Top 10 Mexican Airbnb Markets to Invest

A Caribbean climate is on many people's bucket list of places to live. Well, the reason is obvious! Who wouldn't want beautiful, sand-covered beaches and plenty of sunshine throughout the year, especially if you live in a region with frigid winters? In addition, travel can become a new adventure, and discovering a community with a vast and vibrant cultural heritage is an idea you don't want to turn down.

The Top Ten Mexican Airbnb Markets To Invest:

1. San Cristobal
2. Oaxaca
3. Guadalajara
4. Puerto Vallarta
5. Tulum
6. San Miguel de Allende
7. Merida
8. Playa Del Carmen
9. Cancun
10. Puerto Peñasco

The Mexican Airbnb market is the best place to look into for your vacation home rentals if you wish to add an alternative investment to your portfolio that provides ongoing return on investment (ROI). One of the profitable ways to invest money in Mexico is through vacation rental homes that provide investment income. Here's why.

How Are Airbnb Investments In Mexico Beneficial?

The benefits of investing in Mexico are numerous, especially since the country has presented itself as a country where foreign investment and real estate investment are on the rise. A great deal is unknown about the cinematic regions of the country, where it seems the desert dominates the landscape. In most propaganda, there is no mention of the jungle vegetation, large rivers, lakes, and seas that make up the great ecosystem of the country. Considering its beautiful beaches, archaeological sites, gastronomy, and natural monuments, Mexico is an ideal investment destination. With its privileged location, it is also one of the most visited tourist destinations.

1. Strong and growing economy
2. Strategic location- close to one of the world's largest economies
3. Beautiful beaches
4. Lots of history, culture, and charm
5. Tasty authentic Mexican cuisine
6. Vast natural areas with streams, forests, deserts, and mountains
7. Growing tourism sector
8. One of the world's top tourist destinations

Forbes recently announced that Mexico is the country to invest in 2021. Mexico is also a popular location for second home ownership because foreigners can own property in Mexico. Mexico has long been a destination for retirees but Latin America's second-largest economy is heating up and is rated as one of the top four places in the world to own a second home and/or a profitable vacation home investment. The exchange rate is attractive to a lot of foreign investors and there has never been a better time to invest than now.

What To Look For Before Investing In Airbnb Markets

You may be located anywhere in the world, the basic principles of vacation rental business remain unchanged – you want to choose those places for your investment properties where the return-on-investment is high. To maximize your returns consider the following before investing:

1. High rental occupancy:

Check how much of the available housing stock in an area is vacant;

2. High rentals relative to your mortgage repayments:

The more of your mortgage you can cover from rentals, the better;

3. Understanding the Market

Conduct research into what kind of profit investors are actually making. Will what you gain in rental price eclipse your initial investment over the long-term? Are visitors to your city using the Airbnb service?

4. Local Laws

A local ordinance or law governs where and how you can operate an Airbnb rental. Neighborhoods are classified according to their zoning laws based on whether they are residential, commercial, or both. Certain neighborhoods may not allow Airbnbs. Depending on whether this is permitted, you may need to engage the bureaucracy in order to rent space.

5. There Will Be Costs

Whether you are looking for an investment property to use for Airbnb or you're using your spare bedroom as an Airbnb host, you will have to incur start-up expenses. To name a few, certain costs include mortgage, furnishings, amenities, software, security, insurance, operational, and marketing. If you intend to run your business remotely, you can also invest in property management software. Learn more about Why Hostaway should be your Vacation Rental Software of Choice

Agreement between Airbnb and Mexico

In Mexico City, Airbnb has negotiated with the local government to pay city taxes directly to Mexican authorities. Like hotels, Airbnb pays 3% tax to local officials on total booking revenues. Airbnb has also said that their objective in the region is to replicate the same agreement that has been reached in Mexico City.

The Top 10 Mexican Airbnb Markets To Invest :

1. San Cristobal

San Cristobal de las Casas is not your typical Mexican resort or quaint tourist development. This is a high altitude, high attitude, intact colonial city dating from its founding in 1528. The city proper is set in a lush green valley amid the sometimes fog-shrouded mountains of Chiapas state, at 7,000-plus feet. This is a city in love with color and tradition, music and art. The occasional overcast skies due to the mountainous setting are offset by walls of scarlet, indigo, and titanium yellow.

