Real Estate in Mexico Is NOT Cheaper??

we bought a very nice 2bd 2bath condo near Akumal.  Had one owner and the furniture was included but did need a lot of replacing, updates etc.  Still think it was a good deal and close to the ocean.  Not on it but about 10 min away from nice beaches.  I will take it over where we live now.  The weather, area, people and ocean make it worth a lot more but do not think the value will go down much.  I do admit the legal costs are high and be aware, slow.  I would do it again tho!

Hi to the 2 previous writers "4theloveofsun" & "janalea",

First, I tend to agree that in modern, residential, gated community ans touristy areas where NOTB people or rich Mexicans built, purchase the values are overpriced.

Second, I read and ear to many comments like the one from "janalea" not quoting any price so...how can someone compare???

From my part, I'm not interested in buying (reasons: cost, maintenance and moving on). My wife and I live fulltime in Mexico since last August before travelled Mexico 6 months/year (RVing, renting), finally, renting a 2bdrm with split A/C, 1bth, roof and backyard terrasses, pool, 3 washers/2 dryers, fully furnished (nice & modern), all amenities included (internet, cable TV, gas, electricity and maintenance), paying for my housekeeper 220$ pesos/week. Our rent for all of that is 9000$ pesos/month with the flexibility to move on (ie: political instability, cost of living, bad neighbours or neighbourhood), this is a small complex of 8 bungalows (from may to november, we are alone because the SNOWBIRDS are gone) at that price I need to live in that apartment for about 38 years before having spent the equivalent of 250000$USD based on a 18 pesos to the USD exchange rate.


Adios y buen dia a todos, GyC.

So, 25% on top of the purchase price?  Sigh...  And I thought US taxes were bad   I also thought Merida was in the fair to middle price range when it came to the price of a home.  I feel like setting up a solar panel and pitching a tent somewhere, j/k.  I'm budgeting for full-time help for my dad; he could live 1 day or 10 more years.  I need to sharpen my pencil, look at the budget, and regroup.  Our home is important because he doesn't go anywhere.  Possibly budget for part time help for as long as possible then full-time.  Is it any wonder we are forced to "warehouse" the people we love in nursing homes the state pays for?  I am fortunate enough to have options and choices, the majority of Americans do not.  It breaks my heart knowing what families go through.  The Memory Care Support Group I attend is full of heart breaking stories.  I had to stop going.  I wasn't feeling supported when I left; I felt depressed.  Just suck it up, put one foot in front of the other and move forward.  Nothing is perfect and I'll make the best out of what God has graciously given me.

mexicogc wrote:

Hi to the 2 previous writers "4theloveofsun" & "janalea",

First, I tend to agree that in modern, residential, gated community ans touristy areas where NOTB people or rich Mexicans built, purchase the values are overpriced.

Second, I read and ear to many comments like the one from "janalea" not quoting any price so...how can someone compare???

From my part, I'm not interested in buying (reasons: cost, maintenance and moving on). My wife and I live fulltime in Mexico since last August before travelled Mexico 6 months/year (RVing, renting), finally, renting a 2bdrm with split A/C, 1bth, roof and backyard terrasses, pool, 3 washers/2 dryers, fully furnished (nice & modern), all amenities included (internet, cable TV, gas, electricity and maintenance), paying for my housekeeper 220$ pesos/week. Our rent for all of that is 9000$ pesos/month with the flexibility to move on (ie: political instability, cost of living, bad neighbours or neighbourhood), this is a small complex of 8 bungalows (from may to november, we are alone because the SNOWBIRDS are gone) at that price I need to live in that apartment for about 38 years before having spent the equivalent of 250000$USD based on a 18 pesos to the USD exchange rate.


Adios y buen dia a todos, GyC.

I have to budget for my retirement too.  It is quite possible/probable as inflation increases so will rent prices.  What will happen to me when I'm my dad's age if I have spent years paying the landlords mortgage payments?  If I were older it would work.  Who knows, I may die before my dad and my husband and they are considerably older -- if I keep this up the odds are I will hahaha.

