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What can you really expect for ROI in Playa Del Carmen?

ROI in Playa Del Carmen

Real results regarding return on investment (ROI) in Playa del Carmen

We have had many people ask us about return on investment or ROI in Playa Del Carmen.  Most people that are investing in the Riviera Maya are looking for a investment property. Readers often ask about the rental market and what is the truth about ROI. If you ask current owners you will get different comments because they bought in different areas and developments. We wanted to ask one of our recommended real estate agents to write an article for our readers to give a clear and concise look at ROI in Playa Del Carmen. We are very pleased with what Sebastian sent us and we hope it helps you understand the Playa Del Carmen real estate market better.

If you have further questions after reading this we have placed Sebastian’s email link at the bottom of the page.

The Reality of ROI in Playa del Carmen

There are currently a lot of developers, both big and small, building mostly condos in Playa del Carmen. Some potential investors find the real-estate panorama in Playa del Carmen overwhelming given the variety of properties available.  So it’s important to be able to count on expert advice to decide what your best options are.

The good news is that the Playa del Carmen downtown area is sandwiched between two golf courses, so the land still available to build on is limited. Most plots close to 5th Avenue and the beach have already been developed.

The question many investors are asking when looking to buy property in Playa del Carmen is: Are all developments making a high return on investment? The honest truth is that not all of them are.

As you can see on billboards all over town, everyone is adding ROI and Airbnb to their marketing strategy, and if you talk to them they will probably send you rental projections; some might even show you high return on investment numbers.

Is this really true, however? Some properties are doing extremely well, but there are also others that are not delivering what they were advertising. This is due to several factors that you would do well to take into consideration when you are planning on investing your hard-earned savings in the Riviera Maya.

Types of developments:

1. Condo Hotel (Hotel Operated):

This option is designed for people who want to make a decent return and plan on using their property for no longer than a month a year without impacting their ROI in Playa del Carmen.

Pros: Bigger exposure through online travel agencies, vacation rentals and traditional travel agencies. The majority offer 5-star hotel services such as concierge, room service, daily housekeeping, tours, spa, etc. Most hotel operated developments work as a rental pool, which means you earn income whether your unit is rented or not. The majority of these developments have a commitment with owners guaranteeing a minimum ROI (8% the first year) and some even cover certain expenses.

Cons: Higher maintenance fees, higher commissions to hotel operator.

2. Traditional Vacation Rental:

This option gives you less exposure, since most property managers work directly with Airbnb, Homeaway, VRBO and Flipkey.

Pros: Owners have more freedom to decide when to block their unit and use it themselves. If operated correctly and depending on several factors – among them seasonal occupancy rates, location, amenities, etc.) some vacation rentals can provide a higher ROI than hotel-operated properties due to lower expenses, but there is no guarantee.

Cons: Less services at hand, and expenses are paid out of pocket. Finding a good property manager.

Roi Playa Del Carmen

 

What are the main difference between property types for ROI?

The main difference between the two possibilities is that one offers a minimum return commitment but restricts the personal use of your property, whereas the other doesn’t include a minimum ROI clause in the agreement but, depending on the property, you might even generate higher returns, while also having greater freedom to enjoy your property whenever you want.

Bottom line for investing in the Riviera Maya

The bottom line is that properties characterized by a good concept, an attractive style, a premium location and a knowledgeable property manager will make a good return on your investment. You need to pick and choose wisely.

Some smart investors are diversifying and also investing in the Tulum real estate market, which is currently showing very impressive numbers. See also Sebastian’s article on financing options for real estate in Mexico.

So it’s important to know that not all properties are delivering high returns on investment (10% – 15% ROI). If you need help finding those that are securing great rental ROIs, feel free to contact me for advice on how to meet your investment needs.

ROI in Playa Del CarmenSebastian is a licensed realtor and property advisor in the Riviera Maya. He is one of our recommended agents for our readers because of his outstanding service and knowledge of the market.

26 Comments on What can you really expect for ROI in Playa Del Carmen?

  1. I own an apartment in Residencial Loltun, 2 bedrooms 2 bath fully furnished, I want to know if is posible for you to get people to rent it.

  2. I’m really glad you mentioned a lot of the points in this article. I have had some friends invest in Playa and become disillusioned because it was not as high ROI as they we told to expect. I on the other hand have done very well. A new condo is not like all new condos. You have to be smart about where you buy and a good agent will work for you.

