The U.S. State Department estimates that there are twice as many people buying a home in Mexico today than there were just a decade ago. Many are buying in new waterfront resorts targeted to Americans in popular destinations like Puerto Vallarta, Cancun, Sonora and the Baja Peninsula.
The appeal is more than just the thought of permanently toasty weather. The cost of living, from housing to health care, is significantly lower in Mexico than it is in the U.S. That makes the country especially attractive to retirees on fixed incomes, as well as to younger telecommuters and others with portable jobs fleeing high-cost U.S. cities. Increasingly available creature comforts like high-speed Internet access are making the country more attractive to Americans. In Baja, there's even a Costco with an oceanfront view.
Buying south of the border has its risks, however, so keep these thoughts in mind:
Beware of high-pressure sales tactics. Even the fanciest resorts sometimes participate in aggressive sales tactics, offering discounts on meals or popular side trips if you'll listen to a real-estate pitch.
Some good advice: Walk away from anyone who pressures you. If you get roped into signing a deal, remember that you have five days under Mexican law to cancel the contract and get back your deposit money.
Obtain title insurance. By Mexican law, foreigners can't own real estate outright within 100 kilometers (about 62 miles) of a border and within 50 kilometers (about 31 miles) of any coastline. Of course, that's just where Americans most want to live. So the Mexican government allows foreigners to buy through bank trusts, with the bank holding title to the property. That generally works well, unless there's a challenge to the title. Although title insurance is more readily available than it was a decade ago, it isn't offered on every property. If you can't get it, pass on the deal.
Check your finances. Often, Americans are lured to Mexico by its comparatively low cost to buy or build a house. But they overlook other costs, which can be much higher than they are stateside. In general, acquisition fees are high, about 6%, and include a mandatory real-estate transfer tax, a fee for a government-appointed notary to handle the transaction, and a bank appraisal fee. And while Mexican property taxes tend to be low, capital-gains taxes on the sale of investment property can reach 35% -- a pretty big bite. For more information, check out Tom Kelly's excellent book, "Cashing in on a Second Home in Mexico" (2005, Crabman Publishing).
SIMPLE STEPS TO MEXICO HOME OWNERSHIP
A dream home in Mexico is closer than you think. Decide how you will use your new home. Is this purchase a vacation property, second home, investment opportunity, or retirement choice?
1) While you're investigating buying real estate in Mexico, there are several factors to consider. In deciding where you'd like to live, you'll need to consider things like weather, cost of living, activities that you can participate in that are close by, and how you or your family members (whether living with you or just visiting) fit into the place where you're looking?
2) Determine if the new location offers you a selection of things that you're interested in. For example, if you're looking for a quiet and relaxing place to get away from it all, does your new property afford you that opportunity? If you like more adventurous activities, will you have access to them in your new place? If you need to travel to do what you love (for instance, if you like to take ski trips in winter), does the location have good transportation (public transportation, airports, etc.)? Many people who plan on buying a home in Mexico discover that some of the best destinations, like Puerta Vallarta, offer a blend of both - plenty of space to relax and catch up on the easy life, but filled with activities far and wide to keep things interesting.
3) Is the location close enough in general? Can you drive there? If not, can you fly easily? And if you fly, what arrangements will have to be made for when you are there, and when you're away? And wherever you decide to live, is it close enough (or easy enough) for your friends and family to come and visit?
4) Purchase your property with a reputable real estate entity like MexicoAlive. Having a knowledgeable and trustworthy agent (or broker) makes the search for just the right property easy and pleasant, and will help you find what you're looking for, faster.
5)Ask questions - get to know your potential neighbors, both on the property and nearby. Consult with locals and local officials, visitor centers and/or chambers of commerce to get the inside scoop on where you want to live. The MexicoAlive staff is happy to connect you with others who have chosen to purchase luxury vacation homes with us.
6) Research the property and the destination as much as possible. There's a multitude of information available in travel books and on the Internet, including descriptions of properties and locations, fellow traveler's and buyer's reviews, and images of the area you're interested in.
7) Come visit. If you're interested in any of our MexicoAlive destinations, it's easy to book a discovery package to get acquainted with our luxury vacation properties. This is the best way to try the property on for size, visit local restaurants, see the sights, and generally get to know us. It's a good idea to ensure that your passport is in good standing. Passports will be required for traveling to many parts of Mexico to research a potential second or retirement home.
8) Get your finances and personal life in order. Make sure you have a solid understanding of what you can afford to spend on a second or retirement home. Determine what steps you need to take at home to take on the responsibility of a second home, before you start buying real estate in Mexico.
9) Get started on the next, and possibly most exciting, step in your life - a luxury home in one of Mexico's most sought-after destinations, brought to you by one of the most trusted providers of vacation homes in Mexico.
