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Thread: Investment in Cozumel.

 


  1. #1
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    Investment in Cozumel.

    If this is not the place for this thread I apologize.

    What is the opinion of real estate investment opportunities on Cozumel. I'm interested in making a foreign real estate investment in possibly a dive/resort destination somewhere in the Caribbean. I say this with this specific wording as I am not looking to purchase a 2nd home for my use, but real estate that would appreciate in value and possibly pay for it's maintenance and holding costs thru rentals, but appreciation is the major focus and our use of it would be secondary but a fringe benefit.

    I've looked at a few of the developments on the island. Last year we looked at San Miguel Oasis and this appeared to be a possible candidate, but it appears the development has come to a complete halt? I have also looked at the Landmark down by the money bar, but I'm skeptical if the island will support this high dollar level of development and allow it to appreciate in value and be a good investment. Cozumel is a cruise ship and diving island first and foremost and for something like the Landmark which looks to be at the top of the food chain, to work as an investment means the island has to attract a higher dollar clientèle as expatriates then it currently does in my opinion. Cozumel to my knowledge does not attract this type of person as far as I know.

    Opinions in regard to any of this?
    Mike

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    Quote Originally Posted by mfinley919 View Post
    If this is not the place for this thread I apologize.

    What is the opinion of real estate investment opportunities on Cozumel. I'm interested in making a foreign real estate investment in possibly a dive/resort destination somewhere in the Caribbean. I say this with this specific wording as I am not looking to purchase a 2nd home for my use, but real estate that would appreciate in value and possibly pay for it's maintenance and holding costs thru rentals, but appreciation is the major focus and our use of it would be secondary but a fringe benefit.

    I've looked at a few of the developments on the island. Last year we looked at San Miguel Oasis and this appeared to be a possible candidate, but it appears the development has come to a complete halt? I have also looked at the Landmark down by the money bar, but I'm skeptical if the island will support this high dollar level of development and allow it to appreciate in value and be a good investment. Cozumel is a cruise ship and diving island first and foremost and for something like the Landmark which looks to be at the top of the food chain, to work as an investment means the island has to attract a higher dollar clientèle as expatriates then it currently does in my opinion. Cozumel to my knowledge does not attract this type of person as far as I know.

    Opinions in regard to any of this?
    You can almost certainly get a great deal right now on an investment property, unfortunately, filling it with renters will probably be an issue in this economy. But, first. . .

    What do you consider "high dollar"? There are quite a few places that will cost you between $600k to over $1 million for just a 2-6 bedroom 2k-5k sqft condo. And remember, real estate in Mexico often requires you to have all of the cash on hand for the sale.

    Cozumel is a prime example of "never judge a book by it's cover." There are quite a number of expat's that may not look like it, but in fact are quite wealthy. That's the beauty of Cozumel. You don't have to "look" and "act" a part, you can simply be who you want to be. No one asks you how much you're worth or what college you graduated from. You're either likable or an ass, and that's how you're judged.

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    I've been looking at the same thing and have been looking at Cozumel specifically for some time now. I also looked at the Oasis and while it's a nice development, building activity stalled over a year ago and their financing is questionable at best. Many developments in the Caribbean are heavily dependent upon presales and ongoing sales during construction for their capital requirements. I'm not willing to invest in any unfinished projects during the present economic conditions because of that.

    Very few condos covered all of the holding costs even before the present downturn. Most will cover monthly expenses and contribute some portion to mortgage costs but on average you will end up with some monthly out of pocket expense. Of course, if you are in a position to pay cash then the situation is much improved.

    Are you looking at waterfront only? If appreciation over time is your main goal then a waterfront location seems best. After that, it seems to be mainly a question of in or near town vs fairly far south of town.
    Wherever you go, there you are.
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  4. #4
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    I think Cozumel is over-building right now in terms of condos etc. I can't imagine how they will sell all of them. So wait a bit and you might get a better deal. However watching the market as long as I did before buying our house, there isn't a lot of movement in list prices. They just stop development.

    There are big issues with buying there for rental. You are subject to taxes from gov't if it becomes known you are renting and not declaring. And if you use a management company, you have their fees to consider.

    All this led to our decision to purchase something that would NOT depreciate (it's a fairly new home in El Centro), but was affordable so that we would not have to depend on rentals.

