I have a friend who thinks Mexico is the best place in the world to Invest in Real Estate. I have my reservations going outside the US. Can anyone give me the Good, the Bad, and the Ugly on Mexico? ;D
Hi:
I am originally from Bellevue. I now live in Scottsdale, AZ and go to Mexico quite frequently. I am in the process of buying a luxury condo on the beaches in Rocky Point. You probably have never heard of it, but it is seeing some serious appreciation right now…about 15 to 20 percent annually.
It is still very gritty looking. Many properties you can get into right now are ground floor stuff. I think investing down there right now is a great opportunity. Why? One of the main reasons is because of all the people moving to Arizona. There are 10,000-12,000 people moving to the state each month. Many of those people will be going down there on weekends to relax. It is only a four hour drive from Phoenix. There are also a lot of people from Texas who come over to enjoy the resorts and the beaches.
There is a ton of American money going into the city. Ground breaking on a new international airport is expected to occur within the next year or two. In addition, cruiseliners are going in. If you can get into Rocky Point, aka Puerto Penasco, I gaurantee that you will make a ton of money.
The only major drawback that I can see is that American financing is not strong in Mexico. Down there, you need to put 20 to 30 percent down on a property. You also do NOT own the land where your property sits. You only own the structure. Money down is not an issue if you have strong cash flow. Otherwise, it is quite a bit of loot to part with. Hope this helps.
George
I grew up in San Diego and have heard at least one horror story about the Mexican government coming in and displacing an entire retirement community of Americans. I believe you’re not allowed to own property within a certain distance of the Coast. However I’ve heard of loopholes where American’s can own Mexican companies which in turn own land. Just going from memory on this one…
A lot has changed in 20 years. Mexico has strong property rights and US citizens can have the same rights in Mexico as fee simple ownership in the US. I am a developer in a coastal resort area and I suggest that you do your homework. Make sure you understand as much as possible about the steps required of any project in Mexico. Do not rely on any single source of information. Talk to other people doing what you want to do. It is now becoming treendy and certainly profitable.
Regarding the event near Ensenada (Punta Banda, a development opportunity that is now again for sale), it is unfortunate and yet widely misunderstood. It brought a lot of fear for Americans buying in Mexico, yet the property rights that were upheld we would all want handled just the same had the situation (fraud - and by an American) occured in the US.
I live in Tucson, AZ and have been down to Puerto Penasco a few times. Cholla Bay looks promising, but the surrounding area is gritty (as someone else noted) and dangerous. The federales are also incredibly crooked.
I also looked into investing into real estate in Puerto Penasco and was dismayed to hear of the 30% capital gain tax and from what I understand no way to work around this. I think their probably are some great investment opportunities, but their government makes me nervous enough not to invest.
I have some relatives who leased a lot and were frustrated getting the deal finalized. It seem like there was always one more expensive document that was needed. They may not have done their homework so I can’t really say. But I do have a friend who recently leased a lot and had a house built on it and is happy. I believe that he went through a developer so that may have helped. And he may have payed a premium doing it that way. My relatives were transfering the lease (I believe) from another American and were getting a really good deal, so that may have been a factor. So it looks like do your homework and maybe be prepared to hire a reliable professional if need be.