10 Things Every Vacation Homebuyer Should Do Before Buying Playa del Carmen Real Estate
So, you've discovered our fantastic little Mexican Caribbean city. You've spent a few glorious vacations relaxing on the beach, shopping on 5th Ave., exploring the regions mystical cenotes and maybe even diving the world’s second largest reef system. You love the weather, the people, the food, the laid back lifestyle. Now you’re back home and the wheels are turning. You start imagining your perfect vacation home in your perfect vacation destination. Simply out of curiosity… to scratch that itch… you Google “playa del carmen real estate”. Look out! You've taken your first step toward buying a vacation home.
What do you do next? Here are 10 things you should do before buying real estate in Playa del Carmen.
Find the right real estate professional for you
90% of all vacation home-buyers begin their search on the internet and with good reason. The Internet is an excellent source of information for buying a vacation home in Playa del Carmen. Plan to spend a good amount of time looking at various agency websites and their listings then make contact with a few who offer a good inventory of the kind of property you are looking for. Don’t be afraid to ask for referrals. A reputable brokerage will be eager to put you in touch with some of their past clients. Choosing the right Playa del Carmen real estate agent is one of the most important decisions you can make in the home-buying process. That agent will be your eyes and ears on the ground and can be a great resource for little-known information about the area.
Establish your needs and desires
According to the National Association of Realtors, when asked for the reasons for purchasing a second home, the majority of people answered vacation (51%), followed by retirement (18%), investment (16%) and rental income (15%). Regardless of your personal motivation, you will want to consider how your new vacation home will be used and by who. You may only need a one-bedroom bungalow but a two or three bedroom unit will be far more likely to attract renters and will be easier to resell. Consider also whether this is a property you are planning to keep for a long time or turn over in a few years. Right now, you may think you'll keep this tropical retreat all to yourself, but it's wiser to shop as if you're going to rent the place out at some point. In Playa del Carmen, a home's rental potential will absolutely affect its resale value. Also, if you have an eye toward retirement, you will want to be sure the property will suit you in your elder years.
Decide what kind of vacation home is best for you and your family
Are you looking for a stand-alone villa or would a condo suit your needs? The costs and demands of owning a single-family home are different from those of owning a condominium or town-home. Which type serves you best will depend on factors such as cost, location, and up-keep. In Playa del Carmen, condos and some townhouses may require less maintenance, since the common areas of the property outside your unit are governed and maintained by a homeowners association. However, you'll pay for that maintenance in HOA fees and special assessments. Also, if you plan to keep the property for the long term, it's a good idea to consider the age-friendliness of the property. You may want to restrict your search to single level villas, ground floor units or buildings with elevator access.
Determine what you can really afford
Whether or not you consider yourself an investor, you certainly want your vacation home purchase to be a sound financial move. As there are currently no mortgage options for foreigners buying real estate in Mexico, you will need to come with the full amount of the final sale price, plus closing costs. When narrowing down your list of properties make sure your agent is keeping your budget carefully in mind and not showing you properties that will unduly stress you financially or that you have no hope of ever purchasing. If you are unable to come up with a large amount of cash all at once, you may want to limit your search to pre-sale or pre-construction properties that may offer payment plan options.
Consider the real costs of vacation home ownership
Many vacation-home owners complain that the ongoing expenses of the home ended up costing more than they anticipated. You will need to consider property taxes (which you find are very reasonable in Mexico), the cost of your fidecomiso (trust), maintenance, utilities and possibly HOA and/or condo fees. Regardless of whether you plan to rent out your new home, you will need to factor in the cost of a caretaker or property manager to look after your new home in your absence. When you set out to estimate maintenance costs, try to get an idea from another vacation homeowner what it really takes to keep a Playa del Carmen vacation home in good condition. Your real estate agent should be able to introduce you to other people who have already purchased in the same neighborhood or building.
Choose the right location
Even the most exquisite vacation villa or condo won't satisfy anyone's goals if it is in an undesirable location. You won’t enjoy staying there. An investor won’t be able to resell it at a profit. It won’t attract vacation renters and cover its expenses. You may not know the best neighborhoods and most desirable destinations for vacationers coming to the Riviera Maya but your real estate agent will. Once you have narrowed down your choices based on the market and your own personal preferences, your agent can set you up to meet with a professional property manager to help confirm the rentability of a particular condo or villa.
Assess a property’s true rental potential
Some second-home buyers plan to rent out their property long-term with the idea of eventually turning a profit as the property appreciates in value. Others are looking for a vacation home that they can enjoy a few times a year and then rent out to other holiday makers between their visits. Whether a particular property is suitable for long term or vacation rentals is an essential piece of the puzzle when shopping for real estate in Playa del Carmen. Make sure your real estate agent knows exactly how you plan to use your new home before right from the start. An experienced agent will know which properties are the best for you. Your idea of the perfect vacation may mean escaping to a place with no television, no cell phone reception and no one around for miles. But that's generally not what people who rent vacation homes want. Be certain that your agent makes you aware of the location and amenities renters expect.
Meet with a real estate attorney
Chances are this is your first vacation home purchase in a foreign country. Buying real estate in Playa del Carmen is indeed different than in the United States or Canada. Make sure you are well informed about the process before you make an offer on the home of your dreams. An experienced real estate agent will have a list of preferred service providers for you to meet with including a bi-lingual real estate attorney. Meeting with a reputable lawyer and talking through the transaction will help you understand your responsibilities and any possible risks. A good attorney will be able to educate you and put your mind at ease during what may be a stressful time.
Determine your payment options
As there are no mortgages available for foreign buyers investing in Mexico, vacation home-buyers must resort to alternative financing sources to pay for their place in the sun. Where do they get the money? Most second home-buyers utilize a home-equity line of credit drawn on their primary residence as their payment source. Many buyers from the US are converting their conventional IRAs to self-directed IRA’s and using their retirement funds to finance the purchase of their vacation or retirement home. You can also try to borrow the money from your family or close friends. Borrowing money from a close relative or friend will eliminate the interest to pay back on a bank loan. If you do turn to conventional banking to finance the purchase, try not to rely on potential rental income to pay back the loan. While Playa del Carmen is a wildly popular tourist destination, you can never be too sure. Make sure you are able to cover the loan on your own and take any rental income profits as icing on the cake.
Don’t wait too long
It always comes off as a “sales tactic” when we say it but once you have followed the steps to buying a vacation home in Playa del Carmen and identified the home that best suits your needs and desires, don’t wait too long to make an offer. There is nothing more disappointing and often heartbreaking than spending days, weeks and even months searching for the perfect place only to have it snatched out from underneath you. There are a lot of properties for sale in Playa del Carmen but it is likely that the very best deals will be highly sought after. Take your time and make sure you have all the information you need but don’t wait too long to pull the trigger and make an offer. If you have surrounded yourself with the right team of real estate professionals, you will not be sorry!
Michele Kinnon and her husband Rob are the owners of BuyPlaya Real Estate Advisors and FurnitureMEX, both based in Playa del Carmen, Mexico. Michele is a member of Rotary Club of Playa del Carmen Seaside and participated on the founding committee for Taste of Playa, the Riviera Maya’s largest and longest running culinary festival. She also blogs, writes local interest articles and administrates the Riviera Maya Events Calendar. Michele and Rob have lived in Playa del Carmen with their two children since 2004.