What is a Lock Off Condo & Crazy Architecture in Tulum, Mexico

What is a Lock Off condo?

In both Tulum and Playa del Carmen you can buy “Lock Off” condos. What are they? Essentially, they are two-bedroom condos that can be cut into one-bedroom + studio with their own entrance each.

It means that when you decide to stay in your condo, you can still earn money from the other unit. It’s quite an interesting concept that should get rolled out to other markets. My Tulum and Playa del Carmen realtor Luigi showed me such a condo in a pretty amazing development in Tulum.

This is not a pitch for this particular development, but what I wanted to show you is the type of architecture that is being built in Tulum, which is unique.

Tulum is booming

Big catalysts are being implemented.

1. A large train station is being built in Tulum

This train station will be part of the “Mayan Train” network which will link Tulum to the rest of the region and Cancun airport.

2. Tulum International Airport is set to open its doors early 2024

This type of architecture and lifestyle will soon be a direct flight away from Mexico City and major US and Canadian cities, not a 2 hour drive away from Cancun airport.

Full analysis of the Tulum real estate market

I am not saying that Tulum is a high yield investment destination. I just don’t know. There are too many moving parts. All I know is that the lifestyle and architecture are unique and that prices are at a 30% discount to Playa del Carmen.

I wrote a whole analysis of the Tulum real estate investment market.

Feel free to  get in touch with my Riviera Maya realtor Luigi if you have any questions.

To a World of Opportunities,

The Wandering Investor.

Available services in Mexico:

• How to Obtain Residency in Mexico
• My Real Estate Buyer’s Agent in Tulum and Playa del Carmen
• Give Birth in Mexico for Citizenship
• My Favourite Realtor in Puerto Vallarta, Mexico

Articles on Mexico:

• 6 reasons against a Real Estate Investment in Cancun
• Full Guide to Investing in Tulum Real Estate
• Making a Real Estate investment in Playa del Carmen – decent diversification in Mexico
• Investing in Multifamily Housing in Playa del Carmen
• Full Guide to Making a Real Estate Investment in Puerto Vallarta
• Puerto Vallarta Investment Case Study with Numbers
• Is a house in Puerto Vallarta a good investment? Case study with capitalization rates
• We bought a house in Playa del Carmen, Mexico!

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Transcript of “What is a Lock Off Condo & Crazy Architecture in Tulum, Mexico”

LADISLAS MAURICE: Hello, everyone. Ladislas Maurice from thewanderinginvestor.com. So Luigi and I just finished breakfast here in Playa del Carmen and we’re going to go straight to Tulum. We’re going to have a look at and give updates on the real estate investment market in Tulum, because there are many changes happening, right?

LUIGI: Absolutely. Yeah, it’s growing, it’s exploding.

LADISLAS MAURICE: Yeah. So we’re going to discuss that in detail. And then Luigi is going to take us to an apartment that is specifically designed for investors. And it’s called a?

LUIGI: Lock-off. It’s a lock-off concept. We’ll be discussing that.

LADISLAS MAURICE: Cool. Fantastic. Playa del Carmen is about a 50-minute drive away from Tulum.

LUIGI: Yeah, I’m driving, so 40 minutes.

LADISLAS MAURICE: Cool, faster.

LUIGI: Rock and roll.

LADISLAS MAURICE: Let’s go.

LUIGI: Let’s do it. This is it. One beautiful project here in Tulum. These amenities are really unique, something completely different. This is what Tulum offers. There is no limit, so architects can really design things that are absolutely different and cool.

LADISLAS MAURICE: Beautiful. Beautiful.

LUIGI: So this is attracting a lot of people on Airbnb and Vrbo also. If you’ve got pictures of your unit, so as an investor, you buy a unit here, and you post your pictures on your Airbnb list, and you see this, it draws attention. So you’re separating yourself from all the other basic condos.

