Friday, June 11, 2010

to buy or not to buy



I own a house in Oregon.



I rent a house in Villa Obregon. 


Three years ago, I would have told you there was something wrong with that picture.  I intended to sell the Oregon house in 2009 and to buy a house on the Mexico Pacific coast.


The spirit of "irrational exuberance" put an end to that plan.  There was simply no market for my house in 2009.  And if it did not sell, I could not buy into the Mexican Dream.


Like almost everything in life, that change in plan turned out just right.



During the past year, I have lived in two houses in Villa Obregon.  A house sit on the beach, and a rental on the laguna.  With the freedom to pick up and move whenever I choose.


Last week, I received a copy of a survey conducted by the International Community Foundation: Housing and real Estate Trends among Americans Retiring in Mexico's Coastal Communities."


I am a sucker for these studies.  Anything that purports to be scientific attracts my moth-to-light attention.


And this study is full of interesting tidbits.


As an example, the report authors were surprised that only 37.4% of the expatriates surveyed felt that locating in a planned unit development was either "very important" or "somewhat important."


I am not certain why they found that to be surprising.  My experience has been that most Americans who move to Mexico do so to get away with some aspects of planned societies.  As a group (and the stereotype is no more accurate than most), they tend not to be an Average American -- in politics, social mores, lifestyles.


The old adage has some truth to it.  Half of the Americans in Mexico are not wanted in the United States.  The other half are.


In my beach community, most of my acquaintances do not want to hang around other expatriates.  The idea of a "planned unit development" would evoke another chorus of ticky-tacky.


The irony, of course, is that some of the most vocal opponents of gated communities live behind walls that rival the Alamo.  Yours truly included.
If you want to read the full study, you can find it at: http://www.icfdn.org/publications/housing/index.php.


I eventually decided not to buy in Mexico -- even if my house does sell.  But the report provides some interesting tip for people who do decide to buy.
  • Do your homework before buying. Familiarize yourself with Mexican laws and regulations, which are quite different than the laws of the United States. Don’t assume that laws are uniform across Mexico as real estate conventions, laws and costs for closing vary on a state-by-state basis, just like in the U.S.
  • Make sure that you have been provided all pertinent disclosures specific to the property you are purchasing including non lien certificates, proof of property tax payment, condo regime documents, legal suits or other legal actions that might otherwise impact your property title.
  • In coastal areas, make sure that the property you are purchasing is in a development that is in compliance with the Mexican Federal law for mangrove protection to avoid possible legal actions.
  • Make several trips to your retirement destination of choice before making a decision to buy.
     
  • Don’t try to do a deal on your own. Retain licensed Mexican and U.S. real estate agents, attorneys, and accountants.
  • Get title insurance. Make sure the seller has clear title.
  • Require that all documents to be translated into English and read them carefully.
  • Place deposits in a neutral, third-party escrow account.
     
  • If you own coastal property in Mexico through a Fideicomiso, your trust must be reported to the U.S. Internal Revenue Service to avoid potential tax penalties. For additional details on IRS rules and guidelines on foreign trust reporting requirements please refer to: http://www.irs.gov/businesses/international/article/0,,id=185295,00.html
     
  • As in any country, including your own, if it is too good to be true, it probably is. 

10 comments:

American Mommy in Mexico said...

It seems like the gated communities would be more appealing to those looking to buy a vacation home and have younger children or maybe visting adult children with grandkids.

I agree with your assessment of many expats who choose to live NOB are looking for attributes that are not consistent with transplanting their previous way of life. In about 20 years I will fall into this category.

When we lived our year here, we rented in a complex with mostly Mexicans (Mexican vacation villas) and some Expats. Many villas were empty much of the year. It was pretty much gated with security at entrance and walking the grounds. Our #1 reason for doing this was to add an extra layer of safety for our kids.

Calypso said...

Good advice...and there is so much more to consider. We don't regret owning two Mexico properties (looking for a third actually) ;-)

Go Mexico! Minutes away from the opening game in South Africa - Color me excited and then GREEN_WHITE_RED!

Anonymous said...

i think it's smart to rent. that way you can move around and get to know lots of areas in the country. i think it would be fun to live in different cities. i'm a bit of a gypsy and when we retire, we hope to spend 4 months of the year in different locations. i look forward to that day but for now, i will enjoy my job. just 6 more days of school and i'll be out for summer. lots of travels coming up.

take care,
teresa

Chrissy y Keith said...

Steve, we have been looking at a property in Altavista, Nayarit. It is everything we want, were we want and the price is right. We have owned bought and solf property near Zihuatanejo and like you, we had told ourselves that we would just rent for a while. Well, this place passes all your list but yet I still have some concerns. Not head, but heart. I prayed last night that the Lord lead us more directly, so to see your posting has told me that He is walking this with us. I think I might slow this thing down a bit and do more listening and praying.

jennifer rose said...

"The old adage has some truth to it. Half of the Americans in Mexico are not wanted in the United States. The other half are."

That adage insults nearly all of the Estadounidenses living in Mexico. It's rude, crude, and implies that Estadounidenses who live in Mexico are castoffs and criminals.

NWexican said...

Curious:
"wanted" or "not wanted" ?
I guess the former would be a Saif bet? ;)

Steve Cotton said...

AMM -- There is nothing inherently wrong with gated communities. But I suspect we will see more of them as the older generation of expatriates is replaced with a different group -- with different needs. As you know from your own experience, families with children is currently the exception. But that group is growing rapidly.

Calypso -- I guess a tie is better than a defeat.

Teresa -- The downside of being a gypsy, as Jennifer Rose has reminded me, is never becoming part of a community. And I need that connection.

Chrissy y Keith -- I knew there was a reason I wrote this post.

Jennifer -- The adage, as you know, is an old one. And, at one point had the real ring of truth -- at least, in the 70s when I was first introduced to Mexico. Most expatriates tended to be misfits -- by their own description. But, just as the mountain men in my fair state were replaced by missionaries and city folk, that has happened to expatriates in Mexico. The sophisticated, genteel people (such as yourself) are far more the rule than we untamed libertarians. (Of course, I claim to be on the mountain man side of the divide while simultaneously complaining about the lack of cultural events in my village. Go figure.)

NWexican -- Color me as "not wanted" in the first sense, and practicing on being "wanted" in the second.

Tancho said...

I am sure as you enter the gates of SMA, a flock of vulture real estate sales persons (PC) will convince you to "invest" there!
You would certainly be part of that community!

Anonymous said...

not clear on why you decide not to buy in Mexico

The 50/50 thing about Americans in Mexico could use more air too--maybe some approve of new policy and will go home?

Anonymous said...

We just bought in Guanajuato. Our biggest problem was finding an Escrow service...and our neighbors claiming over half of our land was actually theirs. ~Korima