I’ve just returned from Tulum on Mexico’s Riviera Maya. I was joined by a group of your fellow RETA members.
We came to review construction progress at Sian Ka’an, the #1 resort rental opportunity on my radar. Of course, we had some fun, too, taking in the breath taking beauty of this coast and picking each others brains. We even squeezed in some golf.
What a week to visit. This was a big week for Tulum and the Riviera Maya. There was big news for members of our little group who have already invested here. If you haven’t already invested you can still profit…but you’ll have to act fast.
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More from my Tulum trip in a moment…but first I want to make sure I draw your attention to the special pricing and terms I’ve negotiated on 10 phase-three units. I twisted developer Benjamin Beja’s arm.
The M (middle) units start at $164,000. He has agreed to make 10 units available to members of our group with a $5,000 discount. You can lock down a unit with a down payment of $4,000, monthly payments of $999, and three balloon payments of $10,208 during the build period.
I strongly urge you to visit (Benjamin will pick up the tab while you are down there) and check out this opportunity for yourself. Once these units are sold…or May 1st rolls around…this offer is of the table. I expect prices to rise further in May.
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Last year Mexico’s Riviera Maya greeted 2.9 million visitors. That’s a big number. A government plan calls for this number to increase to 18 million by 2025. An increase like this means a major infrastructure investment. Mexico’s president Felipe Calderon was here two weeks ago. Accompanied by his minister for tourism and infrastructure he officially kick started the Tulum airport project.
The president told a gathering of press and dignitaries that construction contracts would be awarded by the end of the year with construction to begin shortly afterward. The 1,500-hectare site (just outside Tulum) is “ready to go”. Once open the airport will accommodate three million visitors.
That’s a lot of people who will be looking for a place to stay. Fifteen minutes away from where the new airport will be built is Sian Ka’an and the Gran Bahia Principe Resort. That’s where we have been hanging out.
Right now, there is a shortage of rentals in this resort. That’s right….a shortage even before the new airport lands three million visitors in the area. This resort is operating at 96% occupancy this year. This week they are full. Last week they had to arrange alternative accommodation for guests as they were overbooked.
To Remind You About This Deal:
The Gran Bahia Principe is located close to Tulum on Mexico’s stunning Maya Riviera, 23 minutes from Playa del Carmen, just over an hour from Cancun airport. It boasts all the amenities you would expect from a resort of this quality and size.
The Robert Trent Jones golf course opened late last year. The course is absolutely world class. A Spanish company, Grupo Piñero, owns Gran Bahia Principe. It also owns Europe’s second biggest travel agency, Soltour, which sells and runs 2.5 million vacations every year.
Grupo Piñero’s hotels along this stretch of coast have been operating at 88% occupancy for the past 10 years, and the Gran Bahia Principe already has a total of 2,700 rooms.
Fortunately for us, 2,700 rooms aren’t enough. The resort needs 3,000 rooms…because that’s the current level of demand.
And that’s before you even figure in any impact from the new golf course or airport.
The Developer at Sian Ka’an
Serial developer and entrepreneur Benjamin Beja studied law in Mexico before completing Harvard’s prestigious MBA program. Over the last 10 years, he has sold and/or developed more than 1,000 homes (mostly targeted at the North American market) in Mexico City, Puerto Vallarta, Riviera Nayarit, and Riviera Maya.
Benjamin spotted the opportunity created by the room shortage at the Gran Bahia Principe. And the Gran Bahia Principe hotel chain likes his work. It (through another Grupo Piñero company) has agreed to lease the 300 units Benjamin is building.
Owners of these units will be paid a guaranteed and fixed rent for the duration of the lease.
The Project
Benjamin is building 300 condos on the new Robert Trent Jones golf course, built to hotel specs. These condos will be located a block from the new 7,600-square-meter clubhouse.
