Mexico is the most popular destination in the world for Americans living and retiring abroad, with an estimated 1.5 million expats (700k+ from the USA) residing in the country, according to the US State Department.
Whether they're moving for retirement, work, or a change of scene, Mexico has remained an attractive landing spot for many expats. Many parts of Mexico boast of great weather and beautiful beaches, a low cost of living, and a location that is geographically close to the United States.
Due to the strong US dollar compared with the weaker Mexico peso, many Americans and Canadians can purchase a second home or a vacation property for a more affordable price. With the continued interest in the country and culture, the pace and cost of living, and the weather and beaches, Mexican real estate attracts buyers.
While the global pandemic brought many changes to the real estate industry and the global economy at large, recent data suggest vacation and rental housing across the globe has held strong throughout. During April 2020-March 2021, vacation home sales made up 6% of the existing home sales across the world. This is an increase from what was observed in 2019-2020. Many experts were surprised to see an increase in vacation home sales and associate it with the people working from home, having flexibility to relocate for recreation, and people seeking a more desirable location in case of another lockdown in the future.
Mexican real estate also saw an increase in vacation home sales and has seen little to no delays in property sales. While supply chain issues definitely had a negative effect on smaller developers with less stable construction teams, many large Mexican developers have kept builds and sales up steadily.
CIPS designee Ed Eakin says that even coming off of the pandemic, now is a great time to invest in a real estate property in Mexico: "Housing prices in Mexico are still going up. SIMCA (a developer in Mexico) has data showing that if you buy something pre-construction right now, by the timeit's completed in 18-24 months, you will likely see a20% price increase."
If you have clients interested in retiring abroad, purchasing a vacation or second home, or an investment property near the beach, you may want to draw their attention to (and build your own expertise in) the market in Mexico.
"There's nothing like getting boots on the ground and knocking on doors to learn about the market. It doesn't happen overnight! To become an expert, you need to go to your area and really learn about it." - Ed Eakin
Right now, the Riviera Maya is the hottest area for real estate in Mexico. Many developers have large multi-million dollar projects beginning. There are wonderful and vibrant expat communities in Playa del Carmen, Cancun, Cabo, and other areas for Americans and Canadians looking for a home away from home or a destination for retirement. Tulum, once a charming, remote archaeological ruin on the beach, is now a booming area with condos, apartments, and houses going up quickly. Each area has its own feel, but those who have helped buyers look for properties in Mexico say "there's something for almost everyone" if you find the right area and community.
A significant portion of buyers purchasing property in Mexico are looking for an investment property as occupancy rates for rental units all across the Riviera Maya are high, in part because of shortage of hotel spaces as the tourism industry booms. Many buyers purchase a property, put it in a management program with a large management company, and can reach 70% occupancy throughout the year without much additional legwork.
"We help clients all across Mexico. I’m always excited to help others grow their global business." - Ed Eakin
According to Eakin, real estate in the Riviera Maya and surrounding areas has "grown so much and there's more to come! In the next 5 years or so, the Mayan Train should be completed. That will help people zip from the Cancun airport down to Tulum in an hour or less. The area is just going to keep growing and attracting buyers." The Mayan Train is a 1,525-kilometer intercity railway that will traverse the entire Yucatan Peninsula, connecting tourist destinations including historic Mayan sites and other popular destinations. With such an easy transportation route, the entire area will be expanding and the real estate market is expected to grow.
How to Buy Property in Mexico
As with any international real estate transfer, buying property in Mexico requires coordination from multiple parties with many legal processes involved in determining what and where non-Mexican citizens can buy. As a CIPS agent, many clients interested in purchasing property in Mexico will be looking to you for help to find a reputable way to view legitimate listings and navigate a real estate transaction in Mexico.
Mexico's purchasing process has several legal requirements that differ if either party (buyer or seller) is not a Mexican citizen. The Constitution of Mexico has set up protections for certain areas of land called the "Restricted Zone." These restricted zones include areas less than 30 miles from the coasts or less than 60 miles from the American border. In order to purchase property within this zone, a foreign buyer (an American or Canadian client) needs to establish a Bank Trust or fideicomiso or create a foreign-owned Mexican corporation.
A fideicomiso is essentially a property trust guaranteed by a recognized Mexican bank, with you as the legal beneficiary. These trust agreements are established for a 50 year time period. The bank holds the trust, but as the beneficiary you can lease the land, sell the land, sell your trust, or set up an heir to inherit the trust and the property.
To purchase a property outside of the restriction zone, the process is more cut and dry. You need to apply for and receive a permit from Mexico's Ministry of Foreign Affairs.
Build Your Global Business in Mexico
If you are interested helping clients purchase property in Mexico or in helping Mexican buyers purchase within the US, here are some helpful tips to establishing yourself and network in the Mexico:
1. Get involved with AMPI
AMPI is the Asociación Mexicana de Profesionales Inmobiliarios, the NAR Cooperating Association in Mexico. There are many agents and brokers within AMPI that are well connected and eager to build connections with American and Canadian real estate agents. As you work to build close ties within AMPI, those connections can help you grow your business into Mexico.