This time last year I had just returned from a house-hunting trip to Barra de Navidad and La Mananilla. After a bit of scouting, I had decided that was the area of Mexico I wanted to live in retirement -- and I was ready to buy a house.The house that drew me to Barra is pictured at the top of this post. It was not on -- or near -- the beach and it had been through some construction halts, but it really appealed to me. It was built on a 10,000 square foot lot with three bedrooms and three bathrooms. There was also a 1-bedroom guest house on the lot.
It was priced a bit higher than I wanted to pay, but it appeared to be a good deal -- even though it would require some finishing touches -- such as windows -- and doors.
Like many a gringo before me, I was ready to buy as soon as I could. I booked a flight for late November. And -- as is the case in most real estate stories -- it sold the weekend before I could fly down. I had a backup house in mind -- but it sold the same weekend.
Fast forward about 8 months. The first house shows up on the market listed at almost three times its original price. Obviously, the seller was after another gullible gringo to snatch up what had been a virginal property and was now gussied up with more pancake makeup than a ten-dollar whore.
In late November the price dropped by over $200,000, but it is still far too expensive for its location. Maybe -- with a view. But a view it definitely does not have.
The lesson? Every book on moving to Mexico warns readers, blogs warn readers, expatriates warn listeners: do not buy until you first rent in an area. (I know there are exceptions. Some of whom write very good blogs listed to the right -- and who have been happy with their quick purchases.)
I suspect this little lesson is a reminder to me. After all, I am the guy who almost bought houses on a single trip to an area. If I had done that, I would not now be able to retire.
But I didn't buy; and I will retire in a fleeting few days.
18 comments:
It's hard to settle for a rental and be at the mercy of a landlord when you're used to having your own home. This is one of those times, though, when it's best to poke a toe in the water before diving in. By the way, have you checked out La Manzanilla?
Hola Steve--I was raised in KF and lived in PDX for 35 years. Now I'm in Chapala. It seems you found out that "if it's meant to happen, it will". At least that is my philosophy. Count yourself lucky, perhaps?
I am happy to rent (with wonderful landlords) and keep my money more liquid. And I find that especially appealing now with the more difficult economic times in the US. I eat the babies, but never the mother.
Living in the Chapala area, while far and away not the perfect place, affords me a more pleasing climate than the hot humidity of the beach areas. And in any direction I choose to drive, I find wonderfully interesting new venues to explore.
Welcome to Mexico, short-timer!
Bliss -- I think I will be fine with rentals -- especially, the first one -- it literally has everything I will need. I will probably not be as lucky on my next leg. La Manzanilla is a possibility. I seriously considered buying a house there in December.
Pat -- You are correct. THe last thing I need is to tie up my money in a house under current financial -- and political -- conditions. The more fluidity, the better.
I did buy two lots side by side totalling 1360 sq. mts. They were situated right in the path of new construction, had no water or mud problems in the rainy season and were flat with a lake view. I sold them both one year later and made 33% on my investment. As good as that was, I probably couldn't do it again, especially with the slowdown here.
There are several problems with renting. I've found never to rent from a Mexican landlord or a cheap Canadian. Right now I have wonderful Canadian landlords. They know that I take care of their house as if it was my property. However, it's not mine and occasionally I am hit with the need to OWN! Just a leftover from the States, I guess. But owning a house, for me, would just be putting a big stone on my shoulders again. And after remembering feeling so light and unburdened after selling everything I owned in the States, I'm loath to return to that place.
But because the place isn't mine I'm reluctant to spend much money on improvements or renovations. Which is probably a good thing--saves me money to use for other things, like international travel!
I am ready for the renting issues. But, I agree with you, renting offer far greater freedoms -- and forces moves now and then.
Thee are many arguments for buying - but this is NOT the time - the value of properties is chaotic right now.
If you have read any of my Blog entries about real estate - rule of thumb for me - do not pay more than current replacement value accounting for deprecations - sounds technical - right now being a renter is a good thing.
Here's an offer: buy it, I'll take the guest house.
robin
You will need to line up behind my mother, several relatives, and even more friends.
Anyone thinking of buying property in Mexico, had best constantly remind themselves of a few things. First, U.S. buyers have a whole lot less purchasing power than even 6 months ago. So they won't be pushing up prices in retirement areas. Second, oil pays for Mexico's government and a lot of other stuff. The oil price has gone from $145 to the low $30's in less than six months. This will take some time to seep into the Mexican economy, but trust me, it will. And when it does, property prices are likely to head further south. Finally, the peso has lost about 30% of its value over the last few months. This too will put further strains on Mexico.
Renting now is a terrific idea. And if you can sell US property, well, the sooner the better. 'Cause prices are just going lower and lower. And any material upturn in prices will be years and years away.
Regards,
Kim G
Boston, MA
Where the number of unemployed finance people just keeps climbing.
Kim -- As always, your advice is spot on. And I wish now that I had sold my house a year ago when I first talked about retiring. Now, I will simply hold on to it as a nonliquid asset. (The danger, of course, is that the coming administration may come up with a hefty capital gains tax for me by the time I am ready to sell.)
Jennifer often points out that Mexican property owners do not lower property prices in the face of fewer buyers; they merely hold on and wait. But if there are fewer buyers, it will not matter in the long run. Contractors certainly will be hungry to build for less.
My home has been on the market a year this month, not even looky loos. I just stopped by to wish you a Merry Christmas and a very Happy New Year Steve.
Gloria -- The market is slow -- and getting slower up this way. But, for every home there will be a buyer -- eventually. Enjoy your Christmas.
It took us ten years of coming to the same island year after year to finally buy a house and admit that this is where we wanted to retire. We have no regrets in buying a house here. They have only continued to escalate in value.
Wayne -- There certainly was a better time in mexico to buy homes than now. I suspect I will never buy. But everything changes.
Go and rent in the area, you will be surprise what opportunities will open up to you after you're there. Befriend a trustworthy local (very difficult) since they will garner cheaper prices. Once the owner know it's for a gringo the price will climb. Do not be in a hurry. I have been offered land next to mine for very good deals. Cash is king since locals cannot put their hands on it unless a gringo buys. Buy as soon as you are comfortable, they prices are not going to go down on locals properties, on overextended gringo property it will. remember that everyone will have their hand out....Good Luck.
Ken -- Thank you for advising caution. I have discovered that will be my best approach. My trips to Melaque have provided me with a good foundation of contacts. I need to expand that network. I may even end up in your neck of the woods -- but not so high on the mountain.
Coming to wish you a VERY merry holiday season and of course, tell you that renting from mexicans isn't always bad. I've had 9 years with a lovely Mexican family. I never see them, they are paid automatically by Lloyd's here in Mexico. My money from selling the business and the house in Tx. has been there when I need it. Safely insured! Money in Mexican bankds. at least what I've beena ble to ascertain from research is NOT INSURED......
Babs -- If I have learned anything in this quest of life, it is that generalizations are to be relied upon with great caution. Most of us are a bit wary of being tenants -- having been spolied by the power of ownership. I just hope I can be as fortunate as you if I ever need a Mexican landlord.
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