Hi again "4theloveofsun", my wife and I decided when we retired to live on a campground so did so and put money aside that we can afford now living fulltime in Mexico even if inflation rate is higher than Canada or the USA. As a couple and going to restaurants 3 time a week, wine and beer, buying local produce, our budget is less than 15000$ pesos/month, IMSS health care (+70 years old) is 15000$ pesos/year (seguro social is cheaper), local support exist in our little community for elderly person and local neighbours will always help you if you interact with them (one of my neighbor is 83, I helped him get his 10 water bottles from the back of his pickup inside is house), in our case our rental could go up from 9000$ to 15000$ and our total monthly cost would be 32250$ pesos/month or around 2300$CND/month.

So for us, it would still be cheaper than living in Canada and lving on a campground and less stress in Mexico, we are 65 and 70 years old.

Adios y buen dia a todos, GyC.

I calculated rent vs buying... renting came out considerably ahead on a 15 year plan...so good that unless you are renting luxury (then buy) we would be able to bank our house in the US
If your father and husband are getting social security or near to it then rent, and you should be able to bank a bit as well.

When the sad times come, then go and find a nice area for you and a smaller home and buy.

I haven't seen where inflation is going to out price the rental market like it has in the US.

As far as buying, an agent told me to expect about $7000 on top of purchase price, not 25%
Of property selling in the $150-200,000 range...sounds about right
It's not much different in US with closing costs.  The biggest difference is the 2%buyers pay

If you buy from those that sell to mostly expats, the price will be jacked up!  The agents are not regulated and they keep anything above what the seller is settling for.  It is not the same system as the US
This is one of the major reasons for finding as honest as you can agent.  Or skipping the agent and just going with the notary...while possible to be crooked, he is bound by the law.

In researching the homes for sale away from expat majority, I've found a $100,000 difference in comparable.
The same with rents

Luxury of course is different. Mostly because Mexico people rarely afford luxury.

"Fideicomiso (if needed) `$1,500 US + Annual fees."

A fideicomiso for a $200,000 USD house will be about $9,000 USD plus about a $600,00 USD anual fee. Notarios here in San Luis Potosi charge 3% of the cost of the house or $6,000 USD not 4 to 7%. or $8,000 to $14,000 USD. Registro Civil fee [Registry fee] here for a $200,000 USD house is about $100.00 USD not $4,000 to $8,000 USD. Agent fees are paid by the seller not the buyer. Title insurance is included in the 3% Notarios fee. There is no sales tax and any taxes are paid by the seller. Acquisition Tax [permission for a foreigner to buy property in Mexico] is about $200.00 USD and is only applicable to foreigners and is not $4,000 to $8,000 USD on a house that price. Rough total cost here would be about $9,000 + $6,000 + $200.00 + $200.00 = $15,400 USD or about  8% not 25% of $200,000 or $50,000 USD. I don´t know where you got that information from?

alleycat1 wrote:

"Fideicomiso (if needed) `$1,500 US + Annual fees."

A fideicomiso for a $200,000 USD house will be about $9,000 USD plus about a $600,00 USD anual fee. Notarios here in San Luis Potosi charge 3% of the cost of the house or $6,000 USD not 4 to 7%. or $8,000 to $14,000 USD. Registro Civil fee [Registry fee] here for a $200,000 USD house is about $100.00 USD not $4,000 to $8,000 USD. Agent fees are paid by the seller not the buyer. Title insurance is included in the 3% Notarios fee. There is no sales tax and any taxes are paid by the seller. Acquisition Tax [permission for a foreigner to buy property in Mexico] is about $200.00 USD and is only applicable to foreigners and is not $4,000 to $8,000 USD on a house that price. Rough total cost here would be about $9,000 + $6,000 + $200.00 + $200.00 = $15,400 USD or about  8% not 25% of $200,000 or $50,000 USD. I don´t know where you got that information from?