Highlights of summer include week-long jazz festivals, featuring international groups. Symphony orchestras play here in the winter and itinerant lecturers are constantly passing through town making it one the most touristic cities in Mexico.

Market Info

• Market Grade: A+ with 1,337 active rentals.
• High travel demand with 54% entire home rentals
• Average Daily Rate (ADR):$755
• Median Occupancy Rate: 50%
• Median Monthly Revenue: $8100
• Rental Size : 2 Bedrooms / 5.1 Guests on average
• Rental Channel Presence: Airbnb 98%

2. Oaxaca

Oaxaca, a Mexican state that has contended with obscurity for years, is slowly gaining popularity as a tourist destination. This town is an exemplar of Mexican culture, a destination that has successfully preserved the traditions of its people. Standing in the streets is a testament to the past of Oaxaca; buildings put up by the colonialists. Bustling markets, colonial architecture, Aztec ruins, and lush botanical gardens are all part of Oaxaca’s rich culture which makes it the ideal market for vacation rentals. It’s also currently in the top 10 in Mexico.

Market Info

• Market Grade: A+ (97/100). 2,449 active listings
• High travel demand with 47% entire home rentals
• Average Daily Rate (ADR): $900
• Median Occupancy Rate: 48%
• Median Monthly Revenue $8,956
• Rental Size : 2 Bedrooms / 4.4 Guests on average
• Rental Channel Presence: Airbnb 96%

3. Guadalajara

The affordable prices in Guanajuato make this town one of the best places to buy vacation rental property in Mexico. A bustling second city to Mexico’s capital, Guadalajara has a lot going for it these days, including not being as pricey as some of Mexico’s most exotic locales. It’s bursting with gourmet food and delicious, local craft beer. Close to the beach, the capital, and to the birthplace of tequila, Guadalajara makes a great base for seeing the entire country.

Your rental period should include both the rainy season (mid-May through mid-October) and the dry season. Since news of narco-violence in the country has caused prices to decline nationwide, it seems like now is the right time to invest in Guanajuato.

Market Info

• Market Grade: A with 3,412 active listings.
• High travel demand with 52% entire home rentals
• Average Daily Rate (ADR): $937
• Median Occupancy Rate: 32%
• Median Monthly Revenue: $7,587
• Rental Size : 2.1 Bedrooms / 5.3 Guests on average
• Rental Channel Presence: Airbnb 97%

4. Puerto Vallarta

One of the most popular destinations on the country’s Pacific coast is the town of Puerto Vallarta in the State of Jalisco. Its golden sand beaches, charming Spanish colonial-style architecture and picturesque cobblestone streets lined with inviting boutiques and restaurants have made the city one of the most popular destinations in Mexico. Renowned as a welcoming beach, culture, romance and adventure destination, Puerto Vallarta is couple-, family- and LGBT-friendly.

There are a number of new condominium developments in the works, offering contemporary apartments complete with access to luxurious amenities such as roof-top pools, spas and gyms.

Market Info

• Market Grade A with 7,271 Active Rentals
• High travel demand with 87% entire home rentals
• Average Daily Rate (ADR): $2,511
• Median Occupancy Rate: 45%
• Median Monthly Revenue: $22.5K
• Rental Size : 2.1 Bedrooms / 5 Guests on average
• Rental Channel Presence: Airbnb 70%

5. Tulum

Situated on the Caribbean coast of Mexico, Tulum is one of the jewels in Mexico’s crown. The small town was once an off-the-radar destination beloved by yoga lovers looking to “downward dog” in idyllic surroundings away from the crowds. It has since emerged onto the scene in style. Glowing global press coverage praising its spectacular coastline, 1,000-year-old Mayan architectural ruins and a bohemian vibe has elevated Tulum’s reputation and made it one of the hottest destinations on the Riviera Maya. The yogis are now joined by legions of beach bunnies who come to soak up some vitamin D on the beautiful white-sand beaches by day and sip tropical cocktails in chic bars and restaurants nestled in the jungle by night. The surge in visitors has provided a major stimulus to construction and real estate in Tulum. New condos and villas are springing up in gated communities such as Aldea Zama offering tremendous opportunities for buyers in search of both a vacation home near the beach and an investment property that can generate significant returns via the short-term rental market.