    YMMV but I'd suggest you contact a good, honest local real estate agent for advice. I can recommend Cozumel Capital Real Estate.
    Marg Moran McQuinn

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    Quote Originally Posted by FishOutUvH2O View Post
    What do you consider "high dollar"? There are quite a few places that will cost you between $600k to over $1 million for just a 2-6 bedroom 2k-5k sqft condo. And remember, real estate in Mexico often requires you to have all of the cash on hand for the sale.
    Two things - square footage pricing and annual holding costs which would or could be HOA, elec, maintenance etc... basically any dollar you have to spend over the year as part of ownership.

    The Landmark is around over $400 a square foot (A million dollar 5000 sq ft property is only $200 a sq/ft.) and annual holding costs are well over $12,000.00 at a minimum.

    That's pretty high dollar to me for Cozumel from what little I know of it.

    American banks have been willing in the past to lend to purchases in Mexico. I have not looked into it much since the bank crises so that may be gone now.

    Quote Originally Posted by FishOutUvH2O View Post
    Cozumel is a prime example of "never judge a book by it's cover." There are quite a number of expat's that may not look like it, but in fact are quite wealthy. That's the beauty of Cozumel. You don't have to "look" and "act" a part, you can simply be who you want to be. No one asks you how much you're worth or what college you graduated from. You're either likable or an ass, and that's how you're judged.
    They can look like they aren't millionaires, but they can't hide their properties from me and I don't see a good size of high end properties.

    Take a look at an island like St Barts or the development going on on Virgin Gorda in the BVI for the measuring stick I am comparing too in regards to my statements of the potential for Cozumel.

    Cozumel is a diving and cruise ship destination. (as of right now) which equals cheap, cheap and cheap visitors for the most part.


    Quote Originally Posted by BTravlin View Post
    I've been looking at the same thing and have been looking at Cozumel specifically for some time now. I also looked at the Oasis and while it's a nice development, building activity stalled over a year ago and their financing is questionable at best. Many developments in the Caribbean are heavily dependent upon presales and ongoing sales during construction for their capital requirements. I'm not willing to invest in any unfinished projects during the present economic conditions because of that.

    Very few condos covered all of the holding costs even before the present downturn. Most will cover monthly expenses and contribute some portion to mortgage costs but on average you will end up with some monthly out of pocket expense. Of course, if you are in a position to pay cash then the situation is much improved.
    This is one of the selling points to the Landmark as I was explained to. They are apparently fully funded and aren't relying on the sales to fund the construction. They are also very forthright in doing anything that is required to elevate worries of the project not being completed such as offering a performance bond.

    Lip service or reality? I don't know. It's easy to say anything before you sign on the dotted line.

    Quote Originally Posted by FishOutUvH2O View Post
    Are you looking at waterfront only? If appreciation over time is your main goal then a waterfront location seems best. After that, it seems to be mainly a question of in or near town vs fairly far south of town.
    That would be might thoughts also.

    I thought the Oasis was a pretty good project with a lot of room for appreciation. They were under $200 a sq ft, very well located to town for rental opportunity and had a great view. The finishes were top notch and the design was well thought out. I was very disappointed to see that the place looked about exactly the same as it did one year ago when I was last there with virtually no progress made. I had hoped to look into that project again while I was there to see how it had come along in a year and see how the pricing had changed.
    Mike

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    If you are purchasing with the idea of renting then don't expect much. We have property in El Cantil and have seen a steady decline in rentals over the four or five years while costs have kept going up.

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    As other people have indicated, rentals will be the key in maintaining cash flow. While there are exceptions to the rule, I think 90%+ of homeowners/condo owners are dissappointed in the percentage of time their house is actually rented out. The fees you pay for marketing/management etc may also be higher than you expect.

    I would not buy a vacation home unless the primary reason was for personal use.

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    Rental is not the investment objective.

    Appreciation in value is. As I said:
    possibly pay for it's maintenance and holding costs thru rentals
    This is an investment. No other reason.
    appreciation is the major focus and our use of it would be secondary but a fringe benefit.
    There are lots of places to consider in the Caribbean, the question only if the environment in Cozumel would be better then another place.

    Personally I believe Roatan so far looks like a much better investment on paper (except for the political climate), I'm just wondering if Cozumel has the potential to compete for my dollars?
    Mike

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    The Peninsula Grand is my favorite condo development on Coz. Seems to be well built which is not true of many there such as the Palomar and Palmas Reales. The floor plan of the Peninsula is excellent with ocean views from everywhere inside the 3 BR units. Does not have a true beach and is north of town so this will somewhat limit rentals but I believe it will have long-term appreciation due to aesthetic appeal. Most of the popular dive ops would not go that far north to pickup divers but there are dive ops that operate out the northern marina that will pickup in the northern hotel zone.
    Wherever you go, there you are.
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