LADISLAS MAURICE: Wow. And this is like a sea note with like–

LUIGI: Yeah. So this was manmade. So this is natural rock, this is all here. But they fill this up. This was in a natural, they fill that up with water. And they’ve got different seating area. And underneath here, they have umbrellas, they have more seats under there. I mean, this is really cool. So this uniqueness is what draws that occupancy. This is what separates you from all the other condos, basic condos. And so this is great for people who are looking for ROI, that want to invest in something that they can also come down for one month, two months of the year and enjoy a fantastic property like this.

LADISLAS MAURICE: Gosh, the maintenance is so good. Like, the water is so clear.

LUIGI: Crystal clear, yeah.

LADISLAS MAURICE: Crystal clear.

LUIGI: So as an owner, as an investor, not only are you making 5%, 6% return, people booking perhaps a little higher because it’s unique, you get to come and enjoy this whenever you want.

LADISLAS MAURICE: Yeah. Gosh. The water is so warm.

LUIGI: [laughs]

LADISLAS MAURICE: Yeah, it’s so warm, so clear.

LUIGI: I want to push you in but there you are. [laughs]

LADISLAS MAURICE: What are the HOA fees like per square meter, roughly?

LUIGI: So typically, they’re between $2.5 to $3 a square meter.

LADISLAS MAURICE: Okay, so the apartment, the two-bedroom apartment we’re going to see, so the HOA would be about $400 a month, roughly?

LUIGI: Well, this one is 140 square meters, so I’m just going to go, let’s say, $2.8, you’re looking at about, yeah, $414 a month.

LADISLAS MAURICE: Okay. For these amenities?

LUIGI: For these amenities.

LADISLAS MAURICE: And then we’re going to go check out the gym and the rooftop there as well?

LUIGI: That’s right. So not only do you have the swim-up, so this is an important thing, too, these are all swim-up units. So swim-up meaning you fall right off of your own terrace into your own private little pool area.

LADISLAS MAURICE: Wow.

LUIGI: So not only do you have the swim-up pool area, you also have the rooftop pool area with Jacuzzi, you have a rooftop bar, a huge gym. So these are some of the amenities you get. Now, this particular concept that we’re going to talk about today is a two-bedroom lock-off. A lot of Canadians, Americans, a lot of people aren’t familiar with a two-bedroom lock-off, but what essentially it is, is if you’re looking at this door–

LADISLAS MAURICE: Two doors, one apartment.

LUIGI: these are two doors, one apartment. So this is the door to the main part of the house, and this is the door to the second bedroom that you can separate and rent out separately. So we’re just going to walk in here.

LADISLAS MAURICE: All right. So guys, this is not like a property tour.

LUIGI: No.

LADISLAS MAURICE: The whole point is just explaining the concept, and the sort of kind of space that Tulum occupies in the real estate investment world. Because it’s very unique. Where else do you get architecture like this? I can think of Bali.

LUIGI: Maybe Thailand a little bit.

LADISLAS MAURICE: Yeah, some places in Thailand. That’s pretty much it. This is it.

LUIGI: So we have exposed concrete, you have a lot of vegetation, a huge terrace, a lot of privacy. So this is the main part of the condo. So again, and if we want to talk another market, not just the people investing that want to use the place a couple months of the year and then have a good ROI and vacation rental, you also have the digital nomads. Now, remember, Tulum, Bali, and Thailand are huge digital nomad hubs. And as a digital nomad, you can invest in a property like this. You can stay for two, three months in the main part of the condo, which is this right here. And then you still have some revenue because you can rent out the second bedroom that has its own separate entrance, so they’re not going to bother you.

LADISLAS MAURICE: You put like a little kitchen here.

LUIGI: Right. You would equip this with a kitchen. So you would put a tiny little electric stove top, a coffee maker, a bar fridge, plates, knives, everything you need to do, and essentially, this is its own studio, while you’re staying at the main part. Or, you can rent it out once the digital nomad leaves, you can rent this out as a two-bedroom, you can rent that out as a studio and a one-bedroom. So you’re essentially getting all three searches. If someone’s searching for a two-bedroom, they’ve got it. If they’re searching for a one-bedroom, you’re listed. And if they’re searching for a studio, your property is also listed. So it’s three properties in one, you’re getting a lot more traffic, and you’re able to push that occupancy level maybe a little higher.

