How the condo hotel system works. 90% of investors buy a property in Tulum or Playa del Carmen as an investment, to rent it while they are not physically here, and come to vacation from time to time.
-How does the condo-hotel system work?
It depends on the developer, there will be some differences but basically, the idea is the same. The management company that manages your building will rent your apartment on platforms such as Airbnb, booking.com, and many others. Of all the profits that are accumulated monthly, the management company will pay for basic services such as electricity, water, taxes, HOA, etc. They will charge a portion for their services and deposit the remainder into your bank account.
-How much do the management companies charge?
It depends on the company they will charge between 20 and 25%
-How much do you expect to receive after paying for all that?
That will depend on the location of your apartment, amenities, and number of bedrooms. But, it is projected to be between 8 and 12% ROI per year.
-Is that a good percentage?
Banks offer you a .5 or 1% ROI. As you already know, any asset that offers you more than 5% ROI plus annual capital gains is a good business. I ask you; What type of investment is currently offering you more than 5% per year?
-Does that mean that I can use my apartment as many times as I want?
Well .. Not really. For them to be able to fulfill their promise it is necessary that you, do not use your department more than 30 days a year. You can divide those weeks as you like best.
The idea is that you don’t worry about anything from the comfort of your home or country. If something breaks. The management company will take care of fixing anything, they also will receive your guest, check that everything is fine when they leave, and always maintain your apartment in perfect shape.
Most management companies will offer you a one-year contract to get started and to test if you like this system. If the first year you don’t like it, you can get out of the contract without any problem.
-And if my development does not offer that service?
Do not worry. That type of development is called Free Administration. If that is your case, there are many external management companies that can take care of your investment. Or in your case, you can take care of listing on Airbnb and renting it on your own. Remember that another option is to rent for longer periods of 6, 9 months, a year or more. It depends on the use you want to give your property. To enjoy or as a pure investment.