I know links are sometimes excluded, but the page I got the percentages/breakdown from is Mexperience .  Toward the bottom of this page with the heading: Costs and Taxes of Mexican Property is the list I detailed above.  I couldn't remember where I read the article and while I was searching for it I found a different page, Live and Invest Overseas detailing much lower costs; about half way down the page with the heading: Closing And Title Transfer.  Regarding fideicomiso I found several pages with different prices, but it seems banks will compete for your business; not unlike mortgage rates in the US.  I know a good credit rating can make competing interests rates much better, but I'm not mortgaging, and I'm not in Mexico.  How you can make fideicomiso more attractive to the banker is an unknown for me.  I like the fideicomiso explanation given on Tax Me Less.  I have read so many different prices for fideicomiso I'm going a little bonkers (well, I was already bonkers, so more bonkers than usual  ; this page seems to give a plausible explanation for the variation in fees.

It seems to me that even after you do your homework, you had better get a very good attorney to review all of this with; provide him/her with the research and get help!  Just ridiculous how so many people have so many "facts" about this;  not much different in the US either.  We are taken advantage of at every opportunity.

Re: rent vs buying.  My thoughts (I tend to weaken the nation when I think so take this with the grain of salt) are property values tend to increase (unless we have another crash!) so it's a safe place to put my money.  At least I will have a roof over my head if the world banking system goes bonkers again.  I don't need to worry about housing; renting and my money in the bank, well... That's anyone's guess.  Social security income "should" continue until I die, but what if...  I like tangible assets; I want to see it, feel it, and touch it everyday   Nothing in life is guaranteed, not even my own few feet of land that I own outright.  My second thought about buying over renting; the norm is when I sell my home I should be money ahead.  If I had paid rent to someone the money is gone; it's like food, once you eat it you have nothing to show for it.  So... if housing prices go down I don't believe I will have less than if I had paid rent; though nothing surprises anymore.

My husband and I have no family ties...so owning a home doesn't necessarily make much sense. If we rent and something happens to one of us, the other is free to relocate.  Owning would definitely hamper that, as we hear homes might take a long time to sell in Mexico.

Not buying would leave a nice nest egg for emergency

that is very high, and yes you will need a bank trust (fidecomiso) or corporation as a foreigner to acquire property in the restricted zone. 50km of ocean.
I have a big brand new condo on a white sand beach just outside Merida under $150k USD. I guess it all depends what you want

Hi Beach,

is this the condo you live in now?

25% is way out of line...... paid $145K for my place and closing costs were less than $5K

Hi,

I  live at Tao in Akumal.
Your prices are very good.
Can you tell me the development or area you live in?

Thanks

Larry

I just stumbled on this thread this morning and I would like to share my thoughts and first hand experience and numbers when we were looking for property in PDC.    I know the OP is discussing about property prices in Merida being costly but what I am about to say rings true for any real estate property anywhere.  Having searched or browsed through Merida properties in the past when we were considering where to invest some money, I can say that Merida centro is expensive for the size of lot and house you get.  But, the areas outside of Merida centro are much affordable especially if you like to be somewhat in a more peaceful setting than the hustle and bustle of the city.

We finally decided to search for property in Playa del Carmen (PDC) primarily because it is much cooler than inland areas such as Merida and the diving is much better on the caribbean coast.  We accidentally found the Los Arrecifes neighborhood of Playa del Carmen (PDC) during our search.  It is a non-gated community in the triangle (or almost in it) which came to market in 2008 and is still sparsely populated except for some Schools and Universities at the perimeter areas.   This community is developed with paved roads, sewage, municipal water, electricity.  All services including internet, TV/Cable is underground.  Fiber Optic is already available in some micro residential communities within this area.

We were eyeing a handful of properties being sold in that area and this is a quote I got from a law firm for an 857 sq.m lot that costs approx.  USD $85,556.    The following quote is in USD:

$3,800.  This includes the following:
Recording fee
Title Issuance
Certificate of no liens
Owners name change
Acquisition Tax
Appraisal
Preventive Notice
Notary Book Fee
and Lawyer Legal Fee

$1,574 for the Notario Fee
$1000 Trust Permit (Fideicomiso)
$1,000 Recording and First Year Trust Fee (Fideicomiso) 
* Note:  Fideicomiso fees vary by bank.   Some banks are more into Fideicomisos than others.