  3. Sebastian really knows what he is speaking about. He has given me really good advice for investing in the area and it proves right.

  4. Thomas Burton // February 18, 2019 at 1:32 PM // Reply

    I want to know what the potential rental rate is for my 2 bed, 2 bath lock off Condo on 5th. Ave. and between 12 and 14th. St. My condo is a one of a kind as it is on a Cenote lot with Turtles and Fish and has a large tropical yard. Every private. I purchased it 19 years ago when 5 th. Ave. was a sand Street. The Thompson Hotel is across the Street and rents for +400.00 US with all taxes included. I am 72 now and own a larger Cenote that I want to build on and now must sell to an investor looking for a high ROI. With sound proof windows the noise at night is eliminated. My place will require a small upgrade to get those high rates but having a Cenote helps.

  5. Please be very careful with ROI promises. Many investors with GMB have not gotten their rental income from the in house rental company they contracted with , Koox. After excuses, getting the runaround and basically hiding from the owners they changed rental companies and walked away with our profits. We have no recourse now. Many received nothing for 2018 after promises of 8-13 percent return. They rebranded the same rental company with a different name. Short of filing a lawsuit , most owners walked away and are renting on their own or using a small property management company. I like the condo I bought, but would not trust GMB and be realistic that you will probably have to figure this out how to rent on your own and it is not turnkey. I still love Playa and am actually purchasing another property but will not do business with these companies ever again. The advice given here on reputable agents is very good. But even the agents couldn’t foresee that Koox would not honor the contract and essentially walk away with our profits.

  6. Norma Dillworth // March 10, 2019 at 7:29 AM // Reply

    I have three friends that all bought condos in Playa Del Carmen and each one has a different experience. The one that is doing the best is the one that is advertising it himself but with different websites. It is work but it can pay off. I live in my condo so I don’t worry about roi. I just think about the enjoyment of it for me.

  7. Daniel Porto // April 7, 2019 at 10:22 PM // Reply

    I have always wondered how correct the roi statements were on posters for new buildings. I am looking ti buy somehting in the next year for an investment since I see the rental market strong in the area. Your articles have been helping me along the way through this process. Thanks

  8. Paul Daniels // April 15, 2019 at 2:19 AM // Reply

    This guy really knows his stuff and gives good advice. I have known Sebastian for years and he is pretty spot on with what is goping on with real estate.

  9. Carol Kalcich // May 9, 2019 at 2:34 AM // Reply

    I am in the process buying a studio condo pre-sale 43m.
    Kaab South Beach. Between
    10-15 Ave. And the small airport. Great price,amenties walkable and good management. BUT is it a good enough area? Getting cold feet and ROI.
    Any thoughts, Thanks Carol

    • Mr.Yucatan // May 9, 2019 at 8:32 AM // Reply

      Hello Carol

      That area is developing, albeit slowly. The airport was supposed to close years ago but is still around. There is major opportunity to revitalize that area. We looked at the photos and mock ups of the building. It does look very nice. Here are some thoughts about it. One of the biggest things that we think about is access to the beach. You can walk to Playacar beach, technically from the pier and walk south, to the nicer beach. There is the beach north of the Cozumel ferry pier but this is more locals and not a luxurious as matching to your guest that would rent there. Kaab is near Paso del Carmen for shopping but not near the center of Playa Del Carmen. Most of the more luxury condos are going up near 34th street and 38th. This end of 5th and Playa is developing and getting more of the upper end restaurants. This might be reflected in the price compared to new condos on 34th street area.
      There was one luxury condo building years ago that was in that area. It is on 10th Ave across from the entrance to Phase 1 of Playacar. Paseo Carmen I think is the name. It struggles to rent out since it is a luxury building but in that area. You can search online to see what they look like and what they are asking.

      Overall, real estate is part passion and part practicality. If you are going to be staying there part of the year, this factors into if you like it or not. If it is purely for rental, then it should be purely based on numbers and what that area is attrating now or in the near future.

  10. This is very good advice here! I have seen a lot of people fall in love with Playa and buy blind. They end up with a condo that does not get many renters because it is bland and in a spot where people don’t really want to be. A good realtor is key!!!!

  11. I’m about to buy from a development company that promises 15% ROI for the first 5 years if I also buy their standard furniture package.
    Does that sounds too good to be true?

