Real Estate Trend Alert

By Ronan McMahon

Everybody is in Tulum (and Pay No Tax)

Weekly Wrap-Up

Saturday, April 24, 2021

Ronan McMahon Dear Your Overseas Dream Home Reader,

Welcome to your Saturday Wrap Up!

I’m in trendy Todos Santos, an hour north of my Cabo base.

Monday afternoon I fly to Cancun via Mexico City…then it’s down to Tulum, the end of the line for the mammoth Path of Progress down the Riviera Maya, where I’ll be hammering away at the final details of a truly killer new Tulum deal.

I see a lot of similarities between Todos Santos and Tulum…

My winter base is in Cabo San Lucas, where RETA members are soon to hear about an amazing new deal.

Baja California Sur is the southern part of the world’s second longest peninsula, fringed with secluded beaches and craggy cliffs. At the peninsula’s tip, you have the world-class luxury destination of Los Cabos, where I and fellow RETA members have had good fortune—and made big profits.(And we have a big deal coming soon.)

Dramatic mountains form a spine down the center of the peninsula. On the west side is a wide coastal plain, mostly arid with pockets of fertile land.

Since so much of Baja California Sur is desert, these fertile pockets are very desirable (and all the more sought-after if they are close to Hollywood hangouts). Water is key to our opportunities here.

Todos Santos is just back from the coast, picture 10 miles or so of beaches studded with hills and look out points. Whales come so close to shore you can easily see them from the bluffs. Some beaches are best for swimming, others for surfing, and still more for simply having the ocean to yourself for a while.

In the last decade major improvements to the highway have put Todos Santos within reach of a much bigger number of the wealthy West Coast set who love its artsy atmosphere and the natural beauty all around. The town is making the pages of Vogue, Conde Nast, and Jetsetter. Celebrities get married here. They take beach vacations here. Take a stroll down the town’s cobbled lanes and you’ll find art galleries, boutique stores, and farm-to-table restaurants. You can go on a yoga retreat, buy a kaftan or a dreamcatcher, or go surfing. That last one’s important, the beaches here are among the best surfing spots in Baja.

The expats are a mixture of wealthy hippy types and folks with a gypsy soul. The town’s location between the beaches and the soaring Sierra de la Laguna mountains is perfect for outdoor activities and the climate is ideal year round.

The rental market for nice big homes on the beach in Todos Santos and the Baja is now extremely hot. We’re talking an entry price of $800 per night for four or five bedrooms on the beach. For that you get a lived-in looking 40-year-old beach house that maybe was never properly built from day one…I’m not turning my nose up at it. You’ll pay much, much more for modern shiny and luxury.

There is a lot happening in Todos Santos. I love the new restaurant called DUM. It’s in a cool setting in town in a little oasis of palm trees…you can hang out pool side after a long lazy lunch…

I couldn’t say no to dessert in DUM, Todos Santos newest trendy restaurant.

I’m not one for oysters but I’m told I have to check out Ernesto Coppel’s new Oyster Bar in town. He’s the guy behind the Pueblo Bonito group including the 5-star Quivira Resort where RETA members (including myself) have had such great deals.

I’ve been telling RETA members this transformation was coming to Todos Santos since my first visit when I saw streets dug up. Now it’s roaring ahead.

Boom! Rental Demand in Cabo

As I told RETA members in their alerts last week, I’m seeing an explosion of rental demand for both short-term and long-term in Cabo.

When the pandemic hit, it significantly slowed the travel of older second homeowners and vacationers. They were replaced by younger remote workers. I’ve seen this first-hand in Copala, were I spend my winters. It’s packed with 20- and 30-somethings …even families with young kids. All renting and ready to pay premium prices. The influx of these long-term renters is one factor that has pushed up demand and prices.

One owner here has a portfolio of rentals in the community and now has more potential customers than inventory. So he’s started reaching out to other owners to rent their places long-term, so he can sublet short-term. This is something you’ll typically see in a strong market.

