Is 5% good enough?

Just this morning I was chatting with a client about a property currently listed for sale in Playa del Carmen.

His questions centered around :
What is the ROI? How much money will I make? Etc.
These are valid and commonly asked questions, for sure.
In my company, we do our best to guide people through the process of choosing a condo with a holistic perspective.
If a client can use the property and enjoy it for part-time use or vacation use and also rent it out to cover the costs of ownership, that is ideal.

So How do I answer the hard-core question of “how much money will I make renting it out on Airbnb / VRBO?

There are sooooo many factors that can affect the net rental income of owners. For example:
How often it is used for personal use, what time of year it is used by owners, world events, local happenings, and the list goes on.

Also, historical use and info on a property is not always a valid question for future income. It can be a helpful tool but does not always tell the whole story. After all, how the previous owner used a property may not reflect at all how a new owner will use it.

Here comes the truth:

In all the spreadsheets I have seen in 20 years of income vs. expenses on rental condos there is a common value.
Generally speaking, an owner can reasonably expect a 5% ROI from vacation rental, with some owners use.
This NET is cash on a cash basis and considers income minus expenses like property management, operations of cleaning and laundry, utility bills HOA expenses, etc.

If you use it more, then the net income decreases, of course.
There are some properties that perform at a higher level and some that perform less than that, affected by things like the management company, the proximity to the beach, the rental reviews, the amenities, and more.

Generally speaking, when you see “ROI” promises of 13% or more, how do you feel? Does it make you want to rush out and buy that thing?

The old adage still holds true.
If it sounds too good to be true….

Talk to us and we will tell you “the truth, the whole truth, and nothing but the truth…”

Investing in a Property in Riviera Maya: Choosing Between Luxurious Condos and Charming Villas

Investing in a property in Riviera Maya offers an exciting opportunity for lifestyle enhancement and potential financial gain through rental income or retirement living. The question that arises is: which option is better suited for you? Should you go for the elegance of beachfront condos or the charm of gated community villas, complete with amenities like golf courses, gyms, trails, multiple pools, and security? With choices that cater to diverse preferences and budgets, let’s explore the factors that can help you make an informed decision.

Exploring Condos: Convenience and Appeal
Many people initially prefer the idea of a condo for its “lock and go” appeal for those who want to visit or live part-time. The market is loaded with condo choices. However, the reality of dealing with homeowner association (HOA) fees, varying personalities, frequent cash calls, and condo regulations can often be a deterrent.

Embracing Homes: Space and Freedom
On the flip side, the idea of owning a home—whether it’s a villa or another type of property—holds its own appeal, being King of your own castle is satisfying. Homes provide more space and the freedom to shape your lifestyle according to your preferences. Currently, the demand for homes in Riviera Maya surpasses the supply, making it an appealing investment choice. Additionally, the demand for rental homes remains robust, making properties a potentially rewarding investment avenue.

Dispelling Myths: Condos vs. Homes
Investors often have the misguided belief that a condo is a) less work and b) less expensive to maintain.
Both are not true. In either case, if you are not living in the property full time, you will need a property manager while you are gone. Your maintenance fee in a condo equals about the same $$ as your own pool and gardener in a house, which your property manager hires for you.

Also, the cash calls for condos for fixes not related to your own condo can be frustrating, especially if they are due to poor quality or bad installation.

On a good note, the level of sophistication of service in Riviera Maya for 2nd homeowners is exceptional, making your life here easier.

Navigating the Real Estate Journey: Expert Assistance

Keep in mind navigating the local real estate market and understanding legal considerations is essential. Consulting with a reputable local real estate agent and a legal expert can help smooth the buying process, ensuring that you can fully embrace the magic of Riviera Maya for years to come. That is where we step in to guide you through these choices at Living Riviera Maya. Feel free to contact us for help.

There’s more to it than you think!

With diverse coastal communities in our bustling seaside area, it’s no wonder that property from Playa del Carmen to Tulum has consistently been desirable.
Riviera Maya, including Tulum, Playa del Carmen, Akumal, and Puerto Aventuras spans 73 miles. The area is home to approximately ten to twenty coastal communities that form part of the named cities. In regions like this, where small beach and jungle areas are abundant, and vibrant cities are attractive, luxury buyers have the unique opportunity to acquire unique property.
Many of our investors buyers inquire about buying land in a gated community. Based on my experience, here are some of the main considerations for agents and clients to remember.

Everyone can embrace the coastal lifestyle

There’s no singular profile fitting coastal properties in Riviera Maya. Anyone who wants peace, privacy, and a sense of perpetual vacation, or people who want lots of social activities can find an ideal home here. This includes if you are interested in the possibility of building multiple homes for a family compound or an exclusive retreat to entertain friends, or a city condo close to the beach and close to the gym. Those who love nature and yearn for a serene, pristine environment near water will enjoy some off-grid communities, as will anyone who has a passion for walking beaches, or nautical pastimes like sailing and yachting. If you are into such hobbies, make sure to take a closer look at  Puerto Aventuras.

