IL Postcard

How to Make Your Second Home in Mexico Pay for Itself

Date: 10/27/2008 Author: Glynna Prentice

Monday, Oct. 27, 2008

Read more about Mexico in International Living Postcards—your daily escape

Dear International Living Reader,

If you’re not ready to move to Mexico permanently, then why not try it out for part of the year? You have absolutely nothing to lose.

In some parts of Mexico, rentals stay in high demand for much of the year. Savvy owners may cover their yearly condo costs by renting their property in Mexico out for a few months. The rest of the year they can enjoy it themselves...free of charge.

In Huatulco, for instance, on Mexico’s Pacific coast, a three-bedroom condo can earn you from $1,200 up to $3,000 a week, depending on amenities and view. Three to four months’ worth of rental income during the high season (October to May) can cover a condo’s yearly costs, including mortgage, maintenance, utilities, and insurance.

Monthly and weekly rentals are a huge market for beach destinations like Huatulco. In fact, in some beach towns there can even be pressure to keep leases short for Mexico beachfront and near-beach properties. That’s because these properties can command very high weekly rates during the high season.

Longer-term rentals in Mérida for a three-bedroom house in good condition, with garden space and a pool, can run about $1,500 a month. In San Miguel, depending on location, a three-bedroom home can run anywhere from $1,200 up to about $4,000 a month.

But there’s a catch...you’ll need to make sure your property is kept in good condition, with good-quality furniture and appliances. Even if it’s a casual beach place, don’t go too cheap on furnishings...things will start to fall apart and you’ll spend much of your rental income on repairs and replacements. You can likely find rustic and casual furniture at local shops in most cities. For high-end furnishings, you may want to go to a department store. (Liverpool is one Mexican chain; Sears also carries furniture, including a separate Pier One division.)

Kitchens should be fully furnished. In addition to large appliances, include a microwave, coffee maker, a toaster or a toaster oven, and, of course, dishes and cutlery.

Some owners don’t include telephones and televisions, as they consider these to be high risk for breakage and abuse. In many places, high-speed Internet service is a basic necessity; consider installing it if your property will be rented for four- to six-month stretches.

Your bedrooms should be large enough to fit either a queen-sized bed or two twin beds, plus a dresser, with room to walk around the bed.

Once you rent your Mexico vacation house or condo, you will need to pay 25% tax on your rental income. Your management company should be able to collect rents for you, give receipts to tenants, and pay any IVA (value-added tax) due.

Getting a management company and setting up your property for rental takes time. But most owners find that having a second home they can enjoy—and that helps pay its own way—is worth all the effort.

Glynna Prentice
Your Mexico Insider, International Living

Editor’s Note: Glynna will tell you everything you need to know about living in Mexico—from how to find pocket-money real estate to colorful information on the most beautiful cities and beach towns in the country—at our Live and Invest in Mexico seminar, Nov. 6-8, 2008, in Merida, Mexico. There are only 15 seats left, so don’t miss out, register today.

Read related IL Postcards:

- Getting a Mexican Visa Is Easy—Here’s How

- How to Be Happy, Stress-free, and Retired at 55

- Which Mexican City Should We Move to?