Many investors around the world not only look to the Riviera Maya to invest in a vacation property, but to take advantage of the high demand and influx of new tourists who arrive at the destination (without forgetting the high percentage of repeaters) throughout the year, more than 13.5 million visitors in the state of Quintana Roo, according to the Tourism Indicators of the end of the year 2021 of the SEDETUR (Ministry of Tourism and that you can see by clicking here), in order to enjoy the hundreds of tourist attractions offered by the region and at the same time, enter the business of vacation rentals, opening a range of interesting opportunities: Invest, vacation, increase equity, rent and generate income.

This option has had a boom since 2008 thanks to the birth of platforms such as Airbnb, VRBO, etc. making any owner to rent their property regardless of the type of property (apartment, house, hostel, townhouse, etc.) and start earning income.

But to all this, how do vacation rentals work? and How can maximum income be generated?

The host:

He is in charge of keeping the place in good condition, offering cleaning and maintenance services to the property, in some cases including breakfast.

The host may or may not personally receive his tenants, may leave the key in a strategic place or give access to the property through an automated system of opening by code (Electronic plate, fingerprint) or do it through a third party (Co-host), which can be a person who is dedicated to vacation rentals or, a property management company that has a comprehensive system and larger structure; with guest service, transportation services, concierge, etc. and at the same time offer services to the host such as: property payment, payment of services, insurance, etc. (in addition to the common services offered by these companies such as: administration services, maintenance, cleaning, logistics, marketing and use of platforms such as Airbnb).

The host has full control of the property as well as decision making, for example, he decides the availability of his property in terms of dates, times and spaces, this means that you can rent it on the days and / or seasons you want, receive guests at the times you prefer and even choose to rent all the property or restrict the spaces to only one room and / or limit the use of common areas.

However, the host may choose to hire a property management company, and some of these aim to generate the maximum return on investment through vacation rentals, so they can limit the host from control, use and availability, in general, there are few companies that limit the host to use their property only 15 days a year in order to get the most out of the rents. However, the vast majority of condo-hotel companies, do not limit the control, use and availability to the host (making it clear to the investor that the return on investment will be lower), the advantage is that the owner can use and dispose of the property for longer periods (as is the case of expatriates around the world, mostly from the U.S.A. and Canada).

Finally, the host can decide in advance whether or not to approve the guest request based on their rating on the platform used, messages, emails and / or chats that they can exchange before closing any agreement.

Administration:

It involves the control of rates, maintenance, cleaning, guest service, marketing and advertising, service payments, administration and general logistics of the property, even, some condo-hotel management companies (in the Riviera Maya) have agreements with beach clubs so that their tenants have a guaranteed place and enjoy the Caribbean beaches.

In the Riviera Maya, as well as in many parts of the world, properties can be managed personally by the owner or through a company dedicated to the service of vacation rentals, taking away from the owner enough headaches and stress, especially giving him more time for other important matters.

And precisely this option makes the difference between an investor and a person who owns a vacation rental property who personally manages their property. Why?

Because the host who personally leads the management of the property devotes his time and energy to routine tasks, while the investor dedicates that time and energy to educate himself and know where to reinvest.

However, in the latter case there is a small difference in favor of the host who personally leads the administration of the place, his ROI (return on investment) is slightly higher (In general numbers, in the Riviera Maya the annual ROI goes from 8% to 12% with a property management company, on the other side of the coin, without a condo-hotel company, the annual ROI ranges from 10% to 15%). There are 2 different investor profiles, one is not better than the other everything depends on your objectives. Are you an investor or are you someone dedicated to the business of vacation rentals? There are no bad answers.

Usually in the Riviera Maya the commissions charged by condo-hotel management companies range from 20% to 35% of gross income, in return, they are responsible for the management and organization of the property so its rented as much time as possible or the time that the owner wants, to promote and publish the property on channels and platforms such as Airbnb, even, these companies can take care of making inherent payments of the property (water, electricity, gas, internet, T.V. etc).

