Bargains on the Pacific Coast?

Last week, my scout Jason Holland was putting boots on the ground on Mexico’s Pacific coast.

I sent him there to get an update on the market in Puerto Vallarta and to check out progress in the neighborhoods where I’ve identified the strongest opportunities for real estate investors.

I’ll be discussing this in more detail in the coming days…

Today, however, I want to focus on the second leg of Jason’s trip. North of Puerto Vallarta, there are a string of smaller beach towns, spread out along the Riviera Nayarit. Less developed and less visited than Puerto Vallarta, these towns offer lively Mexican culture, small scale hotels, boutique shops, and rustic cafes that cater to local vacationers as well as a small cohort of retired expats.

Jason set out on a whistle-stop tour to check them out and see what opportunities he could find…

Along the way he sent me tons of notes and video reports, a taste of which you’ll find below…starting in the town of Sayulita, a designated Pueblo Mágico (Magic Town), and on to San Pancho, Lo de Marcos, and Rincón de Guayabitos…

The first notable change since I’ve visited that area is signs of a huge new road development linking Puerto Vallarta to the coast to the north.

It’s the perfect example of what I call a Path of Progress. An infrastructure project of bridges, tunnels, and viaducts is expected to cut the drive times from Puerto Vallarta to this coast, as well as from the city of Guadalajara, which has a population of nearly 1.5 million.

I’ve personally had a traffic nightmare with huge delays on that road when I was last scouting the area. This could be a game-changer for beach towns that are already seeing an influx of American families…young couples from the U.S. and Europe…and well-heeled Mexicans from Guadalajara.

Here’s Jason’s video:

Sayulita

Jasons says: It’s similar to Tulum in a lot of ways. Yoga. New Age shops. $200 beige smocks. Lots of macrame and hippie-chic design.

The pioneering surfers and bohemian expats who started coming here in ’60s, ’70s, and ’80s, buying up ocean-front or ocean-view lots for $5,000…$10,000…$20,000…have been joined by fresh faced American families dutifully wearing sunhats and sunscreen, riding around in rented golf carts…young couples from the U.S. and Europe…and residents of Guadalajara, one of Mexico’s largest and wealthiest cities, seeking weekend getaways stream into the town center starting on Friday afternoons.

The barefoot surfers carrying their boards after a session and dreadlocked bongo drummers playing impromptu performance on street corners for spare change are still there…but Sayulita has certainly grown up.

Little Sayulita, population 5,000, retains its laidback vibe and bohemian heart. For those who visit, it’s a quiet retreat from the hustle-and-bustle of Puerto Vallarta 25 miles to the south.

However, there’s limited inventory and high prices. Not many condos. A two-bedroom on the quieter north end of town is going for $465,000. It’s within a walk of the beach. Has an ocean view. A golf cart parking spot (golf carts are big here). A very simple place.

The expat scene, including those buying the million-dollar homes, are primarily from California—especially the Bay Area (I’m thinking techies), Pacific Northwest, Colorado. They come for the surfing and bohemian vibe. For them, these prices are cheap. Sometimes they buy, use the condo for a few weeks a year, and rent out the rest of the time. The very wealthy buy and go a few times a year and don’t bother to rent out at all.

When the rare condos come on the market they go fast. An agent told me that some are buying here to get some money out of the U.S. and also to have an escape if things go bad back home. It’s a changing of the guard from the old hippies to big money.

What’s crazy is Sayulita is still very rough around the edges. Roads are in bad shape. Some places are up super steep and rutted dirt roads. You need a 4×4 to get up, but they might be impassable if it’s been raining. Last time I was here it was the same, so not much improvement on that score in about four years.

Ronan says: Watching your videos, I’m reminded how beautiful this region is. We don’t get those steep hills and elevated views in places like the Riviera Maya. And we don’t get those rich, green, jungle-clad hills in Cabo…

On my last trip I considered spending a night or two there, but there was no accommodation that jumped out at me. It seemed really expensive for ordinary small hotels. And the fancy boutique resorts in the area were charging a whopping $1,500 a night.

Jason says: What strikes me most is the landscape. The mountains, the jungle. Reminds me a lot of Costa Rica’s Southern Zone—including the roads to and in Sayulita. There are still some budget hotels and even hostels here. But anything decent and close to the beach is pricey, especially in winter. And because of the lack of buildable land, it’s all small-scale hotels.

You can watch my video from Sayulita here:

San Pancho

Jason says: Just one town north of Sayulita is another surf haven: San Pancho (officially San Francisco). The main street coming off the beach is lined with craft vendors, surf shops, boutiques, and little restaurants serving up everything from seafood tostadas and fish tacos to barbecue to vegan and “healthy” smoothies. The hippie vibe is strong here. Everything is reachable on foot in the main part of town and most people get around that way—or on bike.

