Top 10 Questions to Ask Before Buying
a Second Home in Mexico
The U.S. housing market slowdown is making headlines here, but south of the border, Mexico’s residential real estate market is stronger than ever. According to recent reports, second-home investments in Mexico have increased by 60 percent over the last three years, with Americans making up the bulk of foreign buyers.
Mexico also ranks high as a retirement destination, and was recently named best country to retire in by International Living Magazine. Lured by the country’s relaxed lifestyle and beautiful coastline, a growing number of baby boomers are buying second homes in Mexico with an eye toward retiring there in the future.
For the novice foreign investor, however, the prospect of buying property in Mexico can be daunting. El Encanto answers commonly asked questions about buying a second home in Mexico.
1. What are the hottest areas of Mexico to invest in right now?
On the Pacific side, Cabo, Punta Mita and Puerto Vallarta are very popular. Cancun and the Mayan Riviera as well as inland locations like San Miguel de Allende, Ajijic and Cuernavaca are also sought-after locations.
2. Why have people decided to buy in Mexico?
A good example is Punta Mita, a peninsula just north of Puerto Vallarta. It has the beauty of Hawaii at a lower cost point and the infrastructure of a world-class, master-planned community. Mexico’s proximity to the United States is another huge advantage. It also offers a tropical setting that appeals to people in a high-pressure, stressful lifestyle.
3. What is the top country from which people come to buy in Mexico?
The United States.
4. Some people are understandably nervous about buying property in a foreign country. If someone is interested in a second home in Mexico, where should they begin?
The process of finding a second home in Mexico is just like finding property in the United States. If you don't live in the city, you visit, ask questions and do your homework. Choose your location and property carefully, and verify the strength and credibility of all the major players with an investment stake in the development. For example, two companies that I work with are AIG Global Real Estate and BCBA Impulse. They have international stature, and can’t afford to work with a project that is not credible.
5. What should I do once I find a home I like?
Once you've decided on a home, ensure that you hire competent professionals who will follow the letter of the law and can confirm that the property you are purchasing is free and clear of any claims or liens. A good local attorney or the notary public can help with this. Tens of thousands of foreigners have successfully purchased second homes in Mexico. With the careful planning, there is no reason why you should not become one of them.
6. Do I have to become a resident of Mexico to buy property there?
No, there is no need to qualify for resident status under immigration laws. Mexican law on property ownership is comprehensive and provides protection for the seller and the buyer in all property transactions, provided that you follow the law, ensure you have all the necessary documentation and adhere to all the proper procedures.
7. Are there any restrictions for Americans buying property in Mexico?
The rules regarding real estate purchases by foreign, non-Mexican nationals have been dramatically liberalized over the last 10 years. Although the Mexican Constitution still technically prohibits direct ownership by foreigners of real estate within 100 kilometers of any border, and within 50 kilometers of any coastline, the Mexican government has introduced a system of land trusts so that foreign nationals can now invest in a property inside the so-called restricted zones.
The trust holds the deeds to the property, but you are sole beneficiary to the trust (and therefore the property). You have full rights to do whatever you like with your property: it can be developed (in accordance with local planning regulations), rented, leased, sold, or given away. In other words, you own the property in all but name. The trust enables you to name a beneficiary upon your death, and you do not need to have a Mexican will in order for your wishes in regard to the trust to be executed.
8. How can I ensure nothing goes wrong?
An all-too-common and potentially costly problem involves developers who do not get the proper zoning and subdivision permission to develop their land for resale. They might be marketing a project that appears to be above board. You might see survey stakes marking the lot lines and have in hand a glossy brochure with drawings of what the plans entail. But unless you can be absolutely sure you'll get your own independent title to your lot, don't buy. And the only way to be sure is to have a title-insurance company investigate the project for you.
9. What is title insurance and why is it important?
Title is a legal right to the possession of property. By purchasing title insurance, you make sure you hold clear title to your property and that, should anybody dispute that title, you'll have an advocate who will defend your claim in the local courts. I highly recommend title insurance - particularly for undeveloped land. And if the title insurer you've hired says he will not insure the property…don't buy it. Two U.S. firms offering title insurance in Mexico are First American Title Insurance and Stewart Title and Guarantee Company.
10. Some people think the building quality in Mexico is not up to the standards of the United States. Once you decide to buy, how do you ensure quality control?
Just like in the United States, there are a lot of different developers and builders in Mexico. Most luxury properties are of the highest quality. At El Encanto en Punta Mita, for example, we build with the expectations of our international buyers in mind while being cognizant of the fact that building materials and processes are different from those used in the United States.
For more information on buying property in Mexico, please email us at email@example.com and we will contact you shortly.