When working from a platform like Airbnb or VRBO the host receives payment when guests arrive, and it is done through a bank transfer, direct deposit or PayPal, so the host almost does not deal directly with money.

When the management is through a vacation rental company, the host receives monthly his earnings through bank transfer or deposit along with a detailed report of what happened in his property that month (rates applied, nights occupied, number of tenants, availability for the next 6 months, etc).

In this last case (hiring a company to manage the property), the owner receives his net income from vacation rentals, on the other hand, when the administration is personal, after platforms such as Airbnb transfer the profits to the owner, these income is gross, the owner still has to make payments for services (water, electricity, gas, internet, T.V. maintenance, cleaning services, property, etc.).

So how to choose the best property management company?

It all depends, if you want to maximize your profits or you want a combination between using the property for long periods and renting it when you do not use it.

The best property management companies that generate the best investment returns are those that are not limited to publishing the property on Airbnb or VRBO, there are condo-hotel companies that in addition to being present on the platforms mentioned above, are also present in platforms and hotel portals and travel agencies in Europe, Asia and even parts of Africa. There are few property management companies that have ties and connections with hotel and tourism companies to enlarge and take advantage of tourist flows from around the world, having the property occupied for more days, generating greater returns on investment.

Would you like to know which are the best condo-hotel companies for your property? Ask me, leave me your details in the “Contact” section to contact you.

Insurance:

Investing in a property to rent has been a very juicy and stable business with excellent returns if it is managed in the right way, however, as any property, it can suffer damage therefore it would lose its value (surplus value) and would stop generating income (less vacation rental), which makes it fundamental and almost mandatory to have some protection system for real estate (Insurance) and with greater reason in the Riviera Maya, an area prone to hurricanes and storms.

Some property management companies include it, others do not, that is the least, the important thing is to hire some insurance to protect your assets. In the case of managing rents through a platform such as Airbnb, you can opt for Airbnb accident damage insurance, where the host is covered in the event of a mishap or event.

In conclusion:

The business of vacation rentals is a business with very good and juicy returns, as long as the property is managed correctly and that the property is in a tourist area or with a lot of influx of people.

One of the main benefits of investing in real estate in the Riviera Maya in order to get into the vacation rental business, is that there are several ways to get the most out of the property:

+ Zero inflation.

+ Opportunity to invest in pre-sale and save up to 30% of the value of the property.

+ Vacation rentals generate liquid income.

+ Nightly rates in the Riviera Maya are handled in dollars, so there is an exchange rate difference in favor of the investor.

+ You can use the property to vacation whenever you want.

+ You grow your wealth.

+ Destination where occupancy is increasing. In 2022 it has increased up to 35% (in Riviera Maya which includes Playa del Carmen, Tulum and Puerto Aventuras) compared to 2021 according to the hotel occupancy data of SEDETUR (hotel occupancy link in the caption).  

+ The surplus value increases with the passage of time (below I leave a table of the added value of the last quarter of 2021 made by the Federal Mortgage Society of Mexico, attached link to the full article in the caption) – In first place is the state of Quintana Roo with 12%.

In addition:

+ The real estate industry is more stable and profitable.

+ Increase in visitors in the Riviera Maya according to the SEDETUR report (2022 has grown by 70% more compared to 2021, pages 6, 7 and 8, full report link by clicking here. )

+ Unique place in the world with hundreds of tourist, culinary, cultural, sports, archaeological, adventure, sun and beach attractions, and much more.

+ Projects by the government that will connect the Riviera Maya with the world (Tulum International Airport 2023, and interconnecting the Mayan region, as we talked about earlier in our article The Mayan train and the benefits in real estate for the Riviera Maya).

If you are interested in investing to rent and take advantage of the points mentioned above and get the most out of a property in the Riviera Maya, leave your details in the contact section to contact you and help you find the ideal property you are looking for and adapts to your investment objectives.

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