LADISLAS MAURICE: And as the market changes, you’re more adaptable as well.

LUIGI: You’re more adaptable, yeah.

LADISLAS MAURICE: Look, in terms of net rental yields in Tulum?

LUIGI: Well, I mean, if we’re going to base on 2022, we saw 5% to 6%, some properties pushed up to 7%, 8%, depending, again, on who’s running the property and the amenities. Finishing 2023 going to 2024, ’25, while more of these projects completed, we have more product in the market. We don’t know if that’s going to decrease the rates, average daily rate, we don’t know. I don’t have a crystal ball. So we don’t promise anything. But if we’re going to base on 2022, we’re looking at 5%, 6% average return.

LADISLAS MAURICE: Yeah, because essentially, it’s a market of imbalances. Supply is booming with such properties, and then tourism is booming as well into Tulum. I mean the place keeps making headlines. Everyone knows about Tulum. And it just keeps getting better. And then there are these two huge catalysts that have been confirmed in the very recent past.

LUIGI: That’s right, yeah. So we have the train, which is big. The President, really, this is his project, he’s pushing for this. And so the train is starting in Cancun, is coming all the way down to Playa, Tulum, it’s going to Chetumal. It’s going to all through the Yucatan. So they’re going to start the early testing of a small section of the train in July this year. So that’s going to change this whole Riviera Maya, it’s really going to connect all of these areas.

And then the other big one, the other big catalyst is the airport, which was kind of a rumor for a long time but now we have concrete dates. We’re looking at the first flights are supposed to be scheduled in December 2024. It’s about 40% built. So they might even be ahead of schedule, I don’t know, we’re not promising that. But right now they’re looking at December 2024, which can change everything. And that airport is supposed to take about 2 million to 4 million passengers a year to start, which will take some of that pressure off of the Cancun Airport, which is two hours away from here. So now people can arrive and get here in 40 minutes instead of having the two-hour travel time from Cancun.

LADISLAS MAURICE: So such amenities, such apartment complexes will be a direct flight away from major US and Canadian cities.

LUIGI: That’s right.

LADISLAS MAURICE: So huge catalyst.

LUIGI: Yeah. Cool. Awesome.

LADISLAS MAURICE: Let’s go check out the rooftop and the gym which is quite spectacular as well.

LUIGI: Yeah, the gym.

LADISLAS MAURICE: And then, when we’re up there, let’s discuss some differences between the Playa del Carmen and Tulum real estate markets.

LUIGI: Yeah, perfect. So we’re going to go out the separate entrance. You have this, this bedroom has its own entrance and exit. So we’ll just go out here. Here we go. Yeah, so look at the size of this gym. So typically, you don’t find gyms like this in any projects. Usually, they’re a tiny little room with two couple treadmills, a little bike. This here, you have full squat machine, you have everything. So really people who are staying here, like, again, talk about the market, digital nomads. If you’re a person that likes to work out and you’re a digital nomad, you want access to a good gym, you’ve got it. So this is pretty impressive.

LADISLAS MAURICE: So essentially, the HOA is not cheap, a bit over $400 for a two-bedroom unit. But then when you take into account that you get membership for an actual gym, like, not a cheap gym, like you’re often seeing in condos in buildings, this is an actual I mean professional gym.

LUIGI: It’s a really good gym, yeah. And the pools and everything you have. And there’s a library, there’s all kinds of stuff.

LADISLAS MAURICE: There’s a library?

LUIGI: Yeah, there’s a reading area.

LADISLAS MAURICE: This is cool.

LUIGI: All right.

LADISLAS MAURICE: Wow.

LUIGI: Yeah, look at the view.

LADISLAS MAURICE: Jungle.

LUIGI: Jungle view.

LADISLAS MAURICE: Wow. Tulum, yeah.

LUIGI: So you can come up here hang out by the bar, take a plunge, just a couple of Jacuzzis there.

LADISLAS MAURICE: And, roughly, per square foot, how much is an apartment here?

LUIGI: Between $250 to $300 a square foot.