Amenities here include commercial area, tennis courts, spa, and restaurants overlooking the natural cenote-dotted course. A shuttle bus takes you between here and the beach and main hotel amenities every 10 minutes. Residents and visitors have full use of all of the resort’s amenities.
The Rental Yield
Here are the guaranteed and fixed rental yields:
* 56-square-meter unit: $9,000
* 90-square-meter unit: $13,500
* 130-square-meter unit: $13,500
And some other important specifics:
* Rent is paid quarterly
* The rent you receive is fixed, irrespective of occupancy
* The operator will take care of all the expenses
* During the course of the lease, you will not pay maintenance fees, HOA fees, administration fees, or property tax
* Each unit comes with approximately $18,000 worth of furniture and appliances
How This Differs From Other Rental Promises
Whenever a developer talks about guaranteed rental returns, I hear alarm bells. From Dubai to the Dominican Republic, real estate developers “guarantee” rental returns pushing (in some cases) double digits for periods of two to four years.
In the industry, it’s no secret how this works: You effectively pay upfront for the rent you will receive during the period of the rental guarantee. In other words, your “return” is actually “priced in” to the purchase price.
If you buy a unit expecting—or relying—on the same level of rental returns to continue at the end of the guarantee period, you will be sorely disappointed. The rental market for your unit will be limited.
True rental guarantees—that accurately reflect the market—are rare. So rare, that I think of them as a unique type of program for savvy investors. I call these “Gilt Resort Programs” because of the guaranteed fixed payments.
Gilt Resort Programs offered at a retail level are difficult to find. The good deals are typically snapped up by funds and high-net-worth individuals. I can understand why—who wouldn’t want to lock in a strong, fixed and guaranteed return with the upside potential of capital appreciation?
Here’s how Gilt Resort Program deals work:
1. The developer makes plans to build a condo building or hotel. He pitches the location, the building, and the resort to a hotel or travel operator.
2. If the operator likes what he sees, he signs an agreement to lease all the units in the project or hotel from the owners for a fixed period of time.
3. The rent to be paid by the operator is agreed upon in advance.
4. The operator takes on the entire risk of selling the rooms.
5. The operator is confident he can make a margin on the difference between what he rents the units for and the net revenue he can generate from selling the unit by the night or week to vacationers.
6. The operator and the developer agree upon a standard unit fit-out.
The operator of these units knows the market here. It already has 2,700 rooms under management in this area.
Remember, the strength, stability, and track record of the operator is the key to a deal like this. A promise to pay a fixed rental income is only as good as the group making the promise.
This group is strong; however, I still encourage you to check it out on your own.
What We Saw Last Week
Here, you aren’t relying on a resort developer’s promise to build roads, put in infrastructure or build a golf course. Check out these videos:
The roads are in places. Infrastructure is first rate. The Robert Trent Jones Golf course is absolutely fist class.
Video 1: http://sharing.theflip.com/session/841b40ea01614dfc99e8798ce133d497/video/12089294
The water you see dotted along the course are natural cenotes. Try this for a testing par 3.
Video 2:
http://sharing.theflip.com/session/57c9fc490d2b35a1612a3aaa5c2f8d3c/video/12088726
Video 3:
http://sharing.theflip.com/session/161cc191d6d4f1e7be6ca38f6d4fa4d7/video/12088948
These are two of the holes that border Benjamin’s next project (more about that later).
Video 4:
http://sharing.theflip.com/session/be03ee3e102c5f5138d955771c0a30eb/video/12089928
Video 5:
http://sharing.theflip.com/session/d6e73c9515ebed3721ef4a3e180b195d/video/12089783
The exterior of the clubhouse is complete. They are working on the interior fit out. The clubhouse is expected to be open within the next 3 months. Here we pass the clubhouse to our left.
