Top 10 Tips For Buying Property In Mexico

Akumal MexicoWhile the US real estate market still seems to be dragging, things are picking up fast in Mexico. With the wage rates and shipping costs going up in China and Vietnam, outsourcing to these countries does not seem as attractive anymore.

This situation is driving many US companies to look closer home i.e. Mexico.

Also, more and more retirees are considering relocating to Mexico in order to make the most of their savings. Mexico escaped the worldwide economic recession better than many other countries and its real estate market never suffered as badly as the U.S.  All these factors have made Mexico a prime candidate for real estate investment.

We at I Own Akumal have compiled a list of top 10 rules for sound property investment in Mexico:

Decide Your Objective:

Before making any big ticket investment, your objective needs to be crystal clear to you. Most people around the world invest in property either for cash flows in terms of rentals or for capital appreciation and Mexico is no different. The investor needs to be sure of his approach and then invest accordingly.

If the main objective is capital appreciation then the investor needs to look at emerging markets, price reductions etc. If rental income is the focus then the investor needs to look for properties in specific locations or regions in Mexico where the rent rates are high due to high demand by vacationers. Vacation rentals are very popular in tourist regions of Mexico. So once you have finalized your objective, selected areas are shortlisted and your search becomes much more focused.

Researching:

Now, thatyour buying objective is clear and regions have been shortlisted check other aspects of the various locations like infrastructure and development plans earmarked for the future. Research the area where you’d like to buy. Is it in decline or on the way up? A good indication is if some big multinational companies are moving into the region.

These companies do a lot of work on demographics and income before deciding where to locate. Read articles and get the views of experts. These, obviously, will lead to value appreciation in the long run. But one must also check on how good the chances are for an upcoming project to get through or if most projects in that region get stalled as these factors may have an impact on the value of your property.

Analyzing the Economy:

Read and learn more about Mexico’s economy to understand where it is headed and why. Read articles and get the views of experts on how economic trends will affect certain industries and markets, and in turn, real estate. The idea is to keep yourself informed so you can you make a profitable investment decision.

Examine the Legal Status of the Property:

After zeroing on the properties, check the legal status of the property. As a foreigner there may be some laws governing if and how you can buy property in Mexico. Hire a good real estate agent and lawyer well versed with the whole process of real estate buying. Whatever may be the reason for buying property in Mexico – investment purpose, vacation home or retirement, the most important point that needs to be checked is if the property is legally secure.

Analyzing the Property.

It is very important to analyze every aspect of the property in terms of location, per square foot rate etc. It is a good idea to compare these elements of the properties with other similar properties in Mexico and the prevailing market rates. If the prices are slightly higher make sure that the extra investment is justified by some factors like higher rental potential etc.

Consider the Cons Carefully:

Mexico has many real estate investment options in various beach cities/towns. Each destination and property type has its pros and cons. Be mindful of the economy, infrastructure and investment scenario of the town.

Checking the Condition of the Property:

A property inspection is a must. You could do it yourself or even hire a professional to do it for you. Find an expert who will ensure that the structure is sound and will give a detailed report about the plumbing, electrical wiring, ventilation, floors, walls etc. This step will incur a small cost but can save you significant amounts of money and trouble in the near future.

Being Patient:

Property investment is not a way to get rich quickly so if you are looking to make huge profits overnight by investing in a property, you are setting yourself up for disappointment! The key to being a successful property investor is being patient and avoiding common pitfalls. This especially holds true for Mexico where bureaucratic processes can take noticeably more time and are less “smooth.”

Weighing your Financing Options:

At present, banks in Mexico do not offer financing for non-Mexicans. But many developers offer short term financing and some offer even long-term options.  Many investors depend on loans from their home countries. Be sure to compare the financing options available to you and also the initial and monthly costs of financing.

Insure the Property:

The cost of not having property insurance is just too high. Insuring your property should be an important part of your investment plan – even if you plan to rent.

Real estate investment in Mexico can be financially very rewarding if you do your homework well and reduce your risks.

 

Guest post courtesy of Martin Cowell. Martin is a real estate agent in Mexico and is the owner of IOwnAkumal.com  Visit his site to learn more about the exciting opportunity to own property in Mexico, as well as the top reasons to visit Tulum, Mexico.