Owning property in Mexico may seem daunting for some people but it does not have to be, far from it. The purchase process is easier than many people think and operating your property as a short-term rental is relatively the same as owning a property in a different state or province. One of the other most common worries we get asked about is around how to manage a property from overseas.
If you are renting your property in Mexico when you are in a different country, you will need to either self-manage the property or hire a property manager. Who manages the property could have a huge impact on the profitability of your investment. If it is not you, it will be important to hire the best possible property manager.
Self-Manage Your Property
Being your own property manager comes with pros and cons. It takes time and patience. You still have to rely on other people such as contractors, handymen and cleaners. If you live in Mexico and reside in the same city as your property, it is obviously easier to do.
If you want to self-manage your property in Mexico, you will need to spend some time initially to build a local team that will help you operate the rental.
Here is a list of contacts you will need on the ground:
- Trades/contractors that can handle various issues such as water heater, plumbing, electrical, air conditioner
- If your property has a pool and you are responsible to maintain it, hire a reliable pool company. This is not applicable if the pool is part of the building amenities, as it will be handled by the HOA
- Find a local handyman that can handle small repairs, receive deliveries, refill any supplies and be your go to person for issues that need immediate attention
- Find a local legal representative
Once you have your team in place, you need to advertise your property. Airbnb and VRBO are the most popular platforms to use for short term rentals but there are others too.
Last but not least, have the necessary instruction manuals so that your guests can take advantage of all that is on offer at your property.
It makes sense to self-manage your property if:
- You live next to your property.
- You want to save the cost of property management and are prepared to be actively hands-on.
Hire a Property Manager
One of the main advantages of hiring a property manager is to have him be a buffer between the owner and the guests. If there are any problems with payments or damages on the property, the property manager will deal with them. Also, property managers know all the ins and outs of the local laws pertaining to rental properties and can be valuable advisors.
Obviously, the peace of mind and the more hands-off experience comes at a cost. To manage a short term rental property, a property manager will typically charge around 20% of your gross rental income (his fees are considered tax deductible if you own the property through a Mexican corporation.
There is a lot of work that goes into marketing, guest management, and property care for a short-term rental in Mexico. From monitoring inquiries to answering emergency late-night guest calls to increasing the occupancy rate, it could be a full-time job if you do not have the proper systems in place.
The typical responsibilities of the property manager are:
- Advertising and marketing the property
- Setting the price
- Managing the calendar
- Check-in and guest communication
- Online payment processing and direct deposits to owners
- Coordination for cleaning and maintenance
- Completing inspections on a regular basis
- Monthly financial reports
Before selecting a property manager, it is a good idea to interview a few. Ask them questions about their processes and how they deal with certain situations. Also, ask for recommendations from other owners and find reviews online. Select the one you feel the most comfortable with.
Here are some questions you might want to ask property managers:
- What are their fees and when is it due
- How they handle tenant issues such as repair requests
- How they advertise the property and what platforms they use (Airbnb, VRBO…)
- If they work with contractors that are properly licensed in their respective areas;
- If they have customer support 24/7
- What is their accounting process is and what reports they provide and how often
- When the rental proceeds paid out to the owner
- At what point they contact you regarding maintenance or tenant issues
- How often they inspect the property
Most importantly, ask them how they have been performing. What occupancy have they achieved? Then, compare their performances with that of the market and other property managers.
Be as thorough in your selection process as if you were hiring for a job. It is that important. As mentioned in the introduction, who manages the property could have a huge impact on the profitability of your investment.
It makes sense to hire a property manager if:
- You want a more hands-off experience.
- You are a busy individual.
- You do not want to deal with all the tasks involved in managing a short term rental property from afar.
Conclusion: Self-Manage Your Property or Hire a Property Manager?
Many people might think it is easy to manage a property in Mexico from afar. Yet, it is not for most people. It requires you to spend some time upfront to establish a team of trusted contractors (from cleaners to handymen). You also need to advertise the property and coordinate the bookings.
If you are looking for a less active approach, hiring a property manager is the way to go. Make sure you interview multiple companies before making your choice. You need to have a certain level of comfort with the manager you select. Ideally, get recommendations and references to ensure he has a good reputation.
If you want more information on this topic or any other topic pertaining to buying or investing in real estate in Mexico, reach out to us through the contact form.