LADISLAS MAURICE: Okay, so 2.5K, 3.5K in square meters.

LUIGI: Right? So a unit in here is going to be above $300,000.

LADISLAS MAURICE: Cool.

LUIGI: But again, that’s about the average in Tulum, is about $2,500 a square meter, about $250 to $300 a square foot.

LADISLAS MAURICE: It’s significantly cheaper than Playa del Carmen.

LUIGI: It’s about $1,000 a square meter cheaper than Playa del Carmen, yeah. But the rates can be a little higher here. People are paying a premium to stay in Tulum because Tulum’s got a buzz around it right now. The influencers, everybody is talking about Tulum, the Hollywood stars, and you know?

LADISLAS MAURICE: Yeah.

LUIGI: So you can get a higher daily average rate and you’re paying less per square meter.

LADISLAS MAURICE: This is such an interesting market in the sense that it’s just hard to predict what will happen. So when you see this and you’re like this is cheaper than Playa del Carmen, it doesn’t quite make sense, it’s more premium, etc., there has to be upside, I think there’s upside as well. But then again, when you look around, all this jungle, this is going to be built at some point.

LUIGI: But you’ve got to keep in mind, these are also low density lots. These are huge lots. They’re not like Playa. Playa has small lots. I mean, that’s–

LADISLAS MAURICE: I mean, that’s pretty high density there, what we’re looking at here, what they’re building.

LUIGI: But that’s still considered low density compared to Playa.

LADISLAS MAURICE: Yeah, compared to Playa.

LUIGI: Right, because that, you’re talking about two-hectare lots.

LADISLAS MAURICE: Yeah.

LUIGI: Playa has tiny lots.

LADISLAS MAURICE: So from an investment point of view, the way I look at it is Playa offers certainty but Tulum is a bit more of a speculation.

LUIGI: Well, Playa has been around. It’s been established for 20 years, and it’s steadily growing. And it’s a big city now. And it’s attracting the long-term visitor, I should say, or even people moving there long-term. Tulum is exploding, so we don’t know what direction it’s going to go. There is a lot of buzz around it. And they are putting a lot of infrastructure, so it can potentially, in the future, attract also the people who are going to live here long-term. And still be a vacation rental place.

LADISLAS MAURICE: Like, a place like that would be a bit of a no-brainer. Let’s say, you’re in Toronto, or you’re in New York, you’re in Los Angeles, and you want to buy a condo. You look at what you can afford back home, essentially, not much at all. You’re just in some random building in a one-bedroom apartment with a little gym somewhere in some suburb.

LUIGI: Maybe, yeah. Yeah.

LADISLAS MAURICE: Here, this is the lifestyle that you get, right? So you get to live this lifestyle for a few months of the year, if you want to, when the weather is bad up north, you’re here. And the rest of the year, you can rent out your unit. And even when you’re here, because it’s a lock-off, you can rent out the little studio.

LUIGI: That’s right.

LADISLAS MAURICE: So essentially, and it’s not like you’re not going to rent out, it’s just a matter of price. Because with these amenities, you’re always going to have someone who’s going to be renting your apartment.

LUIGI: It’s true.

LADISLAS MAURICE: I mean, everyone would love to spend time here for like a week or two or a few months.

LUIGI: And as I mentioned earlier, when you have these pictures and you’re promoting this on Airbnb, it is very spectacular. It’s a wow factor. So you’ll definitely get some inquiries. Absolutely.

LADISLAS MAURICE: Cool. Okay, fantastic. So if you’re interested in the Tulum real estate market, I wrote a whole article on the market here, the neighborhoods to look at, the neighborhoods to avoid from an investment point of view. If you are interested in making a real estate investment here in Tulum, or in Playa del Carmen, or in Cancun, feel free to get in touch with Luigi.

LUIGI: Absolutely.

LADISLAS MAURICE: There’s a link below with his contact information and more information on his services.

LUIGI: Absolutely.

LADISLAS MAURICE: Great. Luigi, thank you so much.

LUIGI: Thank you so much. It’s great time.