While I’m away from Los Cabos, I’ve decided to rent out my own condo to a friend of a friend for $1,800. Don’t tell my neighbors as they’ve informally been lobbying for a rental floor of $2,400 to $2,700.

That’s the going rate for units like this in communities with similar amenities in this area. Nightly rates for two-bedroom condos in Copala run from $150 to $275 per night as we speak, and as demand grows, I’m seeing more rental towards the higher end of that range.

There was excess short-term rental supply during lockdown and prices suffered. Now things have flipped, and we’re seeing much higher occupancy at quickly rising rates. Fellow owners are talking about an expected range of $250 to $350 per night as travel resumes in earnest and we have not just remote workers but also the usual vacationers.

This all means a healthy rental income, on top of the capital appreciation.

In Los Cabos the current entry- and mid-level part of the market is $300…$350,000, going up to $800,000 or even $1 million. And that portion of the market has been very hot, with extreme inventory pressure.

There are simply not enough condos that tick the right boxes: two-bed, two-bath, ocean-view, nice community, near town.

There’s a real shortage in that sweet spot, which is why I’ve been working hard to get more RETA deals at killer pricing…thereby locking in paper gains from the get-go.

Those deals have been slow to get over the line due to the permitting process, but we’re getting very close. And I’m optimistic that these deals will be stronger than I originally anticipated when we are able to launch.

I also expect them to go extremely fast. Stay tuned to your RETA alerts.

Two Safe Havens on My Beat

Today is the last chance RETA members have to act on a deal I negotiated in “the Switzerland of South America.”

It’s a deal on a handful of ocean-view lots I expect will double in value in a few years. I got RETA members two options…

  1. Pay cash…and save. On one half-acre ocean-view lot, for example, the price is $37,060. But you can knock off a cash discount of 15%. That cuts the price to $31,501.
  2. Take the interest-free financing on offer. On that same half-acre ocean-view lot of $37,060, you can buy with a manageable down payment of 25% and then spread out the balance with monthly payments of $579 over 48 months—interest-free.

I expect that as the Covid crisis recedes these lots will double in value. And all you need to do is wait. If you do choose to build a home, you can also tap into the hot rental market and make $1,500 a week. And you can always visit yourself…it’s a stunning coastline, close to “The Hamptons of South America.” (If you are a RETA member get the full details here.)

Uruguay is among the safest and most stable places I have ever been. This little country is so safe, relaxed, and easy that you could call it boring…

This tiny country is the wealthiest (per capita) in South America, according to the World Bank, and the most democratic, according to The Economist. It flies high in the annual rankings of least corrupt countries (beating the U.S.).

And, last year, the Uruguayan government made it even easier to establish tax residence in the country.

European immigrants to Uruguay brought wine-making skills and found parts of Uruguay ideal for vineyards.

Once accepted into the program, you would enjoy a 0% tax rate in Uruguay on income from outside the country (dividends, employment, rental income, etc.) for 10 years. You don’t even have to file any forms showing your income.

The dollar amount varies slightly based on exchange rate. But currently, an investment of $380,000 or more in real estate qualifies you for the program.

Farmland qualifies, lots qualify, so do homes and condos…and you can buy more than one property to reach the threshold. The process doesn’t require much paperwork or cutting through too much bureaucratic red tape.

It’s similar to Portugal’s famed Golden Visa…

Portugal is another of the safest and easiest places I know for an international investor. A welcoming place. Last year—as you know—I bought two properties there and successfully applied for Portugal’s Non-Habitual Resident Tax Regime.

The best route for U.S. citizens to something similar is Portugal’s Golden Visa…

And take note: that program is set to drastically change in 2022. Property along the coast, or in Lisbon or Porto, will no longer be eligible. And the minimum investment is being increased from €350,000 to €500,000.