I got three law firms to submit quotes for their services and this is the most cost effective one I received and their quote is quite detailed and more professional unlike others. 

Total Closing Costs:  USD $7,875.  Which is around 9.2% of the price of the property .  This is on par with closing costs in France and Spain (from 7 to 10%).

Optional services include:  Escrow Fee ($500), Power of Attorney ($150)

The Real Estate Agent Fees are paid by the property seller.
All Property Taxes, costs of getting the property's documents in order, and liens up to the point of sale is the responsibility of the Seller.

I did not price out Title Insurance for this particular property.  I have spoken to a long time resident in the area who knows a lot about the different owners that own lots in there and coupled with info from my realtor and her research, I decided that I can bear the risk of not having Title Insurance on it especially if the Notario and Law Firm's research all points to a clean title.  Knowing the history of the development and who the owners of these lots were essential to my decision.

I hope the information I posted above will be helpful to others interested to know from my first hand experience.  BTW, the deal for the lot fell through and other lot sellers won't budge from their higher asking prices.  One thing to contend with when buying lots from private owners is that most are non-business people (i.e., do not know how to negotiate) and you have to deal with their quirks.  Some are just so sensitive and find price negotiations an insult.

We ended up purchasing a nice good sized lot in an upcoming gated community in Xpu-Ha which is were we were considering to look for property when we started our search.

A good reference book that talks about purchasing property in Mexico that I have used and still reference is written by Jackie Bondanza called, 'The Complete Guide to Buying a Second Home or Real Estate in Mexico'.  I consider it a very valuable resource and quite accurate.  Available as an ebook through the largest online store.

Phil

It very much depends on two things. Where you live in the US and where you are looking in Mexico. Somebody from SF will find ANY homes for sale in most if not all Mexican locales to be very inexpensive. However if you are from Chattanooga, TN only half of the homes may seem reasonable.

So the second part is that for instance the neighborhood “Polanco” in Mexico City (Beverly Hills of MX) will be very expensive by any standard. These factors can't be ignored. Mexico is far to big and varied a country to classify anything with broad generalizations.  There are many you tube videos that discuss this in detail.   Think about renting to make sure of which area you want to settle in. Get some rest and take another look

Closing cost on obtaining your Mexico Home is around 7% (this should be expected).

The Seller pays the commission to the Real Estate Agent(s) and this is something you should not worry about.

Buying a Mexico home is a great idea for foreigners (American, Canadians, UK) however it can be a little tricky to navigate the whole process.
- Not speaking Spanish can make things harder.
- Not understanding about Mexico Bank Trust.
- Not knowing how to submit an offer on a property.
- Not knowing if the property is official and secure.

I suggest you enlist the help and advice of a Mexico Realtor (English speaking) who can help you and guide you through the process. You can ask them all the questions.

***

With regards to a fideicomiso, is it as safe as proper ownership? It seems to me that the government could change the law at any time and confiscate property owned via a fideicomiso more easily than fully owned property. Also, what happens if the bank administering the trust goes bust?

[Post under review]

All governments, including the US can change the laws anytime. Some governments simply experience longer periods of stability than others. Nothing is 100% safe and secure in this life, especially if you are betting the farm (literally) on a bunch of politicians. The best you can do is minimize your risks to the greatest extent possible.

I plan to buy in Merida shortly. I am still in the US. As a former attorney with 13 years experience as a California real estate broker, and a pretty decent Spanish-speaker, there is not a scintilla of a chance that I would buy in Mexico or any other foreign country without a lawyer.

Imo
Attorneys are absolutely essential for a gringo buying real estate in Mexico.  In the USA there is title insurance, which is not generally available south of the border. Arguably, it would reduce the risk of faulty title.

I would also opine that an investigation into those unfortunate examples would reveal the absence of local legal representation.