But no matter who you are, there are some factors that I like to bring to your attention before you invest.

Location and Accessibility:
Consider the location of the community in relation to your desired amenities and attractions. Evaluate the proximity to beaches, restaurants, shopping centers, healthcare facilities, and entertainment options. Additionally, assess the accessibility to major transportation hubs such as airports and highways for convenient travel.

Community Amenities and Services:
Explore the range of amenities and services offered within the gated community. Look for features like swimming pools, fitness centers, sports facilities, clubhouse, spa, and concierge services. Assess whether these amenities align with your lifestyle preferences and enhance your living experience.

Homeowners Association (HOA) Rules and Fees:
Understand the rules and regulations set by the homeowners association governing the gated community. These rules can cover various aspects such as architectural guidelines, landscaping requirements, pet policies, noise restrictions, and rental policies. Additionally, inquire about the HOA fees and understand what they cover, as they contribute to the maintenance and management of the community.

Resale and Rental Potential:
Consider the resale and rental potential of the property within the gated community. Investigate the market trends, demand, and rental regulations in the area. Understanding the potential return on investment can be valuable if you plan to rent out the property when you’re not using it.

Environmental Considerations:
Riviera Maya’s natural beauty is a significant draw for many buyers. Assess the community’s commitment to sustainability, environmental conservation, and preservation of natural resources. Look for initiatives like eco-friendly infrastructure, waste management systems, and protection of local flora and fauna.

Remember, it’s crucial to conduct thorough due diligence! Contact us, we can show you any property in Riviera Maya.

Taking these considerations into account will help you make an informed choice. Let LivingRivieraMaya.com  help find the perfect property in Riviera Maya’s coastal communities.

Hey there!
Selling your home is no small feat, and it’s totally understandable if you’re feeling a bit overwhelmed. Let’s face it, most of us aren’t real estate experts who have all the nitty-gritty knowledge about the selling process, especially when it comes to Mexico and its unique nuances. But fret not! We’ve got some fantastic news for you: We’re here to lend a helping hand.

In this article, we’ll dive into the ten most common mistakes that home sellers make and demystify each one of them. By the time we’re done, you’ll be armed with the knowledge you need to tackle this endeavor like a pro. So, let’s get started!

By the way, if you are thinking of selling, contact us here:

The 10 Biggest Home-Selling Mistakes

1. Overlooking Home-Selling Costs
2. Selling Without the Guidance of an Agent
3. Entrusting Your Sale to an Inexperienced Agent
4. Mispricing Your Home
5. Concealing Significant Repairs
6. Moving to a Home Beyond Your Financial Means
7. Neglecting Home Staging
8. Utilizing Poor Listing Photos
9. Personalizing Low Offers
10. Restricting Showings

 

Mistake 1: Overlooking Home-Selling Costs

When it comes to selling your home, there are obvious expenses like real estate commissions and potential capital gains tax. However, there are some lesser-known costs that can catch you off guard if you’re not prepared.

Let’s break them down for you:

• Agent commissions: Typically, sellers are responsible for covering the commissions of both their listing agent and the buyer’s agent. This usually amounts to around 6% to 7% of your home’s sale price. For instance, if your home sells for $400,000, you can expect approximately $24,000 to go towards agent commissions.
• Buyer agent bonus: Many sellers have found success by offering a bonus to the buyer’s agent. This bonus, ranging from $2,000 to $5,000 USD, can incentivize agents to bring potential buyers your way.
• Capital gains tax: If your property has experienced appreciation in value since its purchase, you may be liable for capital gains tax. It’s important to note that the price shown on your title may differ from the actual amount you paid, especially considering factors like currency devaluation over time, Talk to us first. Seeking advice from a notario can help assess your capital gains tax and explore strategies to minimize it. The tax, known as ISR, starts at 36% and can be reduced based on various factors. Contact us for more information.
• Closing costs: Apart from the significant expenses of capital gains tax and commissions, sellers typically incur additional closing costs, ranging from 1% to 2% of the home’s price. These costs may include attorney fees, property certificates of no debt, fideicomiso cancellation fees, POA ratification, and change of land use fees charged by the property tax office. For more details, feel free to reach out to us.
• Marketing materials and photos: To showcase your property effectively, you may consider refreshing certain rooms with a fresh coat of paint or enhancing your home’s landscaping. Additionally, investing in professional photography services for high-quality pictures, drone shots, and videos can make a significant impact. On average, these expenses amount to around $400 to $500 USD for a three-bedroom home.
• Home inspection: Buyers often request a home inspection, so it’s essential to address any known issues beforehand or be transparent about them. Taking care of minor repairs can potentially lead to a higher closing price. Alternatively, if you decide not to make repairs, it’s crucial to inform potential buyers about the existing conditions.
• Seller concessions: Offering some extra perks to buyers, such as including your washer and dryer or other coveted items, can sweeten the deal and make it more enticing.

