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Why are vacation homes a good investment?

Investing

October 2, 2020

Vacation homes have become popular because people have short vacation periods, or because they want a place to get away from the hustle and bustle of the city for a weekend.

The demand for vacation homes in Mexico and South America is increasing, and this trend is expected to continue, so this is the perfect time to invest in a property.

As mentioned in several of our articles such as 'Why invest in real estate', buying a property is the surest way to make your money grow, even in times of crisis.  

Did you know that this type of investment has existed for more than 45 years? And it is a success almost everywhere in the world thanks to services like Airbnb and Vrbo.

Here are the main benefits of investing in a vacation property.

What is a vacation home?

As the name suggests, a vacation home is a property designed to enjoy your own space while you are relaxing.

Vacation homes provide you with all the comforts of a regular home, plus the privacy that a hotel and other similar types of accommodation do not offer, they are an excellent option for resting in a more private environment with greater freedom.

You can find vacation home rentals in beachfront locations with access to private beaches and even in luxury apartments in the middle of the city.

These types of properties have amenities such as swimming pool, balcony or terrace, gardens, parking, and even - if you are in a luxury residential area - services such as spa, massage, yoga, parks and many more.

Advantages of buying a vacation home

Investing in a property is one of the safest investments you can make, whether you are going to live there or not, especially if it is located in an area where the capital gain is constantly increasing.

These are some of the main advantages of investing in a vacation home:

1. Double benefit: a vacation home and possibility of generating income.

Buying a property of this type has great benefits: you will have a house or apartment to vacation with your family, couple or friends in your favorite place, you can rent it the rest of the year producing an income.

As mentioned in "What is the investment that generates the greatest capital gain", an advantage of buying a property is that, since it is a tangible good, inflation does not affect it as much as if it were money.

Buying a property that will increase its value over time -thanks to the capital gain- is a great investment, but you can also get an additional benefit by renting the property when you do not use it.

invest in a vacation home
The benefit can be even greater if the property you buy is among the most popular tourist destinations or in cities with great infrastructure.

2. The demand for vacation homes is increasing

In 2019, the amount for investment in vacation rentals was estimated at $170 million according to Research and Markets, as vacation homes offer a different type of accommodation than hotels.

Their popularity has been increasing thanks to services such as Airbnb and Vrbo, so the investment to acquire rental properties is increasing.

The opportunity to have a rest house, which also generates an accelerated return on investment through a vacation rental, is very attractive for investors looking for the best way to grow their income.

If you want to make this type of investment it is important that you take into account the following factors before buying:

  • The location influences the value of the property. You must be sure that the area has all the services with constant growth projections.  A property located near services such as hospitals, first class schools, shopping malls, restaurants, entertainment centers, among others, guarantee the increase of the capital gain and your investment.
  • Accessibility and connectivity, a property that is accessible and close to avenues that connect to important sites in the city is a decisive factor for decision making.
  • Projection of growth, is another factor to consider when making an investment, since it has an impact on the value of the property over the years as well as on the income that can be obtained.
  • Security of the area, many nationals and foreigners want to invest in a safe area, so it is essential to consider before the purchase.
  • Amenities are attractive when it comes to finding a place to relax and enjoy a quiet vacation, so they influence the decision to buy equally.
Banner of real estate developments in the Riviera Maya.

3. You can use services such as Airbnb or Vrbo

The hotels have been able to maintain their booking levels, but nowadays young people opt for simpler options that provide them with greater freedom and privacy.

The popularity of these apps is evident thanks to technological advances, so it is common to think about renting a vacation home for a weekend or longer through these services.

Whether travel is for pleasure or business, these apps have positioned themselves as the leading choice in terms of accommodation options.

Travelers see in rental properties an opportunity to stay and make their stay a unique and more private experience.

For example, when you are on a business trip, being able to stay in a luxury apartment with amenities such as a gym, spa, swimming pool, among others, is more attractive than a conventional hotel room.  

This type of services are reliable and safe, plus some of the aspects that make these platforms different are:

  • You are part of a global travel community of more than 190 countries.
  • There is a relationship between travelers and hosts.
  • The customer service team is available 24 hours a day, every day of the week and in several languages.
  • Payment protection in case of fraud.
  • Emergency assistance.

