Puesta del Sol

There are two condominium developments in Puerto Vallarta with the name Puesta del Sol.

One is in Marina Vallarta and is not being reviewed here. The second is in central or downtown Puerto Vallarta, about half-way up the mountain and is the subject to this review.

Puesta del Sol is an 81 unit complex of 2 bedroom and 2+1 bedroom units built between 1977-1980. It has been renovated. The complex is very stable with little turnover. It has a very central location which precludes the need for an automobile.

There is no construction, delivery or financing risk. Environmental risk lower than average for the Pacific Coast of Mexico.

Operational risk is lower than average for Puerto Vallarta. A 2-bedroom condo pays $350 per month in maintenance fees. The location of this project, part way up the mountain, will significantly reduce the requirement for air conditioning. Annual electricity costs at these condos will likely be USD5,000 lower than similar sized beachfront condos.

Rental income opportunities are higher than average for Puerto Vallarta. A 2-bedroom condo will likely generate in excess of USD20,000 in rent per year. We have access to records which show a 2- bedroom condo with USD21,000 of rental income for the period Nov 1 - April 30.

Net rental income will likely reach the minimum investment threshold to make owning desirable on an annual cash flow basis. There is a sign outside the complex that indicates it is not a rental building. That sign is there to discourage walk-in traffic.

All infrastructure in the area is complete and functioning. However, the local roads can be difficult to use in the rainy season and pedestrian access is only for the sure footed.

Units are premium priced due to the higher than average rental opportunities. However, there have been recent price reductions in the building, and sellers are offering financing to buyers. A 2-bedroom unit can be purchased for less than $370,000, making this project, financially, more desirable than Selva Romantica, Quinta Luna and Molina de Agua, buildings in the same market. The rental opportunities, and the stability of the building provide downside price protection.

Recommendation: purchase