My career was in real estate.

An attorney is not only advised but it is the only way anyone in Mexico can purchase property. The Noterio/a is a specialized lawyer registered by the state or if in CDMX to conduct property sales in Mexico and only they can register property at the state registars office. There are limited placement of Noterias ( offices of Noterio/as) available in each state according to population therefore if they screwup and loose their license to operate they are screwed so will do a good job. A regular attorney is a waste of money and can only advise you on drawing up a sales contract which your Noterio/a can do. The buyer selects the Noteria office not the seller and both have to use that one. No conflict of interest unless something is amiss. It is very secure and professional buying property for anyone - foreigners and citizens. Don't worry. I have done it a few times.

My caveat would be to avoid using attorneys or notarios recommended by the seller or either real estate agent.

Understand that each state in the US has some system of regulation of agents so that they can become members of NAR and access their local MLS. Becoming a realtor in many states is extremely expensive. Some states also require E & O insurance. There is often fingerprinting and background checking. By the time an agent is hired by an office, there is a decent probability that they are reasonably trustworthy.

Even with all of those safeguards, there are still crooked realtors in the US.

In Mexico, there are *no* safeguards. No license is required, unless something just changed. No matter how lovely your agent may be, you are on your own, Gringo or Gringa.

I can't speak to whether the large franchisees, ie C21 or ReMax, et al. are “safer”. That's a function of how much control the parent company exerts over its franchisees. It could be that they are only required to be in compliance with Mexican law. Or, the parent company could have additional standards that they actually enforce. That would be an interesting research topic.

We think too much like Americans. THEY COULD BE FIRED FOR THAT! THEY COULD GO TO JAIL FOR THAT! Yawn. Wake me up when it happens.

It doesn't happen HERE. What makes you think Mexico would be *more* strict? You might be amazed at how rare it is for a complaint against a realtor to be taken seriously in the US. We get torturously screened and pay obscene tithings. They pretty much leave us alone beyond that.

When we're talking about real estate, which a judge once (correctly) explained to me is *never* an inexpensive problem, we have to shake our US thinking out of our heads. You will *not* be on equal footing. *Fair* will have a completely different definition.

Those of you who feel like you good good deals and are happy, I salute you.

jazminerose wrote:

My caveat would be to avoid using attorneys or notarios recommended by the seller or either real estate agent.

Understand that each state in the US has some system of regulation of agents so that they can become members of NAR and access their local MLS. Becoming a realtor in many states is extremely expensive. Some states also require E & O insurance. There is often fingerprinting and background checking. By the time an agent is hired by an office, there is a decent probability that they are reasonably trustworthy.

Even with all of those safeguards, there are still crooked realtors in the US.

In Mexico, there are *no* safeguards. No license is required, unless something just changed. No matter how lovely your agent may be, you are on your own, Gringo or Gringa.

I can't speak to whether the large franchisees, ie C21 or ReMax, et al. are “safer”. That's a function of how much control the parent company exerts over its franchisees. It could be that they are only required to be in compliance with Mexican law. Or, the parent company could have additional standards that they actually enforce. That would be an interesting research topic.

We think too much like Americans. THEY COULD BE FIRED FOR THAT! THEY COULD GO TO JAIL FOR THAT! Yawn. Wake me up when it happens.

It doesn't happen HERE. What makes you think Mexico would be *more* strict? You might be amazed at how rare it is for a complaint against a realtor to be taken seriously in the US. We get torturously screened and pay obscene tithings. They pretty much leave us alone beyond that.

When we're talking about real estate, which a judge once (correctly) explained to me is *never* an inexpensive problem, we have to shake our US thinking out of our heads. You will *not* be on equal footing. *Fair* will have a completely different definition.

Those of you who feel like you good good deals and are happy, I salute you.

