RANCHO AKU BALAM
ECO-RESORT & CONDO HOTEL
INVESTMENT PROJECT WITH HIGH RETURN

LOCATION: Riviera Maya (Mexico)
LAND PLOT: 11 hectares of jungle with cenote, 2.5 km from the beaches
REQUIRED INVESTMENT (PHASE I): $2,000,000 USD
MINIMUM INVESTMENT AMOUNT: $25,000 USD
ESTIMATED RETURN ON INVESTMENT: up to 50% per year
INVESTMENT TERMS: 5 years, with the option of early exit from the project
DEVELOPMENT PROSPECTS: detailed plan for phased development with gradual expansion of services
TYPE OF DEVELOPMENT: clustered eco-resorts and small condo-hotels
MANAGING COMPANY/DEVELOPER: Dest Group Ltd. (Toronto, Canada)

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PROPERTY

The property is located close to Acumal and Puerto Aventuras, which are popular resort towns in the Riviera Maya (Mexico). It is just 2.5 km away from the coast with beautiful beaches. The property includes 11.5 hectares of land in the jungle, 5 min away from the main highway connecting Cancun with Tulum. Now it is functioning as a working ranch.

A great advantage of this property is a cenote on its territory (an open underground lake), which itself is a tourist attraction, and serves as an unlimited source of fresh water at the same time (like a well). The property also includes a two-storey 4-bedroom house 375 sq.m (approximately 4,000 sq.feet), built in traditional Mexican style in 2010. The house is powered with solar panels. Other structures on the land include horse stables, living quarters for stables, and a large riding ring for horses training.

The existing structures are surrounded by plenty of land that can be used for many purposes. With some extra work it can be turned into a nice common area for recreation and for hosting various events. At the initial stage the house can be rented out either by rooms, or as an entire place for large groups. Later on it can serve as an administration office for the resort that will be built there.

The house needs some renovation. Also it will be good to put a large swimming pool on the adjacent territory. In addition, an outdoor platform with some cover over it can be built there for hosting various events, with the capacity of around 50 people. And the surrounding territory needs some landscaping as well.

ECO-RESORT

The large size of the land parcel along with its good location makes it a unique place for building there an eco-resort. The proposed project involves gradual development of the territory by clusters. In essence, we o􀆴er to divide the territory of the ranch into separate plots (clusters) about 1.5 hectares (2 acres) each. Every cluster can fit about 35 small cabins, with the total capacity of up to 70-85 people. Each cluster can function as a separate small eco-resort with its own theme intended for di􀆴erent groups of people by demographic or by certain common interests.

Altogether, the ranch territory can be divided into 6-7 plots, whereas each of them is built as a combination of micro-clusters. Every micro-cluster will consist of 6-7 cabins that can accommodate up to 12-18 people. This way it will be easier to serve the target types of guests and provide them with a small group vehicle.

As an alternative to eco-resorts, the clusters can be repurposed for building small condo hotels, that can be either operated as a hotel or sold as private apartments. The option of constructing condo hotels is considered as a backup plan (Plan B), or as a possible pivoting from the main project (in order to diversify investments).

The final phase of the project will be selling each cluster (eco-resort) to a consortium of investors, while retaining the status of the general managing company. This way the initial investor(s) will control the operation of eco-resorts and will keep the ownership of the ranch and the land at the same time.

INVESTMENT

The provided below calculations of the expected return are based on the minimum required initial investments including purchasing the ranch, doing some landscaping work, and building 25 small cabins - to create a small eco-resort.

The preliminary estimated initial investment is $2,000,000 USD. In addition to the purchase price of the ranch ($1,200,000 USD), this includes landscaping and organizing the common recreation area, putting a swimming pool and a covered platform for hosting events, which will require approximately $150,000 USD. Plus the cost of construction of 25 small cabins for organizing an eco-resort - about $625,000 USD ($25,000 USD per cabin).

According to the preliminary assessment, a small eco-resort consisting of one cluster (25 cabins) can provide a passive investor with minimum 25% return per year. However, the return on investment can be increased up to 50% if such an eco-resort is turned into an active investment through providing a range of additional services.

When the second cluster is built (as well as all subsequent ones), the basic return on investment will increase up to 35%-50% per year, even without taking into account the additional income from providing extra services. We have also not included into our calculations the increase in price of this property after the cabins are built there and a successful eco-resort business is created. The cost of created business is usually calculated as the two-year profit generated by this business, which we have not taken into account while calculating the expected return on investment.

Taking into account inflation and the growing interest to investing in real estate in Mexico, we can forecast the price appreciation of the ranch for about 5%-6% per year. Therefore, within 5 years the price can increase for 30%-40%. Aside from that, because the project involves building eco-resorts and/or condo hotels on the territory of the ranch within 4-5 years, this will substantially increase the value of the property. We estimate that the property can cost up to $2,500,000 - $3,500,000 USD, after the development project is implemented.

Therefore, altogether the property can potentially increase its value (capital gain) by about 150%-200% over five years, which is equal to 30%-40% per annum.

CONCLUSIONS

According to our preliminary and cautious estimates, the implementation of the project, even under unfavorable circumstances, can bring at least 25%-30% of annual return. However, if the project is realized to its full potential, the return on investment can reach up to 50% per year and more.

If, for some reason, the project is not implemented, the ranch can be sold as is, which will allow investors retrieve their funds. In this case even the fact that the property comes with a detailed project for organizing an eco-resort or condo-hotels on its territory, will add value to it and can bring certain profit after the sale. The best part of this project is that most of investments are to be made in real estate. This guarantees the return of the invested funds even under the most unfavorable circumstances.

DISCLAIMER

Please, be advised, that provided calculations and development plans are prepared solely for outlining a general idea about the investment project, and cannot be considered as a promise of obtaining the specified return on investment as well as nor this is a guarantee that this project will be implemented in the described way. The more detailed and accurate calculations of the required investments and the expected return will be made after the purchase of the ranch. At that point the most effective option of the development project of the ranch will be selected. Based on the selected option, all necessary permits will be obtained, and a detailed estimate of the construction, labour and material costs will be made. It should be also understood that any changes in economic, political and other situations may have a significant impact on the implementation of the project and its profitability.


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