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 an 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.
What is 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 and one of the good research tools investors use for real estate in the Riviera Maya. Sebastian is also featured in our article about the buying process in Mexico for property.
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.
Sebastian 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.
Our video about real estate in Playa Del Carmen
If you liked the information above, you might also like our rather lengthy video about real estate in Playa Del Carmen. The video covers a lot of topics that our readers ask. We also asked investors, like Sebastian, what they look for when they go to buy an investment property in the area so they can get good ROI. We hope hope you find this video helpful.
Our video about beachfront real estate
Since many people dream about a beachfront property, we made this video taking about possibilities in the Playa Del Carmen area and the Riviera Maya. As you might expect, the ROI for beachfront properties is usually much higher on average than other types of properties.
One more article that is good to look at is how to set up your investment condo with furniture. This is an important step to make sure you get more people renting more often.
About The Author
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.
Hello Yuri
These real estate agents are into sales only and do not do rentals.
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.
Sebastian really knows what he is speaking about. He has given me really good advice for investing in the area and it proves right.
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.
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.
Thank you for your insights and comments.
Hello can you please give more insight about it?
Please feel free to write to me at [email protected]
Hi, I bought a condo from GMB and a lot of my neighbors are having problems with the unfinished building. Could you please share your experience with us?
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.
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
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.
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
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.
KAAB is a nice project and pool is awesome. ROI will not be amazing because a tourist won’t want to stay so far from a nice beach. You might gross 3% and that is paltry to say the least. It is just to weird of location. Hence the price.
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!!!!
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?
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.
What are your thoughts on the Believe Condo development being made right now?
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.
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?
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.
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?
Hello Alex
We are going to send you an email to your email here. Let us know if you do not receive mail there.
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.
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.
Hello,
Would like to know What is your insight for ROI and forecast with GMB in tulum, particularly Tuk tukum
Hello Alejandro
We were just next to that building and it seems to be coming along. It is central in Tulum and that is a good thing. However, your question is loaded since it depends on how the management is set up. Is it going to be run like a hotel or can individual owners rent their units? Are you buying a furniture package? What are the final amenities going to be? All of these things will affect the rentability of the place. If you want to talk to a person who knows a lot about Tulum and is an investor, we have an article about Tulum real estate and a link to email Sebastian who is in the video. We hope this helps you. https://everythingplayadelcarmen.com/tulum-real-estate-market/
They are not going no allow owners to rent on their own, they are hiring a hotel management – sercotel- whose ownership is in spain and owns KLR, it’s furnished and decoration packages have to be bought to them, they are building several restaurants, an open air theater, an art walk, and many boutiques. They are even buying electric eco-friendly mopeds.
I have bout several condos over the years and sold some as they got older and did not rent as well. I have been pretty lucky you might say or just made good moves to get good ROI. In general I would say I have gotten about 8-11% returns.
I bought a condo in Tulum last year. It was renting very well and I was concerned about Covid and how things would go this year. I was lucky I got a long term rental for 6 months but now things are really busy in Tulum and I am doing short term rentals. I just booked a month and a half for $10,000 USD, so I would consider myself lucky but many of the same units in the building are also rented. I must say I am pleased with my purchase.
Which condo development? How many bedrooms?
Great insight here. I’ve been thinking about buying in playa del Carmen and in fact two properties were mentioned above: KAAB and Emma & Elsa. (Those two buildings in fact will have pools that face the sea with unobstructed views, albeit KAAB will be much further back. Another building 5 years old called Papaya 15 also has a rooftop pool with a similar view and enjoyable pool area.
What are your thoughts on a unit at Cruz con Mar? It is directly behind mamitas. Great rooftop but UNFUNCTIONAL pool view and cut up design. Units are done nice. Parking is first come but plenty of spots for long stayers.
Would you prefer 38th street to cruz con mar location and or would you prefer Tulum. I know Tulum has a great hippie, eco friendly, conservationists design there, but it is another 45 minutes away making a trip there from Cancun even longer. And quite frankly there are no place I know of that are near the beach on the main strip where the resorts are. But all I hear is Tulum this Tulum that. I know tulum, what am I missing that is making it so desirable? If you can’t left units walking distance of less than 300 meters to the beach then why buy there?
Hello Sean
Playa and Tulum have continues to develop as separate markets. What Playa has in beach access, Tulum has chic and more eco friendly upscale. If you are investing, Tulum in general is giving better returns on investments now. Right now, Tulum is very busy with tourist and has been much more than Playa. We have a whole article here about it. https://everythingplayadelcarmen.com/why-tulum-is-recovering-faster-than-many-tourist-destinations/ People that rent in Tulum don’t really mind so much biking to the beach. Playa is more of a first or second time visitor and people that like more of a cosmopolitan place with more options. Tulum is a richer tourist market. You might want to talk to Sebastian who helped write this article on ROI. He not only invests in properties but also knows both markets well.
Hi I am interested in buying a good investment property in PDC,I am looking to work with a good realtor in the area who will advise me to buy the best ROI property, OCEAN VIEWS AND OR OCEANFRONT. i SHOULD BE IN Mexico IN COUPLE OF WEEKS
Hello Michelle
We don’t sell real estate but we do recommended some good realtors that know about investment properties. We will forward your email to one of them so you can be in contact with you. We hope you find something you like.
Hi, I am looking for a small property as a vacation home, some rental ability would be great, at least to cover cost. I have become enamored with Akumal, is this area good for investing? I’ll be visiting there in a few months. Still trying to figure out potential financing options, I have excellent credit but not much loose cash. Thanks for any advice.
Hello Laura
Akumal is a more expensive market since there is limited space there and more upscale real estate. Usually the larger developments have some financing and payment plans but not so much individual sellers. Credit in another country does not equal much in Mexico because there is a lot of risk. Have you reached out to Sebastian the realtor who has an email button here? He can help potential buyers look for properties that include financing.
Muchos Gracias for your article. Awesome. I am doing some research for an upcoming purchase and want to figure out the details.
Hello! What are your insights on investing on a condo unit on 5th x 42nd? Is this a good area? Thank you!
Hello Eris
Playa is moving north and this area is getting more infill. We remember when CTM was the end of Playa and nobody crossed 38th. Now there are businesses past 38th on 5th Avenue. The area is decent and less expensive than 10th ave and 38th Street area. The one thing to look at is the quality of the building and services. In general, people like to rent in larger buildings with more services. Three bedrooms are very good to have because most condos for rent at one and two bedrooms. How the management is set up is also very important if you are going to be renting it out. Are you working with a realtor now or would you like some recommendations?
Hello I’m interested in find a place in playa del carmen whit private beach, I was looking to purchasing a condo in mareaazul but the race the price $100.000 more in a weekend, I love the place but that disappointed me. I’m interested in three bedrooms.
Hello Luisa
There are a few places along the Riviera Maya that are on the beach and are more excluded. There is no such thing as private beach because all beaches are public in Mexico, however access to the beaches are limited by landowners. A good person to ask is Sebastian who wrote this article. We can have him contact you and let you know about options.
I am looking for a beach front Condo to invest.
Are there any promising beach front Condos with Pre Sale prices remaining in Playa? It appears the better ROI is 38th ad 10th street?
Hello Art
There are some new projects going to be coming online soon as a whole area is getting new development. The best person to ask about this is Sebastian who wrote this article and is a real estate agent who knows the market well. You can email him from the article with the email button.