When you add up all these expenses, it’s understandable to feel overwhelmed if you’re not adequately prepared. But don’t worry! A knowledgeable real estate agent understands how to navigate the home-selling process with these costs in mind and can guide you accordingly.

Mistake 2: Selling Without the Guidance of an Agent

Here’s a biggie: opting to sell your home without the assistance of a real estate agent, also known as going the For Sale by Owner (FSBO) route, can be a colossal mistake. Trying to handle the entire selling process on your own can quickly become a major headache. You might find yourself skipping crucial steps, struggling with complex paperwork, and missing out on the opportunity to maximize your earnings.

In fact, data from the National Association of Realtors (NAR) in 2022 revealed that the typical FSBO home sold for $225,000, while homes sold with the help of an agent fetched over $345,000. That’s a staggering $120,000 difference! Although we acknowledge that the statistics are from the US market, it’s reasonable to infer a similar tendency. And that $120,000 far outweighs the cost of a 3% seller’s agent commission, which would only amount to $10,350 on a $345,000 sale. Additionally, even if you choose the FSBO route, you’ll still need to pay the buyer’s agent’s commission.

Do you possess the best contacts for reducing capital gains tax? We do, thanks to our years of experience in the field. Are you well-versed in all the necessary documents required for a successful closing and how to obtain them? That’s our area of expertise. Do you know how to market your property effectively to gain maximum exposure and achieve a swift sale? Can you secure a prominent spot on the first page of Google search results? That’s precisely what we can offer.

Are you prepared to navigate the challenges posed by inexperienced and uneducated agents throughout the duration of your FSBO journey? We’re well-equipped to handle the hard work involved in closing a deal, along with its twists and turns.

Save yourself the hassle of managing everything solo and instead, hire a competent agent. However, keep in mind that you don’t just want any agent—you want to work with a truly exceptional one. That leads us to our next mistake.

Mistake 3: Entrusting Your Sale to an Inexperienced Agent

While it may seem like a kind gesture to involve a friend or family member in selling your house, relying on an inexperienced agent is a critical mistake. Your home is your most significant asset, and it deserves to be handled by a seasoned professional with at least three years of full-time experience, someone who is truly an expert in your local market. It’s essential to prioritize expertise and knowledge rather than simply relying on personal connections, such as your third cousin twice removed who recently obtained a real estate license as a side gig.

Now, you might be wondering how to find an agent who fits the bill. Well, look no further because we’ve got you covered! We possess the expertise, experience, and deep understanding of your local market that you need. So, you can rest assured that your home sale will be in the hands of a reliable and knowledgeable professional.

Mistake 4: Mispricing Your Home

Determining the right price for your home can be a tricky task. Setting the price too low means potentially missing out on significant profit, while setting it too high can deter serious buyers or lead to prolonged listing periods before eventually having to lower the price.

This consideration is particularly crucial in the context of Riviera Maya, where second-home sales predominantly involve cash transactions.

It’s important not to rely solely on Internet estimates or let emotions dictate the pricing decision. Instead, consult your agent for a historical comparison to understand the selling prices of similar homes in your area. Setting the correct price from the beginning can make all the difference in terms of the speed of your home sale and the amount of money you ultimately receive at the closing table. Trusting your agent’s expertise in pricing will help ensure a successful outcome.

Mistake 5: Concealing Significant Repairs

Ladies and gentlemen, let’s be clear: there’s absolutely no reason to be dishonest and conceal important information when listing your house. Not only is it a reflection of low character and zero integrity, but buyers will eventually discover any hidden issues. Thinking that they won’t notice that roof leak or pest problem is a mistake. Once your buyer proceeds with a home inspection after accepting their offer, any problems you’ve kept hidden will inevitably come to light. Consequently, you risk losing the sale altogether.

It’s best to be transparent from the beginning and save everyone involved, including yourself, the time and headache. Honesty is key when it comes to showcasing your property, ensuring a smoother and more successful transaction for all parties involved.

Mistake 6: Moving to a Home Beyond Your Financial Means

One of the critical mistakes to avoid is moving into a home that you cannot afford. It’s essential to be realistic about your financial situation and carefully evaluate your budget before making such a significant decision.

While it might be tempting to stretch your budget to purchase a larger or more luxurious property, it can lead to financial strain and potential hardships down the line. It’s crucial to consider not only the mortgage payments but also the associated costs of homeownership, such as property taxes, insurance, maintenance, and utilities. Failing to account for these expenses can put you in a precarious financial position.