Video 6:
http://sharing.theflip.com/session/153ee9e1427c9e38c0f2442af13da847/video/12143945
Phase 1 units are on track for a June delivery. The site was buzzing with activity when we were there. This is a garden unit…
Video 7: http://sharing.theflip.com/session/919e320c32abb10ce25636a24856929e/video/12141974
This is a penthouse unit…
Video 8:
http://sharing.theflip.com/session/e21fd38ac160f01e75897e62884a1f27/video/12141794
The finishes are absolutely top class. These units will form part of the resorts premium collection.
The CEO of the resort joined our group on Saturday morning. He’s the guy that signs your rental agreement. He is also a fellow owner at Sian Ka’an. He bought four units.
Your lease expires in seven years. Members of our group were interested to hear what the resorts intentions are at the end of this period and what the medium term projections for new room supply in this area are. Hear what Jose Maria had to say…
Video 9: http://sharing.theflip.com/session/58e08307e134851a6cbc3198d70427ae/video/12254707
Sales volume has been accelerating. Phases 1 and 2 are pretty much sold out. As of yesterday a handful of units were still available; 50 units or so are still available in Phase 3. Inventory availability changes daily.
If you haven’t got in on this opportunity already, you still have time but you’ll have to move fast. Benjamin and his team host another big group of readers next month. Members of our little group who have visited have been really impressed with what they have seen. In fact, 87% have bought.
If you have been waiting and watching this deal from the sidelines I’ve twisted Benjamin’s arm on your behalf. He has agreed to ring fence 10 phase-three units for RETA members at special pricing and terms. Phase 3 units are set for delivery June 2012. Here’s the deal:
The middle M units list for $164,000. RETA members can knock $5,000 (this cannot be used in conjunction with any other offer) of this price making the price $159,000.
Benjamin has also agreed to extend special payment terms. You can buy one of these units with a $4,000 down payment and monthly payments of $999 during the build period. You will also need to make three balloon payments of $10,208 during the build period.
The Play
This deal offers a strong rental yield with the prospects for capital appreciation.
My recommendation is to buy one of these units and hold until the lease period expires.
At the end of the lease period, I expect cash-on-cash yields will rise substantially.
I also expect prices will be substantially higher.
Also at the end of the lease period, I expect the new airport to be fully functioning. If you decide you want to exit, this would be a great time to do so.
Next Steps
Benjamin’s team is standing by to send you a full information pack (including floor plans and renderings) and answer any questions you may have: donna@mexicoalive.com. The team will be delighted to schedule a one-on-one conversation to talk you through the opportunity. I strongly urge you to get in touch today. I don’t expect these units to last long.
I strongly urge you to visit and see this opportunity with your own eyes and to meet the team behind the project. Benjamin believes in his project. He’s willing to put his money where his mouth is.
He asked me to pass on to you an invitation to visit the property for a weekend—all expenses paid. This is the same invitation I personally received when Benjamin first offered to show me the development. It’s the same invitation I took Benjamin up on last week. In other words, most visitors won’t receive this level of attention. This is a RETA Members-only VIP Chill Weekend.
Just get to the Cancun airport on your own, and Benjamin will take care of the rest…not only the logistics, but he’ll also pick up the tab. Remember, all you are risking is a weekend of your time along the stunning Riviera Maya and an airfare. This is an exclusive invite extended to members of Real Estate Trend Alert.
There is both limited time and availability at these special members-only pricing and terms. I strongly urge you to contact Benjamin’s team today. I expect these units will be sold shortly.
This offer is off the table once all 10 units have sold or May 1…whichever comes first.
Wishing you good real estate investing,
Ronan McMahon
P.S. I like this offer because it comes from a solid developer, with guaranteed fixed income, backed by an experienced and successful resort operator. The market here is robust. And the terms are excellent, allowing you to leverage favorably.
Please contact Donna today: donna@mexicoalive.com. She’s the Scottish lady that features in some of my video.
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To help you make clear decisions, you should know that Benjamin Beja is a client of Pathfinder. To learn what that could mean for you, read this disclosure .
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