Market Info

• Market grade A+ with 5,186 Active Rentals
• High travel demand with 84% entire home rentals
• Average Daily Rate (ADR): $2,514
• Median Occupancy Rate: 68%
• Median Monthly Revenue: $34.2K
• Rental Size: 1.8 Bedrooms / 4.9 Guests on average
• Rental Channel Presence: Airbnb 81%

6. San Miguel de Allende

San Miguel de Allende, a colonial-era city in Mexico’s central highlands, is known for its baroque Spanish architecture, thriving arts scene and cultural festivals. In the city’s historic, cobblestoned center lies the neo-Gothic church Parroquia de San Miguel Arcángel, whose dramatic pink towers rise above the main plaza, El Jardín. The historic town center of San Miguel is static. All new growth is on the town edges, and these are typically modern areas without historic charm. Due to San Miguel’s popularity, finding a suitable property to buy in the historic center can be a challenge. Prices are high, and every house is different. Consequently, you’ll have to visit every candidate property in acceptable neighborhoods. This will allow you to determine if the price, location, and the house are suitable.

Right now may be a good time to make a real estate buy in San Miguel. Rising demand from Mexicans and foreigners has stabilized prices.

Market Info

• Market Grade: A (97/100) with 2, 613 active listings.
• High travel demand 73% with entire home rentals
• Average Daily Rate (ADR): $2,500
• Median Occupancy Rate: 27%
• Median Monthly Revenue: $16.1K
• Rental Size: 2.5 Bedrooms / 6 Guests on average
• Rental Channel Presence: Airbnb 90%

7. Merida

A Spanish colonial city, Merida has an abundance of boulevards, plazas, and mansions. It sits close to the Caribbean Sea on the Yucatan Peninsula. Merida is a cultured place full of museums, theaters, and with a thriving expat community and has been growing and developing steadily in the last few years.

Inside and out, Merida is a beautiful place. Even more prominent is the culture of Merida.

The reason that Merida was selected twice for the American Capital of Culture designation (2000, 2017) may have something to do with this. The Mayan culture of Merida oozes all over the city, amongst the museums and the swinging doors of Merida's cantinas. Another aspect of Merida's culture to enjoy is the unique Yucatan cuisine. Adding to the cultural allure, the people living in Mérida, many of Mayan descent, are a friendly and welcoming bunch.

Market Info

• Market Grade: A+ with 3,511 active listings
• High travel demand with 64% entire home rentals
• Average Daily Rate (ADR): $906
• Median Occupancy Rate: 50%
• Median Monthly Revenue: $8,490
• Rental Size: 1.9 Bedrooms / 4.7 Guests on average
• Rental Channel Presence: Airbnb 94%

8. Playa Del Carmen

Playa del Carmen is already a well-established tourism hot spot. Located approximately 40 miles north of Tulum on the sun-soaked Riviera Maya, Playa del Carmen is a very popular resort destination. The city has great beaches and has a tourism sector that is several years ahead of the rest of the country. As well as galleries and shopping on Fifth Avenue (La Quinta Avenida), ziplining, river rafting, snorkeling on the reefs surrounding Cozumel, as well as everything from beach clubs to trendy bars, Playa del Carmen has it all.

Developers are offering condo and villa developments in the heart of Playa del Carmen, along with luxurious beach and golf resorts nearby, including Mayakoba. A number of these developments offer investors a chance to profit from the established tourism sector of Playa del Carmen.

Market Info

• Market grade A with 2,843 Active Rentals
• High travel demand with 84% entire home rentals
• Average Daily Rate (ADR): $1,643
• Median Occupancy Rate: 55%
• Median Monthly Revenue: $17.4K
• Rental Size: 1.9 Bedrooms / 5.1 Guests on average
• Rental Channel Presence: Airbnb 77%

9. Cancun

Cancun is the most popular Mexican resort destination, welcoming 3 million tourists annually. There are a lot of hotels, marinas, shopping, and nightlife options along the 15-mile Zone Hotelera strip, and they are all within easy reach of the beaches and coral reefs of the Caribbean. There is also a major international airport in the city - Cancun International Airport - which is located just 6 miles from the Hotel Zone. Cancun's thriving tourism industry imbues its real estate market with a variety of investment opportunities from upcoming construction villas, condos and boutique hotels on (or close to) the beach and waterfront properties in the sparkling Puerto Cancun marina community.