Ensure that you assess your financial capabilities thoroughly and work with a reputable lender or financial advisor to determine a comfortable and sustainable budget for your new home. By doing so, you can avoid the stress and potential financial pitfalls that come with moving into a property beyond your means.

Mistake 7: Neglecting Home Staging

Underestimating the significance of home staging is a major mistake when it comes to selling your home. Why is staging important? Well, it can significantly impact the speed of your sale and the final sale price. In fact, according to reports, 48% of seller’s agents state that staging reduces the time a home spends on the market, while 44% of agents believe that staging can lead to increased offers by 1-5%.

Therefore, it’s crucial not to present potential buyers with an empty, cluttered, or poorly lit house. Instead, keep your furniture in place and arrange it in an appealing manner. Clear the clutter and ensure that every room is well-lit, creating an inviting atmosphere for visitors.

Additionally, consider giving rooms a fresh coat of paint where necessary. While your daughter may have loved her purple bedroom, potential buyers might not share the same preference for pastel hues. Investing in professional painting services or taking on the task yourself is a small investment that can yield significant returns, potentially translating into thousands of extra dollars in the final sale price.

Remember, staging your home appropriately can contribute to a faster sale and attract higher offers, making it a crucial step in the selling process.

Mistake 8: Utilizing Poor Listing Photos

In today’s digital age, potential buyers often begin their home search from the comfort of their couch. In fact, a staggering 95% of buyers use the Internet as their primary tool for searching for homes. So, if your online listing photos appear subpar and resemble snapshots taken with a dated flip phone, you risk losing buyer interest even before they have a chance to visit your property in person.

That’s why it is crucial to collaborate with an experienced professional who understands how to showcase your home effectively through captivating photographs. You’d be amazed at the difference that proper lighting techniques and the use of wide-angle lenses can make in capturing the essence of your home. Investing in high-quality listing photos can generate increased buyer interest and engagement, significantly improving your chances of attracting potential buyers to your property.

Remember, the visual presentation of your home plays a vital role in capturing the attention of online buyers, so ensure that your listing photos make your home shine and leave a lasting impression.

Mistake 9: Personalizing Low Offers

It’s important to keep in mind that a buyer’s offer should not be taken as a personal reflection of their opinion about your home or your abilities as a homeowner. If someone makes an offer on your property, it’s a clear indication that they are interested in your home. Remember, selling your home is a business transaction, and emotions should be kept in check.

Even if the initial offer is lower than your expectations, it’s crucial not to take it personally or let emotions guide your response. Instead, view it as an opportunity to engage in negotiation. Respond with a counteroffer that aligns with your desired terms. If the potential buyer is genuinely interested, they may improve their offer in response to the negotiation process.

Maintaining a business mindset throughout the negotiation process allows you to make rational decisions based on your goals and market conditions. Avoid taking low offers personally and remain focused on finding common ground that benefits both parties involved.

Mistake 10: Restricting Showings

We understand that preparing your home for last-minute showings and finding alternative accommodations during that time can be a major inconvenience, especially if you have young children. However, limiting showings to specific times, such as weekends or certain days of the week, can potentially hinder your chances of attracting interested buyers. It’s crucial to be flexible and accommodating, even if it means adjusting your schedule or dealing with minor inconveniences like showings during nap times.

Remember, allowing showings is a temporary inconvenience that can lead to a successful sale. When showings are scheduled, it’s best to let your agent take charge and step aside. Your presence during showings can create an uncomfortable atmosphere for potential buyers and hinder their ability to envision themselves living in the space.

By granting flexibility in scheduling and trusting your agent to handle showings, you increase the likelihood of attracting serious buyers and facilitating a smooth and successful selling process. Remember, the goal is to make your home as accessible as possible to maximize its exposure and attract potential buyers.

Selling Your Home Wisely

By now, you have gained valuable insights into the most significant mistakes that sellers often make when selling their homes. It’s important to recognize that these mistakes can have substantial financial implications. However, armed with this knowledge, you now have the power to steer clear of these pitfalls and chart a successful path forward in selling your home.

Avoiding these common mistakes is key to ensuring a smooth and profitable home-selling experience. Remember to consider factors such as understanding home-selling costs, hiring a qualified real estate agent, pricing your home accurately, being transparent about repairs, making wise financial decisions, investing in staging and professional listing photos, and maintaining a business mindset during negotiations. Additionally, remaining flexible with showings and trusting your agent’s expertise can contribute to a successful sale.

With this newfound understanding, you are equipped to navigate the home-selling process with confidence and make informed decisions that align with your goals. By sidestepping these common mistakes, you increase your chances of achieving a successful sale and maximizing your returns.

So, take charge, be proactive, and sell your home the smart way, avoiding these potential pitfalls along the journey. Good luck, and may your home-selling endeavor be a rewarding and prosperous one!