It’s a low-key and quiet place; no large resorts or tall condo towers looming. More like boutique hotels and low-key condos. Villas here with ocean views or close to the beach command a premium because of limited inventory. San Pancho used to be considered the lower-cost alternative to Sayulita—but that’s no longer the case.

One new condo project in town stirred up a bit of controversy. Long-time residents felt the modern design clashed with the funky character of the town. But the complex, featuring two-bedroom condos right on the beach from $398,000 and just off the main drag, would make an attractive place to spend time or a lucrative vacation rental. (You can check it out in the video below).

Like Sayulita, agents are telling me it’s a sellers’ market in San Pancho right now. Homes are going for above asking. And there are bidding wars.

People from Guadalajara flood both towns on weekends, and with a limited number of small hotels, many opt for Airbnbs.

Ronan says: In your video, you do a walkthrough of a small hotel for sale, too. I wonder if the better play here is to offer the whole place as a short-term rental for groups. In other places, like Tulum and Rome we’ve found boutique hotels can do much better by converting them to rentals for large, underserved groups.

Jason says: This could be big in Sayulita and San Pancho. Holistic health retreats, yoga retreats, family reunions, surf tours…destination weddings, bachelor and bachelorette parties…

Last time I was here I met folks who focus their rental business on high end homes in Puerto Vallarta for weddings and extended family vacations. In house chef, driver, maids… This could be something like that on a smaller scale.

Note: Jason’s video from San Pancho includes two property walkthroughs. You can check in with Aaron Fisher of MexHome Real Estate Group for details on the listings. But this was a whistle-stop scouting trip, no due diligence was done on any of the properties looked at.

Lo de Marcos

Jason says: To be honest, there’s not much in this rustic beach town farther north. And from what I’d heard about this place in expat circles, people like it that way. They don’t want the attention of Sayulita…they want it to be under the radar and undeveloped for tourism.

And it was quite refreshing to visit the beach there and find just one palapa restaurant…the sand and the jungle-covered hills…and not many people out on the sand. Beautiful. Pristine. Unspoiled.

Lo de Marcos was very sleepy. It’s known for being a winter home to snowbirds from the U.S. and Canada. The expat population swells in that time. Many come down in RVs and stay in trailer parks either on the beach or close to it. What a location! I’m sure the town is much more active then than when I was there. So, I could see it being a fun place that time of year.

The beach itself has some small hotels and apartments—really very traditional Mexican style. Also, some higher-end luxury villas. Simple homes in town range from $100,000 to $200,000—many would be tear downs. The luxury properties go from $500,000 and up. On the beach it’s more like $1 million and up.

You can get lots inland or in town for about $100,000, while beachfront lots go for about $900,000. Honestly, I’m surprised by the prices.

Ronan says: Some of those simple homes in town could be homely with some TLC. If you buy for $150,000 and put another $50,000 into it you could have a charming house, a very nice option at the low range budget here. And for another $50,000 you could build an apartment on top and rent short term. You won’t get rich from renting, but the income could go towards covering much of your monthly living expenses.

Rincón de Guayabitos

Jason says: Rincón de Guayabitos is much more developed than nearby Lo de Marcos, a bustling beach town that is hugely popular with middle-class Mexican tourists. You’ll find all the hallmarks of a tourist town: the souvenir shops, the seafood restaurants, places to get beach chairs and sun hats. People come for the weekend and absolutely flood the place on holidays.

Most people stay in simple hotels by the water, although I did spot some newer hotels that had more modern styling. Condos here, on the beach, run about $350,000, and like Lo de Marcos, there are some higher-end villas and resorts just outside the town proper.

There is not much foreign tourism here in the summer. But it’s another snowbird destination, one favored by those who want a more “authentic” Mexican experience. Those who buy property or settle down full time do find prices lower than Sayulita and San Pancho…but not much lower…and that could be set to change as this whole stretch of coast continues to benefit from a Path of Progress and develop further.

Luxury master-planned communities in and around Lo de Marcos and Rincón de Guayabitos, with residential components, golf, marina, and high-end resorts, will be game changers.

Ronan says: I never got to visit but I did visit a big piece of beachfront land close by that’s slated for major hotel, marina and golf development. Millions is being poured into infrastructure and the golf course.

I’m speaking to the developer about offering members of Real Estate Trend Alert (RETA) first shot and special member-only pricing in an area of condos and homes in the heart of the community and adjacent to the beach and marina. I’ll be sharing an update with them when we’re closer to a deal.

Watch Jason’s video from Rincón de Guayabitos, here:

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