If you’re a RETA member you have access to my RETA Rolodex. And in that Rolodex you have the contacts you need—real estate and legal—to start inquiries about residence in Uruguay and Portugal…

Video Tour: Deal in San Miguel de Allende

This week I told you about a hot RETA-only deal in in San Miguel de Allende, my favorite colonial town in Latin America.

To remind you, it’s only the second-time I’ve ever found an opportunity in San Miguel that I felt was a RETA-grade deal. We have the chance to buy from a RETA-only price of $166,300. The retail price is $211,966…

So we’re getting a RETA-only discount of $45,666…

I put all the details including my predictions on gains and rental income in the full report.

If you’re a RETA member the deal is yours right here.

Last year, readers of Travel and Leisure voted San Miguel “The Best City in the World,” and readers of Condé Nast Traveler voted it “The World’s Best Small City” for 2020.

Its entire historic center is a declared UNESCO World Heritage site. That means it’s considered so historically and culturally significant to the world that it’s protected by international treaties.

One of my researchers, Jason Holland, lives in San Miguel, and he sent us this cool video tour to share with you.

There’s a killer RETA-only deal on the table in San Miguel—if you’re a RETA member details are here

Everybody is in Tulum

Next week I’ll have my toes in soft white sand and I’ll be breathing deep that Caribbean breeze at my favorite beachfront lunch spot in Tulum.

I have a couple of team members joining me. In fact, Jason is already there. He arrived from San Miguel de Allende a couple of days ago.

Coincidentally, International Living’s magazine editor, Sean Keenan is in Tulum right now too.

It’s Sean’s first time in Tulum.

Sean is getting a bead on the lifestyle you can have. I guess he’ll talk to expats and explore all the cool stuff you can do. He fired me this snap through Slack when he was getting his bearings with a stroll on the beach.

Tulum’s beach stretches for over 26 miles…ideal for long walks and dips in the Caribbean.

Stay tuned for Your Overseas Dream Home next week. I’ll be sending you some boots-on-the-ground (toes in the sand) reporting from Tulum. I’m also planning to check out a possible opportunity on Cozumel island…

More next week.

Wishing you good real estate investing,


Ronan McMahon, Real Estate Trend Alert

Your Comments and Questions

Ann says: Hi Ronan, I’ve heard from someone in Uruguay that the government there has changed the law regarding imbibing alcohol to zero tolerance. He thought that would kill Punta del Este as a vacation spot and would send tourists north into Brazil.

Have you heard this and what are your thoughts?

Ronan says: Hi Ann, reading up on the law, it sounds to me like your friend is exaggerating, to say the least…

First off, the new law in Uruguay is not some prohibition that will ban alcohol. It’s simply a (pretty standard) new regulation to manage the risks of alcohol consumption, brining Uruguay in line with the laws of most progressive Western countries.

For instance, the new law adopts preventive public policy measures and promotes the development of educational, community, and family programs aimed at preventing dangerous drinking habits. It restricts the advertising of alcohol and the promotion of consumption.

The law doesn’t prevent the sale of alcohol, but it does create a registry of retailers authorized to sell it. It just means that sellers will be held accountable for following normal restrictions—like the sale to alcohol to minors.

I don’t see this law having any impact on the tourism to Uruguay.

You need only look at the example of Sweden. It has incredible strict restrictions of alcohol sales. To buy alcohol over 3.5% there, you need to go to a state-run liquor monopoly, called Systembolaget. In some places this means getting a train. And you need to plan ahead, too, because it closes at 6 p.m. Even with that, millions of tourists visit Sweden each year.

The point is, it simple doesn’t matter a whole lot. Folks have been visiting Punta del Este, and elsewhere on Uruguay’s Atlantic coast for decades, and they haven’t been doing it for the alcohol.

In fact, more and more have been coming. It’s Latin America’s premier jet-set destination, and as I wrote in this month’s issue of RETA, it’s driving a Path of Progress along the coast.

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