You have been to Mexico many times. You’ve stayed at all-inclusive resorts, perhaps a boutique hotel in town, or rented a condo to enjoy your vacation. You’ve stayed on a short-term basis, or perhaps you’re a snowbird who winters in this beautiful country. Now you’re ready to take the next step. You’ve decided to stop paying someone else’s mortgage, and you are ready to buy property in Mexico.
Whether you’re an American, Canadian, European, or from any country in the world, buying property in Mexico requires much research and patience.
Today we will talk about the ups and downs, the pros and cons, and the process of buying property in Mexico.
Where to Start…
To begin, you should list your priorities of what your new home will include when you buy property in Mexico:
- Ocean front or just a view of the ocean?
- Perhaps jungle vistas?
- How many bedrooms and bathrooms do you want? Will friends and family visit often?
- How large of a pool will you have?
- Is condo living your preference, or do you need more outdoor space?
- What climate do you prefer?
- Hot, sunny and humid?
- A cooler location in the mountains?
- Rural or urban?
- Do you want your neighbours to be locals or expats?
These are questions that require specific answers which will allow you to narrow down your search. Once you’ve determined your geographic preference, you can move to the next step in buying property in Mexico.
How Do I Determine my Budget…
Your budget will depend much on where you have decided to buy property in Mexico. If you decide to live in a rural or mountainous region, your budget will be very low. One hundred thousand dollars in these areas will net you a magnificent hacienda. Conversely, should you explore urban areas near the oceans, that budget will be more suited for a studio apartment facing the adjacent building. Beachfront properties may sell for at least a half-million dollars, with luxury penthouses available for a king’s ransom.
If you have caviar taste on a beer budget, there are but a few financing options. Many banks will only offer mortgages to Residency holders, but the hoops to jump through are many and very small. Private investors will gladly join forces with you, however the terms and interest rates are rarely in your favour.
Have a discussion with your financial institutions at home, and your credible realtor and lawyer here will also offer alternatives and ideas. After all, buying property in Mexico is never a bad investment!
One other thing to remember, property prices are listed in US Dollars. For ease of conversion to your home currency, see the conversion calculator in our article “7 Good things to know after you made the move to Mexico“.
In order to maintain a smooth process of buying property in Mexico, you need to select a realtor. They will help you through the process, offer suggestions and tips, and make sure you find the property that fits your criteria. However, again this will require more research. Find a reputable and established agency, with a good track record of sales. There are many social media pages you can research, ask questions, and get feedback from others who have been in your shoes. Conduct an online search in your chosen area. Look at real estate listings and determine the most popular agency. You can also reach out to the agencies with questions to help determine which would be best for your needs. Don’t worry too much about selecting the perfect match, though, if it doesn’t work out go to the next name on the list. Remember, this investment will be for the rest of your life, so don’t rush it.
I Found the Perfect Property…
Depending on your requirements, finding the perfect property could happen in as little as a week or so, but be prepared to go the long haul. Plan several visits to the area to view properties, or you can have the realtor send pictures and videos. A virtual live walk-through is another option. All these are great methods, but nothing is better than being there. Remember, seeing is believing!
So you found the right home and you’re going to buy property in Mexico. You have negotiated the terms, agreed on a price, and paid a refundable deposit. Everyone’s happy and excited, but before you break out the bubbly, you need to hire a lawyer. They will conduct a search on the property to ensure that the property is free and clear of any encumbrances, disputes, and liens. This is one of, if not the most important step of the process.
Should you buy a property that is in dispute, then your ownership also becomes part of that dispute. That dispute could be a builder’s lien, questionable ownership, Ejido (communal land) or even Squatter’s Rights. Yes, Squatter’s Rights. If anyone is living on a piece of land for a specific period of time, they have ownership rights.
You see why it is of extreme importance that a real estate lawyer conduct a complete and thorough discovery of your property. Should your realtor tell you that you don’t really need this, or you try and deal directly with the seller, you could lose everything. Follow the process!
I’m Ready to Close…
The title is free and clear, and you are ready to proceed. An offer letter is drafted, a second non-refundable deposit is made, and a few days before the closing date, the balance of the agreed price is paid. Here you have two options…put the money in an escrow account, or dont.
Once all documentation is complete and all parties are satisfied, the escrow account holder will distribute the funds as required. If the property is a pre-purchase still under construction or an existing property undergoing renovations, the escrow account will distribute periodic payments to the builders to maintain schedule and budgets. The escrow account holder can be the developer, the realtor, or the lawyer. However, escrow laws are different in Mexico as that the money cannot be held “In Trust”. This means the funds are usually deposited into the personal accounts, which are not insured and susceptible to seizure or liens by creditors.
Should you choose not to use a third party escrow account, you have no protection from unscrupulous sellers, opportunistic lawyers, and may end up holding the…well, not holding anything!
Again, this is why preliminary research is so important. The realtor you choose should provide you with everything you need from finding your property in Mexico all the way through to moving into your property in Mexico!
So, all is good! Your “Buying Property In Mexico” adventure is about to come to an end, and all that’s left is to…..Whoa…..slow down caballeros!! Didn’t anyone tell you about Fideicomiso???
What the Heck is Fideicomiso…
According to MexLaw website, Fideicomiso is a law which requires “All foreign individuals purchasing property in a restricted zone (within 100 km of the Mexican border or 50 km from the coast) must purchase the property using a fideicomiso (bank trust)“.
When buying property in Mexico, Fideicomiso should be considered by anyone who wants to use their property for personal use only, and are considering obtaining permanent residency.
For those of you who are buying property in Mexico for rental income purposes, and plan on buying more than one property, then creating a Mexican Corporation is the best option. This will avoid the Fideicomiso process and extra expenses, as well as remove the associated restrictions. Once again, obtaining trustworthy and reliable legal services is the key.
One more thing about Fideicomiso…it was explained to me by Matt Weatherbee of NASPlaya that years ago some multinationals started buying properties on select beachfront locations. After some consideration Mexican authorities realized they would be losing control of their coastline. So, to control all ports of entry, among other reasons, Fideicomiso was implemented.
Buying property in Mexico should not be an ordeal. Partner with a reliable and honest realtor, enlist the services of transparent lawyers, and follow the process as the law dictates. There will be many along the way who will tell you some things are not necessary, or you can do without this or that, or that they have a great deal for you. Remember, all that glitters is not gold, and if it’s too good to be true, it probably is!
Follow your dreams, listen to your soul, and you too, like all of us at Mexify, will be living your best life in a Mexican paradise!