Investing in a property of this type has great benefits, since you enjoy your own space in an exceptional place with all the amenities when you need to vacation, and the rest of the time you rent it through Airbnb and Vrbo.

If you want to know more about how this type of app works, we suggest you read our article "Generating extra income with your property and Airbnb”.

invest in a vacation home
Spending time with your family in a house on the beach, with all the amenities and services you may need, is an option for a more peaceful and relaxed trip.

4. Constant return on investment

Profitability can be defined as the return on an investment. To determine it, factors such as maintenance costs and payments for services and taxes will be considered.

We have these recommendations for the purchase of your property, which will help you so that your property generates a return on investment:

  • The property should be located in an area of high capital gain to ensure that its value will increase over time.
  • Buy in pre-sale to get properties at a lower price to increase the profit margin.
  • Rent the property to obtain immediate income.

The rental value will depend on the property value, so make sure it has been built with quality materials to avoid extra maintenance costs.

The profitability of your property will depend on the amenities and services, so you should get advice from experts -as is the case of Anah- before investing.

invest in a vacation home
Investing in real estate is safe, since it can maintain or increase in value over the years.

5. Security in times of crisis

Although it may seem risky to invest in times of crisis, it is always a good time to invest in real estate, and it is much safer than other types of investments, guaranteeing that your money will be protected.

The uncertainty caused by crises can generate many doubts, but the real estate market during the pandemic has remained stable in Mexico, and investment costs are lower than in other countries.

The economic reactivation will benefit the real estate market, since construction is considered an essential activity that influences 37 of the 42 economic sectors in the country.

Also, the areas with high capital gains maintain their level of profitability and the interest in the purchase of real estate increased by 15% in the last semester.

Investing in real estate protects your money from inflation, but also benefits from it, since it will increase the value of your property.

If you want to know more, check our guide “Where to invest my money in times of crisis? “.

Banner of real estate developments in Merida.

What are the best areas to invest in Mexico?

The best areas in Mexico to invest in a vacation property are Merida and the Riviera Maya.

The Riviera Maya is a world famous tourist destination, so it is one of the best places to invest, especially for its beautiful beaches, its pleasant tropical climate at any time of year, natural attractions and all entertainment options.

Imagine enjoying the breeze and the ocean view while on vacation, with the security of having a private place to stay.

In addition, tourist attractions like the beaches in the Riviera Maya, theme parks, cenotes and much more to know, represent an opportunity for a new adventure in each visit.

Having a property in a place with a great flow of tourism like the Riviera Maya, allows you to obtain constant income by renting it out as a vacation home, because you will be able to host tourists from all over the world all year round.

Some of the favorite locations to buy a property in the Riviera Maya are Tulum —because of the beautiful beaches—, and Playa del Carmen because of its bohemian and cosmopolitan ambience.

On the other hand, cities like Merida -Yucatan's capital- are also a great investment option. Mérida has countless tourist attractions thanks to its traditions and culture, which are part of everyday life, making your visit an extraordinary experience.  

Did you know that Merida was recognized as the best city to live in Mexico? It is also considered the second safest city in Latin America.

The privileged location, surrounded by beautiful beaches just a short distance away, as well as cenotes, haciendas, museums and the archeological sites of the Yucatan, make it a very attractive city for tourism.

The most impressive thing is that many people marvel at the charms of this city and decide to move here.

Buying a property in a city like Merida guarantees you a return on your investment, especially if your house is located in the northern zone which is considered the location with the greatest capital gain thanks to its luxury residences and proximity to commercial plazas like La Isla Merida.

Make your money grow by investing in a vacation home

Without a doubt, real estate investment is safe, guarantees that your money will grow and therefore is an excellent business option.

The facilities provided by the apps and services to rent vacation homes allows you to start receiving income almost immediately.

Considering the above mentioned tips, you can have a dream vacation home in an incredible city like Merida or in the Riviera Maya.

Don't miss the opportunity to invest in your future, secure your money and make it work.

If you want to know more, read the 5 reasons to invest in the Riviera Maya and 5 reasons to invest in Merida, you will find all the information you need to take the next step.

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