year period.
We will say that about 10% of digital nomads buy something while living in Mexico. So, if you do decide to buy, you are one of the persons that can plan a little into the future and you don’t mind putting down some roots for a while.
What are some costs that come with buying real estate in Playa Del Carmen?
A wise person always calculates the costs before a purchase to see if it is a good idea. Here are the largest things you need to consider when you are thinking about buying a property in Playa Del Carmen.
Closing costs for buying real estate in Playa Del Carmen
In Mexico the buyer pays most of the fees at closing. You can estimate 4%-6%of the total purchase price to be the fees associated with closing. So, if you buy a condo for 2,000,000 pesos your closing costs will be around 80,000-120,000 pesos.
How much are property taxes in Playa Del Carmen?
Calculating cost of buying real estate is important. So, what about property taxes in Playa Del Carmen? This is one of the bright spots in Mexico. Most municipalities in Mexico charge very low property taxes. In general, you can account for 1% of the value of your property. Most residents in Playa pay between $200-$500 USD a year in property taxes.
Fideicomiso and Setting Up a Trust in Mexico
The fideicomiso is necessary if you are buying withing 50 miles of the coastline in Mexico (unless you are buying multiple properties under a corporation). This means setting up a trust for your property purchase at a bank. The initial costs are about $12,00-1600 USD depending on what bank you use. Annual fees average between $500 USD and $900 USD. One of the most recommended banks is Banco del Bajio.
How much are water bills?
Most people pay the basic costs of water in Playa Del Carmen of 250 pesos a month. However, you are charges consumption and if you have a leak to use a lot of water, your bills can jump up there. It is important to check your meter to see if you are using a lot of water. A common problem here is the high mineral content for the water. This is the reason why people don’t drink the ground water without filtration. Many times, the highly concentrated mineral water will start to block valves on toilets and affect pipes. This can mean toilets can constantly run a little and you won’t notice until you get your water bill. Some condo associations include water in the HOA fees. But in general, you need to keep an eye on water usage because it can jump up to hundreds of US dollars if you have a leak.
Electric Bills in Playa Del Carmen
This is not necessarily a cost with buying real estate, but a cost you need to factor in with your purchase. How so? Electricity is subsidized in Mexico. Low amount users have subsidies that keep the costs low. Once you go over a certain monthly amount, your costs go up. Most people pay between $30-$100 USD a month on electric. But some people end up paying $300 USD a month. So here are the things you need to consider when buying real estate in Playa Del Carmen.
- Does the condo have direct sun on the outer walls during the day?
- Are there trees, bushes, awnings, or balconies that shade the building?
- Is there a natural airflow in the condo? Some smaller condos might only have one or two working windows. Some condos are badly designed and need more cooling than others. This can cost you an extra thousand or thousands of USD a year on just added energy costs. So, it is very important to think about this before you buy. This is something that will affect your bottom line and your ROI if renting out your unit.
- How are the windows? Are they tinted or heavier glass or even (but very rare here) double paned? Many buildings skimp on windows because it “looks” the same as good windows. Plus, buyers don’t ask these details usually when buying.
We mention this in the cost of buying because it does cost you after you own it. How your electric bills are, depends on you during the buying process.
Is buying in Playa del Carmen a good investment?
For most people buying in Playa Del Carmen is a good investment. Very few people that we know have regretted buying something in Playa Del Carmen. Prices are steadily rising and because most properties are paid in cash, there is no mortgage bubble. Most people that buy have confidence in the legal protections, and political security of Mexico. We don’t hear of or know of many people that come and then decide to give up on it because it was a bad investment. You can avoid disappointment by looking at the actions of people that maybe did have some regrets. Here are some of the reasons someone’s investment in Playa Del Carmen is as good as they were wishing for.
- The person did not really do research and bought quickly. There are many areas and hidden areas that the average person will not find when quickly looking around.
- If you happen to choose a bad, or decent, or average realtor, this can change everything for you. They are the experts and are there to help you. A buyer’s agent is the best type because they represent your interest. Having a great realtor means someone that is there before, during and after the buying process. Here are some recommended realtors in Playa Del Carmen.
- There is an expression “Those who want to be rich, however, fall into temptation and become ensnared by many foolish and harmful desires.” This means that if you don’t have a lot of capital, you can be tempted by some of these slick developers online that offer things and don’t deliver or end up with a timeshare instead of an actual condo. People that buy the cheapest unit in a building often don’t do as well or are not as happy with the purchase. If you avoid the cheap stuff and invest in quality, your happiness gauge often is much higher. Don’t overstretch yourself financially.
- The very low percentage of buyers that run into a scam. Yes, there are a few scams that happen, but the good news is these are few and far between. The real estate market has been much more regulated in the past decade and continues to become so. Nowadays the scams are a little more transparent if you are aware of a few things. Some scam-ish behavior to lookout for is: One person realtor agencies that have no history in the area, buying ejido land or believing the papers are almost done, a not well-known builder stops construction and runs away with the money, and people trying to sell you other people’s property as their own.
In Conclusion
The best thing to make sure buying something in Playa Del Carmen is a good investment is by having the proper perspective. An investment is not all financial. Buying something in Playa Del Carmen is also an investment in your happiness and quality of life. If you know that Playa will offer you what you are looking for, you will be in a much better position to make a good investment decision.
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