    • Mr.Yucatan // June 15, 2019 at 12:09 AM // Reply

      Yes this does sound too good to be true. Buying their furniture package should not be the deal maker to guarantee 15% return. Also there are a lot of details as to what that 15 % actually is. Is that before fees? What fees do they charge? It also depends on where you buy also in the Riviera Maya. Not all places are currently giving the same returns. No realtor is going to put in writing a 100% guarantee. No one knows what the market will do and most contracts loosely state up to x% is possible. It is good to work with a realtor that can show you what people are making now and are investors themselves. That is why we recommend certain realtors on our website because they know what they are talking about and put it to use.

  12. Andrew Ninny // July 9, 2019 at 11:15 AM // Reply

    What are your thoughts on the Believe Condo development being made right now?

    • Mr.Yucatan // July 9, 2019 at 4:22 PM // Reply

      Well the website is a real estate company and we are not sure who the developer is and where exactly these condos will be. That is very important for the ROI aspect. The fact that the website you sent is not the best and does not bode well for them already. Some condos that say 5th Avenue are on upper 5th in Colosio. The bottom floor can start cheap but they don’t rent well and neither do the upper floors because the location. That makes a big difference.

  13. Alex Fuentes // July 21, 2019 at 8:39 AM // Reply

    We are looking to invest in Emma & Elissa, three bedroom apartment in third floor, ocean view. What do you think of this property? What would you expect the ROI to be when they are finished, expected end of 2021? Do you think is a good investment?

    • Mr.Yucatan // July 21, 2019 at 9:21 AM // Reply

      This is a very nice looking building that will be going up. The same developers did the Oceana on 28th and that is a nice looking building, although it took a while. We will note that the lot for the building you are looking at was mangrove and there was a protest against the demolition of it. Other developers would not touch the land because of the controversy with it. The building will have views of the ocean with its U shape. It should be noted that there is still land in front of the building. It seems too small and close to the ocean but just next to it is the new It Beach building going up. This will block views of the Elements building behind it. That is just something you might want to consider. A good way to consider ROI is look at a finished building with similar stats. For example we pulled up Airbnb and looked at a week in August. Similar 3 bed units in the area were renting for about $130 a night. This is a slower month in Playa but as we have said, the higher end market has tended to book more in Tulum because the instgramable reputation and more chic location.

  14. Alex Fuentes // July 21, 2019 at 10:22 AM // Reply

    Thank you for the information, what property would be something comparable to Emma & Elissa in Tulum, new ocean front property that would have a good ROI?

    • Mr.Yucatan // July 21, 2019 at 11:44 AM // Reply

      Hello Alex

      We are going to send you an email to your email here. Let us know if you do not receive mail there.

  15. Steve Linder // August 21, 2019 at 12:17 PM // Reply

    I bought in Singular Joy at the corner of 1st and 14th. I bought a one bedroom on the top floor that has a balcony and ocean views. I was wondering what your thoughts are for this unit/location for a rental, if you have any recommendations on a rental management company and any other thoughts you may have about the project, location and rentability.

    • Hello Steve

      The builder of this property has a good reputation and has been in Playa for more than 15 years. That is a good thing. The area has been experiencing more infill in that area but is at a crossroads. There are empty beach front and 12th Street properties nearby that have been on hold for a while. The beaches in that area are also some of the worst when it comes to collecting seaweed. Because the bay like corner, the seaweed really collects from 12th to 16th. There is not much beach nearby for people to visit without having to go to Mamitas or further south, like 10th or 4th street. But, the quality of renters in that building will most likely prefer more the area between the Hyatt and Mamitas for the beach and clubs. The building itself is centrally located. There are however a lot of units for rent and condo units around that area all competing for renters. Newer buildings rent better than older ones, so you have an advantage there.

  16. Linda Sanchez // September 22, 2019 at 4:36 PM // Reply

    I would like to know what is the nicest house that i can buy, For the amount of 150,000.. I will be new to mexico
    and i would like to retire there.

    • Hello Linda

      Are you looking at just the Playa Del Carmen area? Most houses will be in planned communities. The best news is the exchange rate can buy you a house for around 2,500,000 pesos. This will be a nice 2 or 3 bedroom home in a community further back from the beach. If you let us know your time frame and perhaps where you are looking, we could give you some more details.

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