 If you have recently purchased some real estate in Cozumel for investment purposes, you are in good company. Recent reports suggest that as many as 25% of these purchases are made by those who plan on using the property for investment purposes only. If you hope to "flip" the property, there are 4 things you must be aware of that can put a crimp on your profits.
1. Property Taxes. Keep the property for a few years and you may experience a surge in property taxes especially if your taxes are reevaluated during that time. Some hot real estate markets such as Cozumel have seen taxes nearly double in just 5 or 6 years.
2. Renovation Expenses. You may have purchased a "fixer upper" at a bargain rate. Once your project is complete will you be able to recover the expenses and make a profit especially if the value of your renovated property is above those in your neighborhood.
3. Property Insurance and Mortgage Costs. You will pay more for homeowner's insurance if you do not occupy the residence and you have tenants. If you are financing the property, you already know that your end price is higher as well.
4. Rental Pressures. A market saturated with rentals will mean that the rents you can charge will be less than what you had hoped to receive. In some markets you are required to get special licensing in order to be a landlord. In other markets the legal rights of tenants mean you could have a lengthy and expensive battle in ridding yourself of a bad tenant. Will the lower income levels coupled with the added expenses drag your investment down?
Of course, you can limit your costs by doing the majority of the leg work yourself, but if you want to limit your risk exposure, find a knowledgable and dependable Construction specialist to execute renovations and improvements in your investment. Flipping a home with attractive profits for you can be done timely and easy with the right approach guided by your professional Real Estate consultant.
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