Market Info

• Market Grade A+ with 8,511 Active Rentals
• High travel demand with 71% entire home rentals
• Average Daily Rate (ADR): $1,496
• Median Occupancy Rate: 54%
• Median Monthly Revenue: $16.4K
• Rental Size: 2 Bedrooms / 5.4 Guests on average
• Rental Channel Presence: Airbnb 86%

10. Puerto Peñasco

Puerto Peñasco, also known as Rocky Point, is a Mexican fishing and resort city on the Gulf of California. It’s known for dune-backed Sandy Beach and Bahía la Choya’s tidal pools. Puerto Penasco has everything from beautiful beaches and warm waters to gorgeous desert landscapes that will make any traveler feel like they’ve been transported into another world. Puerto Penasco also offers numerous activities such as scuba diving, snorkeling, fishing, making it one of the excellent tourist attractions in the country.

Currently, global tourism is estimated to keep growing as statistics confirm it is now at a whopping 14%. Industry experts are saying this growth shows no signs of slowing down anytime soon. Therefore, investing in Puerto Penasco can deliver an excellent return on investment.

Learn more about How to Target International Business Travelers to your Airbnb here.

Market Info

• Market Grade A+ with 2,843 Active Rentals
• High travel demand with 94% entire home rentals
• Average Daily Rate (ADR): $4,534
• Median Occupancy Rate: 45%
• Median Monthly Revenue: $50.7K
• Rental Size: 2.3 Bedrooms / 6.7 Guests on average
• Rental Channel Presence: 77%

Conclusion

Mexico is a large country (14th largest in the world) and offers a huge variety of vacation property investments. Enjoy the benefits of owning your own luxurious vacation rental in Puerto Vallarta, a laid back lifestyle in Tulum, or a fun trip to Cancun or Los Cabos with a laid back vibe. Mexico has something to offer every vacation property owner.

As a general rule – if your main goal is to receive excellent vacation rental returns, look at projects that are already proven to provide ongoing investment income and strong appreciation.

It’s also essential to evaluate the existing rental market in the area, so work with your investment advisor to do some basic research on other investment properties to see if they are renting out regularly or sitting empty and which areas are reporting 80-90% hotel occupancy rates and rising tourism numbers. Before you decide where to invest money in Mexico, it’s important to evaluate the potential location(s) and find an experienced real estate investment advisor to work with, that can help you find and evaluate the best properties for your needs and budget in all of the areas you are looking at.

Further reading recommendations : Is it Profitable to Own an Airbnb? Airbnb Ownership Guide

FAQs

Can a Foreigner Buy a House in Mexico?

The answer is yes! A law on foreign investment was passed in Mexico in 1973. Under this law, non-Mexicans were allowed to buy property anywhere in Mexico, except within 100 miles of the border and within 50 miles of the coastline. There was a restriction on access to these areas.

A further amendment was adopted in 1993 to allow foreigners to buy property near the coast and the border, within the restricted zones. Specifically, they could do so through what is called a Fideicomiso.

What is a Fideicomiso?

A fideicomiso is essentially a bank trust. The system is sanctioned by the Mexican government and is secured by Mexico's central bank, and through this setup, foreign buyers can have the Bank of Mexico legally hold their property title.The property trusts are renewable on a 50-year basis, and the beneficiary (the foreign buyer) has all the rights commonly enjoyed by Mexican owners. In a fideicomiso, the bank cannot sell the property without the buyer's written consent, and the buyer can own multiple properties, leave them to heirs, and sell the trust on. Owning property through a trust includes a setup cost and maintenance fees between $ 500 and $ 700 USD.

Can I Buy Land or Property in Restricted Areas Through a Corporation?

Definitely. An international buyer can own land or property through a corporation, and that corporation does not necessarily need to be Mexican - it can be 100% foreign-owned. The option is typically exercised when you are buying strictly for investment or business purposes (e.g. when subdividing and developing land). In doing so, however, you may also have to comply with reporting requirements and may be subject to other restrictions.