If you’ve been thinking about investing in Mexico but you’re afraid of the unknown, you’re not alone.
Let’s face it, the media is all doom and gloom with the recession, inflation, war, lack of workers, a plunging dollar versus the Mexican peso, and talk of a real estate bubble. And not to mention the Canadian and US media portraying Mexico as a dangerous place due to the cartel. That’s a lot to process, so it’s no wonder you may be hesitant to invest in Mexico and would have a myriad of questions. Whether you’re looking for a winter property, rental investment, or a new country to call home, you’ll want to do your due diligence before making a purchasing decision. Once you have made the decision to buy a property in Mexico, the next step is to hire a Real Estate Agency to represent you during the process.
Buying a property in paradise shouldn’t be a daunting task, so I’ve devised a list of common questions that arise when looking to invest in Mexico.
Q: How safe is Mexico?
A: Generally speaking, Mexico is a safe destination. Visitors need to use common sense and educate themselves about the region of the country they are visiting. The cartel isn’t “gunning” for you, so simply keep minding your own business and enjoy paradise like we are. Here's a guide on how to measure your safety while in Mexico:
Q: Can I own property near the ocean?
A: The short answer is, yes. The transaction is handled through a bank trust.
Q. What is the cost of bank trust?
A: The average fee to establish a trust is roughly $700 USD. The ongoing annual fee is approximately $600 USD.
Q: What is the purpose of the trust?
A: Since a foreigner cannot legally own property in Mexico within 50 km of the coast, the property is put into a trust with a Mexican bank. The bank will then play the role of trustee. The buyer of the property becomes the Beneficiary in the trust which is recorded by a Notary. As the beneficiary, you are entitled to sell your property without any stipulations. You will be required to assign an alternate beneficiary at the time of the purchase in the event of your death. If the bank trust administration is not changed, it can be renewed every 50 years.
Q: What documents are required to make a purchase?
A: The public notary processes and certifies all documents. Documents to transfer ownership, including a “no-lien” certificate which is handled through a public Notary who will complete a title search of the public property registry on your behalf. You are also required to obtain a property statement from the municipality, water bills, statements for any taxes that might be due, and a property appraisal for tax purposes. Your realtor can provide you with a good closing lawyer to ensure your best interests are being considered.
Q: What happens with my trust if I were to sell to a foreign buyer?
A: The buyer has two choices: 1) Take over an existing trust or 2) renew it or extend it for another 50 years after the current trust expires.
Q: Who pays the closing costs when a property is sold?
A: The buyer does. The transfer of acquisition tax (2-4% of the appraisal value), notary fees and expenses and all other closing costs are paid by the buyer. Closing costs vary between 4-8% of the purchase price (depending on the value of the property). The seller is expected to pay the commission, plus IVA (16% tax on commission amount), as well as any capital gains on the increase in value of said property.
Here is a complete breakdown in closing costs:
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Q: How long does it take for a foreigner to buy a home?
A: 60 days is the norm, but do budget for 90 days because “It’s Mexico!”
Q: How is the purchase payment made?
A: Assuming it’s a pre-existing home, the funds will be held by a third-party escrow service which will cost approximately $800 USD to setup. Pre-build homes are a little different. Most sellers will ask for a 30% deposit (discounts are usually offered for larger deposits), with various payment structures that leave you owing 10% at closing. Your payments are not usually held in escrow. They will be put toward finishing the build.
Q: How can I ensure I’ll be protected throughout the buying process?
A: You hire a qualified realtor to protect your interests. Bound by a code of ethics and regulations, the brokerage will help negotiate the purchase between the buyer and seller. Once a purchase agreement has been made, an agent will guide the buyer through the process by providing advice, market comparisons, and make all the necessary recommendations. Having a qualified, AMPI (The Mexican Real Estate Association) trained representative who has access to all the professional resources available through the real estate association will assure that your real estate purchase process happens smoothly and timely. Please note that it is prudent to budget an additional 7-8% above the purchase price of your property to cover escrow, the trust, any Notary or legal fees, and the transfer tax.
Q. Why Nayarit Living and Pacific Paradise Realtors?
A. We have been helping people to source their dream properties for two decades.
Our reputation as a brokerage is that of complete honesty and transparency. Once we have assisted with the selection process, we then provide the due diligence necessary to ensure the deal is legitimate.
We determine if the seller has legal authority to sell the property and is informed of the potential Capital Gains Taxes applicable in advance of the deal. In the case of pre-construction sales, we do our diligence to determine if the developer has the financial capacity to follow through with the development and has all building permits and contracts required through the entire construction process and has a proven track record of delivering as promised.
At the delivery, I am closely involved to make sure there is a smooth transfer of ownership to the buyer with full services installed, utilities transferred to buyers’ names, and has fulfilled all aspects of the agreement.
Lastly, the Nayarit Living advantage! Since Nayarit Living also offers long-term rentals, we can rent you an ideal property while you’re exploring the area to see if it’s the right fit for you. If you decide this is where you want to live/invest, we’ll be ready to assist you along your journey in finding the perfect property for you.
Q. Who am I?
A. I’m an AMPI affiliate Real Estate Agent living in Bucerias, Nayarit Mexico. We invested in a pre-build condo 22 months ago months ago and will likely take possession this June. Based on current market valuations, this condo has more than doubled in value. Those “double-your-money” opportunities still exist but are becoming harder to find as demand drives up pricing.
If you’ve been thinking about investing in Mexico but are not sure where to begin, I’d be happy to have a discussion with you.
In the meantime, here are a few examples of great deals being offered by our team:
Puerto Vallarta - Marina Condo
Mezcales Land Opportunity
GAIA – Phenomenally priced Pre-Build
Hasta Luego.
Geordie Seed AMPI I & II Certified Whats App: +52 322 188 0208 Email: geordie@nayaritliving.com Nayarit Living www.NayaritLiving.com Pacific Paradise Realtors www.real-estate-puerto-vallarta.com
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