Investing in an apartment or second vacation home is an alternative to generate passive income safely, vacation properties have increased their popularity thanks to the tendency of people to travel in short vacation periods in order to get out of their routine, so the option of investing in a vacation property is a good idea, In addition, it will positively impact your finances in the short, medium and long term.
As mentioned in the e-book How to invest in real estate? A beginner’s guide, investing in real estate is one of the safest ways to protect your finances from the changing economy and inflation, and it represents a safe business model when growing your money, even in times of crisis.
In this article you will discover the main advantages of investing in properties that have the purpose of functioning as an apartment or holiday home.
1.- It is a good investment in the short, medium and long term.
Generally, real estate has results in the medium and long term, however, when you invest in a second house or vacation apartment, you will begin to see short-term results thanks to the vacation rentals derived from the property, that is, monthly you will be generating liquidity, best of all is that it gives you the opportunity to have a house or vacation apartment which you can use whenever you want.
In the medium and long term: we are talking about that a property over the years will increase its value thanks to the added value, so it is an excellent investment on its own, of course, as long as the area where the property is located has an affordable market, where the location has a lot of tourist influx throughout the year, being a perfect example of this: “The Riviera Maya”; the important point is that, if you allow your house or apartment to “mature” at least 4-5 years and then sell the property, you will have earned more than 50% in added value (following the case in which you decide to invest in Riviera Maya), adding another 50% of liquidity from the vacation rental income (ROI from vacation rental in Riviera Maya goes from 8% to 12% annually).
Do not forget that the added value depends on many other factors, such as location, age of the property, connectivity and access, amenities, security of the area, etc. so it is always smarter to be guided by experts in the field and avoid bad experiences, legal problems, unexpected expenses or that the investment in its entirety is not profitable.
2.- Increase in the demand for holiday homes and apartments.
Vacation homes and / or apartments are an investment model that is not new, however, they have had a huge increase in recent years thanks to technology and platforms such as Airbnb, VRBO, among many others; In addition, they offer a different type of accommodation than hotels, more private and with more freedom.
A specific example of the increase in vacation properties is in Tulum, one of the many reasons for the real estate boom in this area is because the rules of urbanization of the town and the government, they do not allow large hotel chains to build the so accustomed big hotel complexes that are in Cancun, Cozumel and Playa del Carmen; an example of the urbanization rules is that they do not allow constructions of heights greater than 12 meters (3 levels), it is a very eco-friendly and sustainable place (solar panels, biodigesters rainwater harvesting, use of construction materials from the region), build in only 70% of the land, and leave the rest as green areas; so the large hotel chains do not see Tulum as a favorable destination, however, for the above mentioned it is a profitable destination for other types of investments and investors: residential real estate investments type condo-hotel, that is, condominiums, apartments or holiday homes with amenities (as hotel), beach access, etc.
Hotel chains have maintained their levels of visits, however, travelers see vacation rentals (Airbnb, VRBO) as an opportunity to make their stay different, more private, interesting, unique and with more freedom.
3.- Security in times of crisis.
In addition to the fact that investing in a property does not give you problems with inflation (and if it is in a good location it will appreciate over time), it becomes your asset, a second property that you can rent or sell means great potential as an investor.
Crises generate uncertainty and many doubts, however, the real estate industry during the pandemic, has remained stable in Mexico, although definitely the pandemic brought an economic crisis, it did not bring any real estate crisis in México, and although it may seem risky to invest in times of crisis, it is always a good time to invest in real estate, as mentioned before, it is much safer and your money will be safe.
Investing in areas of high surplus value, in a privileged location, with a high flow of tourists (such as the Riviera Maya), will protect you in times of crisis, since its value (vacation rental market) and surplus value will continue to rise, you will have liquidity due to the flow of tourists (income from vacation rentals still in pandemic).
Destinations such as the Riviera Maya reported occupancy levels above 81% in 2019 and 65% in 2020 (even in pandemic there was quite a tourist influx), so if your purpose is to invest in an apartment or vacation home, it is highly recommended to invest in destinations like Riviera Maya, simply by its occupation you can have an idea of your profits and that it is a much more stable industry to invest and generate passive income than any other, even in times of crisis, in the article “5 reasons to invest in Riviera Maya” you will find more relevant information about the benefits and leverage you can have if you invest in the Riviera Maya.
Without a doubt, vacation real estate investment is safer and more stable than many other industries and business models, since it guarantees that your money grows constantly, you generate income when you are sleeping, you ensure your future, your financial freedom, your wealth and your family.
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