Purchasing A House In Lake Chapala For Investment
Are you thinking about purchasing a house in Lake Chapala with the express interest in renting it out? It's a great idea! Rental demand is high and investment in Real Estate is still a wise choice in Mexico and the Lake Chapala area. But what type of home should you buy, and where? What is the best price point? Educated Realtors can help you in this endeavor and get you the most bang for your buck.
There is a huge variety of homes available in Ajijic. Most rental demand would be for a 2 bedroom/2 bath home with a small garden for under $1200/month rent. If you are purchasing around $200,000-250,000 you will be in a good position to rent in that price range and make a decent return on investment.
Keep in mind, that there are an abundance of summer rentals. If your plan is to come and spend winters in your home and rent it during the summer, there may be times when you cannot rent it because demand is much lower than availability, however, in this case, a smart investor would choose a home with a pool as these are in far more in demand in the summer months.
If you are thinking of your property as a winter rental, then you can safely increase the rent during these months and still have no problem finding tenants.
There is also a strong demand for short term rentals (days-weeks) at a higher price than renting full time. For short term rentals you can collect higher daily/weekly rates at times when other properties are not rented. However, keep in mind that property management fees are more expensive for these short term rentals as this type of rental demands more work and a lot of time. You can expect property management fees to be as high as 35% for Airbnb type rentals.
As to the question of neighborhoods, for short term renters (meaning 6 months or less), or for renters not owning a vehicle, the basic answer is the closer you are to Ajijic the easier it will be to rent. Neighborhoods like Ajijic center, La Floresta, La Villita, Cielo Vista, Vista Alegre, El Parque, San Antonio, and the surrounding Ajijic area, rent easier than outside these areas. The only problem is that it is difficult to find something nice under $200,000 in these locations as they are the most popular and desirable. The best part is that these areas also hold their value better and are in higher demand, therefore, they are easier to re-sell when you want to sell.
Also, avoiding gated communities or fraccionamientos with high HOA fees is a wise move to keep overall costs low when the property is vacant. During times when you are unable to find a full time renter, or summer renter, then you will be forced to eat month's worth of HOA fees during a time of no income. Again, investment properties that have a pool or access to a community pool (in low HOA fee developments) will increase your chances of finding a summer renter.
Things You Should Know As A Landlord
It is common here to rent the property "as is" and for the tenant to look after minor repairs as they arise. Repainting the outside of the house, re-sealing the roof every 3-5 years, paying yearly taxes and water ($300-500 USD total) is the responsibility of the owner so a small part of your rent received will go towards maintaining your home in great shape and paying basic fees.
Services like electricity, water and internet always remain active and in the landlords (owners) name.
95% of homes come furnished in Lake Chapala, so when purchasing a home for investment, account for the cost of outfitting the home properly with all the items required for daily living.
Everybody loves their 'fido', so give consideration to making your home a "pet friendly" rental. Pet friendly homes are always in high demand.
Consider it's worth paying a (very small) monthly fee to a Property Manager , to keep an eye on the property when vacant and to look after the renters. They are your eyes and ears in Lake Chapala relieving you of the headache and burden of property management. Good companies will share an expense report with you on Google Drive so you always have the accounting information you need at your fingertips.
One of the best and most highly recommended Property Managers in Lake Chapala is Cosala Homes
"Hired Help" like property managers, cleaning, gardening, even handymen for electrical, plumbing, etc is much easier to find here and much less expensive than up north.
Rental contracts can be negotiated in any currency.
Rental contracts must be in Spanish to be legal but an English version is normally provided.
Real estate investment in Lake Chapala is a great idea to spread your portfolio and/or get your money out of the U.S or Canada. When it comes time to sell, you have the option of receiving any currency you want and in the meantime make a solid return on your investment.
We are always available for your questions so please contact us! about anything in this article or for information on moving to Lake Chapala.
Michaela & Ricardo are your FULL SERVICE Real Estate Agents. Along with our Retirement Seminars, our over 20 years of combined experience Lakeside, and our network of area Professionals, we help guide you to from beginning to forever in your Retirement Journey to Lake Chapala, Mexico.