Thursday, March 25, 2021
Dear Your Overseas Dream Home Reader,
For the past six days I’ve had boots on the ground in the state of Jalisco, Mexico.
My first stop was Lake Chapala, just 30 minutes from Guadalajara’s international airport.
It’s been a few years since I’ve visited Chapala, but boy is it still a sight to behold…
At 429 square miles, it’s the largest freshwater lake in Mexico. It’s so vast that Cerro Garcia, the area’s highest peak and an extinct volcano, barely registers on the horizon.
The elevation of Mexico’s highlands means the weather here is never too hot and never too cold. The vegetation is lush, with a tropical feel, but without the oppressive heat that in other climates would invite afternoon siestas.
The Lakeside area is home to approximately 120,000 people, most living in the small towns wedged between the mountains and the lake’s perimeter. Among them are Mexican locals, American, and Canadian expats, and even a few residents from Europe and South America.
The nearby airport served direct flights to about 45 destinations in North America, pre-COVID. And you have a major international city on your doorstep.
Guadalajara has everything you’d expect from a cosmopolitan city. The birthplace of mariachi and tequila, it’s charming and vibrant. It’s traditional but hosts an impressive array of restaurants, cafés, bars, and galleries too—as well as a burgeoning tech scene.
What excites me about Lake Chapala is the mix of markets at play here.
The snowbird market…the local market, weekenders from Guadalajara…and international executive coming out from the city…
Exciting things are happening at Guadalajara airport, just a short drive away. Since plans for a new commercial airport in Mexico City went belly up, there’s been an explosion of freight traffic coming through, new carriers moving in, and a booming ecosystem of multinationals buying up commercial real estate in the surrounding area.
This all feeds the Lake Chapala second home market…and there might be a strong RETA opportunity here to boot.
I’m looking at plans for a new project, with land right on the lake. It’s set to be a major golf and resort community. Plans call for 3,500 homes. And if this goes ahead, we could be looking at very attractive RETA-only pricing and terms.
My team will first have to run the due diligence, but we’re looking at spacious, two-bedroom condos—some with lake views—and with sub $200,000 pricing.
Right now, this is a still some way off. Minimum six months…and an extensive due diligence period ahead. Stay tuned…
What I’ve Found in Puerto Vallarta
At the moment, I’m in the resort city of Puerto Vallarta on the Pacific coast. I’m here all week, putting boots on the ground and getting a handle on the market.
Specifically, I’m vetting opportunities in the city’s Centro area and another on the marina. There are two potential RETA deals that are now well advanced.
But more on that in a moment…
Puerto Vallarta is one of the most successful expat communities in all of Mexico. Thousands of snowbirders come to escape the freezing weather back home. In Puerto Vallarta they can enjoy tropical weather, great dining, and the beach.
Truth be told, although it’s a place I’ve found opportunities on past visits, I’ve been mostly indifferent about the city on a personal level.
That’s all changed on this trip… I’ve had more time to explore, acquaint myself with the city, and dive deeper. And what I’ve found is very appealing.
I’m staying in a boutique hotel called Villa Divina. It’s in Conchas Chinas, a high-end community just south of Puerto Vallarta’s highly popular Zona Romantica—a hip, colorful, and buzzing area of the city with an excess of bars, cafés, and restaurants.
Due to restricted travel, I have the hotel entirely to myself. There’s a team of staff and private chefs at my beck and call. I’m essentially getting a $10,000-a-night-experience for under $200 a night.
During regular times, it made sense to put a luxury home like this to use as a boutique hotel. However, for the past year, these businesses have been struggling. Some are now selling up, occasionally creating a good deal for the right buyer.
Incidentally, Villa Divina is on the market for $2,999,000.
But in general, Puerto Vallarta is far from dead. At the weekend, there are a lot of Mexican visitors around. Businesses are bracing themselves for a strong bounce back once travel returns to full force.
Not only have you the North American market. You also have a big domestic market. For the 1.5 million residents of Guadalajara, Puerto Vallarta is their beach town. The well-heeled locals snapped up a lot of the shiny new towers here, while gringos tend to buy in the Zona Romantica or in Nuevo Vallarta to the north.
Within town, I see opportunities for gentrification around Centro. There’s a lot of charm here. Restaurants, bars, street vendors, and craftsmen. Within three to four minutes’ walk of the malecon and within seven to eight minutes from the Zona Romantica you’ll find overlooked and affordable properties. You pay Centro prices, but you’re buying along the Zona Romantica’s path of extension and effectively getting a Zona Romantica experience.
But Puerto Vallarta isn’t a low-price market. It’s mature, established, and by and large, prices are high.
The real opportunity is to find the right developer and use our group buying power to secure significant discounts…our RETA edge.
That’s what I’ve been working on…
Our opportunity is to work with a developer who is experienced, best in class, who can create advantage from the land buying process, and who can bring RETA‘s group buying power to bear to get us killer discounts.
This is a market where I expect to see solid and steady capital appreciation from the right opportunities. I’m narrowing in on condos that have views to the water starting from around $220,000 to $230,000, with members only discounts of around $70,000.
Like I say, Puerto Vallarta is not a ground floor opportunity. It’s a mature market. But, thanks to our group buying power, it’s place where we can still make a strong play.
New projects here typically rely on sales from regular tourist traffic. But now, because of COVID, sales volume is supressed, giving us a brief window to flex our buying power—even beyond what we might normally expect. As qualified buyers, we can get in faster than anyone else.
I feel confident that we’re nearly there…or close. I’ve put boots on the ground at both the marina and Centro projects. The developer is someone we know and trust. The architectural plans look great.
The outstanding question is whether we can lock in pricing and terms sufficient to cut RETA muster.
Tomorrow, my trip continues…
I’m following Path of Progress north to Punta Mita and up the coast into the Rivera Mayarit. There are a number of planned communities where we’re talking to developers.
One in particular has piqued my interest. It’s about an hour and 40 minutes north of here. It’s set to have to have multiple hotels and golf courses…a full-on beach and golf resort. And it could become a very compelling ground floor opportunity if it all stacks up.
Wishing you good real estate investing,
Ronan McMahon, Real Estate Trend Alert
Your Comments and Questions
Patricia asks: Hello Ronan. We are new to RETA. We saw in the archives section on the website that you had something new in Tulum in the first months of 2021. Also, we saw that the project will have two-bedroom condos for around $167,000.
Questions: In this next project, do you also offer a one-bedroom unit? Our budget does not allow us to buy at this price even though it is a good deal. Also, are you working on a project in Akumal in the coming months?
Thank you in advance to take time to reply to us. Also, thank you very much for sharing with us all your knowledge.
Ronan says: Hi Patricia, the Tulum project won’t have any one-beds. Two-beds here will make for much better rentals, thus the developer has decided to go with only two-bed condos. But…developer financing will be available as part of our RETA members-only deal.
So, this might make a two-bed affordable for you. Since I first looked at the plan for this project, the sizes have been increased and amenities added. Launch price will still be in the same ballpark. Plans include a beach club and shuttle from the community to both the beach club and town. As well as a rooftop terrace with infinity pool overlooking the national park and with views to the Caribbean.
It’s going to be amazing… There’s nothing like it in Tulum, let alone for a price like this.
I have a few longer-term irons in the fire in Akumal but nothing that looks like it will come together this year. I’ll be back down there in the last week of April…
Stay tuned for my full report.