Thursday, February 7, 2008

Buying Property in Mexico

Until recently, foreigners could not buy property in Mexico. They could put property into a trust, but the property could not be passed down to one's heirs. The law has been changed so that now foreigners can buy property here, although not within a certain distance of the coast or the border.

We are in the process of trying to figure out whether or not we will buy a house here or continue to rent. Part of the decision involves being aware of the pitfalls of buying property in Mexico.

One of the primary concerns is that, as northerners, we are not used to the construction styles here. When we first visited here, I looked at the brick and concrete houses with tile floors and thought they must be indestructible. I was used to wood framed houses which always seemed to suffer from water and dry rot. Since it was dry here most of the year, it seemed as though these houses would require less maintenance. This was an oversimplification. Having lived through a rainy season, I have seen the damage water can do. Just like with wood houses, water is the culprit. Water can seep into walls and under tiles to create damage which remains unseen until it is serious. So where your house is, is of utmost importance. Drainage is critical. We almost made a serious mistake on the house we almost bought, as outlined in the previous two posts. We have since decided to limit our search to houses between 1 and 10 years old...enough time for construction flaws to show up but not so old that we are buying a slew of unseen problems....probably.

Another problem is ground stability. This shows up particularly in new construction. We have several friends who built houses on fault lines or on poor foundations who are now finding serious cracks developing in their houses. One friend, Judy, who I volunteer with teaching English, completed a new home last year and the house developed such severe cracks that she can no longer live in the house. She has had to move in with a friend; she is now in Mexican courts trying to get the money back from her contractor.

Mexican laws are different as well. In the United States, when we buy a home, there are laws protecting the buyer from blatantly false claims or serious problems with a property. The warning "buyer beware" is particularly important in Mexico where there is essentially no protection for the buyer. If a seller tells you something that turns out to be false, and you buy the house with that understanding, then you have no recourse. You had better make sure there is water, hot water, a working phone line, electricity to the entire house, etc. before you sign on the dotted line. Most people hire someone to help them check out the house before they buy. Some things buried in concrete, however, will remain a mystery.

Another problem people run into when buying a house, especially in the village, is noise. It's important to visit the house at different times of the day and week. Mexicans love fiestas, which is an endearing fact about living here, unless you buy a house near an "evento," a place rented out for parties which may last all night. Some noise is inevitable, especially during annual celebrations, but you could be stuck in a particularly noisy area without realizing it.

So why would anyone buy a house with all these potential problems? Rents are plentiful and reasonable, and usually come completely furnished. You have the flexibility to pick up and leave with no hassle. But, there are drawbacks to renting. Probably the most important one, in this popular area, is the danger of rental prices escalating rapidly. Yes, rents are affordable now, but once the real estate market in the US stabilizes and baby boomers like us start discovering Mexico as a retirement destination, prices will surely rise. Since we are planning to live here permanently, perhaps for 30 years or so, owning a house outright would be a good hedge against inflation. Also, just like with buying property, there are pitfalls to renting here. Unlike in the US, property here is often rented here without any regulations. The renter is often expected to do required repairs to the house at his or her own expense. If the roof leaks, it can be the renter's responsibility. We've even heard stories about renters who have invested their own money in a house only to have the landlord raise the rent because the property is now worth more!

One of the most important things to remember, whether we rent or buy, is that we are foreigners in Mexico. We cannot expect it to be like the United States. If there are problems, they may be more difficult to resolve here. We certainly do not have the protections which we have come to expect in the United States.

We have been looking for property in our price range; property is expensive here thanks to all the like-minded gringos, many of whom are far more prosperous than us. If we find something soon, we may buy it; otherwise we will find a new rent, probably in Ajijic, which should be relatively easy to do. We will continue to look, as, hopefully, prices will fall a bit, at least for the next year or so.

Here are some photos of some recent properties we have looked at. We put a low-ball offer on the pink house, but it didn't fly. Oh well.


Melaqueslim said...

I have also recently moved to Mexico and am loving it. I am in a small town in the state of jalisco and have also seen the massive growth in real estate and prices raising, and the possible threat of having our rent being raised even in the small town I am in of 8000 people. We have been looking at buying a piece of property because it seems to be one of the cheapest way to go , building a house here can be as low as $120,000, so we are quite excited about that. There will soon be a massive boom of people coming here so it is imparative to meet the right people in the right places and get on it as soon as possible. I have met people who have been quite worried about living in Mexico because of all the stereotypical rumors about the people and the dangers of living here. I can assure all of you that the people here are so kind and honest, the people are like no other and I have much more respect for them than anyone I have met before, it is amazing!Buying in Mexico can be alot easier than people would think and I suggest really looking into it before brushing it off.


Melaqueslim said...

p.s. That is a beautiful home, it is a shame that the price was just too high. what were they asking if you dont mind. There are some good deal in my town for homes right now. If you are intersted message me back..