In Mexico usually a realitor is not relyed on to do anything other than help find a property and then you have to determine the undisclosed condition the property is in by hiring a trusted engineer and Noterio/a to tell you what it is worth and what needs to be done. A realitor has no liability or ability to do much in the line of protecting your interest so simply shove them aside and protect yourself and hire a good engineer and have an avaluation done before accepting a fair price to pay. In Mexico it is your respondsibility to protect yourself from fraud not someone who has no interest in your problems or any civil court system which in Mexico is a small cry from the civil court system you would rely on NOB - North of the Border. Forget your experience there and stop comparing it to buying property in Mexico and learn it's system which I described in my above post. Easy and safe if you choose the right property. Don't buy property on Ejido land.

Yes. I think the hard part for those coming from the US is understanding exactly what you said. We are used to the idea of the realtor having heavy liability.

Of the 13 years I spent as a broker in either the most or nearly the most litigious state in the union (California), seven of those was owning my own brokerage. Liability I know about. We were up to something like 34 disclosure forms, including one for “Errant Golf Balls”. Those were mandatory whether the property was on, or 200 miles from the nearest golf course.

That kind of thinking generates a huge culture shock when US citizens house hunt in MX. we need a powerful deprogramming. You are on your own. Get a reputable attorney who works 100% for *you*.

jazminerose wrote:

Yes. I think the hard part for those coming from the US is understanding exactly what you said. We are used to the idea of the realtor having heavy liability.

Of the 13 years I spent as a broker in either the most or nearly the most litigious state in the union (California), seven of those was owning my own brokerage. Liability I know about. We were up to something like 34 disclosure forms, including one for “Errant Golf Balls”. Those were mandatory whether the property was on, or 200 miles from the nearest golf course.

That kind of thinking generates a huge culture shock when US citizens house hunt in MX. we need a powerful deprogramming. You are on your own. Get a reputable attorney who works 100% for *you*.

The "attorney" you mention in Mexico is called a Notario/a and they do not work 100 percent for you, the buyer, even though you selected them to process the sale of a property you are buying. They work for both the buyer and seller in Mexico. The realtor works for the seller not the buyer and gets paid by the seller. Therefore foget NOB real estate systems and understand Mexico's system instead. Don't sign a sales agreement drawn up by a realtor here. The sales agreement should be first only in Spanish to be legal and second your Notario/a must read it and revise any clauses not in agreement to both you and the seller before both sign it and make a binding contract. Realitors are not envolved in legally entering you into a binding contract on behalf of the seller unless you foolishly sign a contract without the legal advice of your lawyer, your Notario/a. NOB, North Of the Border, real estate purchases have no similarities here in Mexico as the system is completely different legally. Know you rights and please do not listen to what realtors say as they have no liability to disclose any information about the property you are interested in and no legal authority to have you sign their sales agreement no matter how hard they push you to do it. Wait until your legal representative tells you what and when to sign anything or give anyone a deposit or payment to protect yourself from being taken advantage of because you are new to the rules/standard proceedures and liability laws.

Nope, nope, nope. The “notario” functions more similarly to a judge, which is completely irrelevant to what I said. The point is to hire your *own* private abogado, completely outside of the real estate transaction. The notario has nothing to do with representation.

The few hundred dollars you invest in a qualified attorney could be money very well spent. Your *own* lawyer works for you, and looks out for your interests.

Buying real estate in any foreign country without your own legal representation is kinda nuts. No doubt, many times, rolling the dice has worked out splendidly. The problem is that if things go sideways, it will get very expensive to fix, if it is fixable at all.

@4theloveofsun  you can't be a shitting house where I live for less than 2 million.  Your lucky if you can buy a parking spot or a boat slip for $100k.  A studio apartment here rents for $2k if your lucky to find one and if you do it will be old and out dated and around 200 sq ft.  Most people don't go to Mexico thinking they will have a 30 year mortgage. It's widely known that you should have cash.  As well as the fact if your going to buy close to the water you'll have to set up a lease agreement.  I believe 30 miles away from the water excludes that.  The whole point of buying in Mexico is to save money.  So setting yourself up to pay interest defeats the purpose.

  Btw a townhouse without a garage and no land or yard at all with one parking spot and common walls is a minimum $2,000,000.00.  stop complaining.