Once you’ve fallen in love with Mexico, you’ll likely start spending more and more time taking in the beauty the country has to offer. At some point, you may decide to purchase a home or condominium here to call home. There are some differences between purchasing a home in Mexico vs. one in the United States.
Can I Legally Own in Mexico?
As a foreigner, you can absolutely own a home in Mexico, but depending on where the home is located, it is set up very differently. If your intent is to purchase a home inland and away from any body of water, you may directly purchase that home. If it is near a beach, lake, etc., your home goes into a real estate trust that holds the actual title for you. This is called a fideicomiso, which is essentially a fiduciary trust agreement. These last for 50 years and are renewable by you or your heirs. This restricted area is considered within 50 kilometers (about 31 miles) from any ocean.
The Good News – Property Tax is Dirt Cheap Here
Property tax (called predial) in Mexico is extremely affordable compared to the U.S. It is payable quarterly and averages about 0.1% of the assessed value of the property at the time of sale. Compare that to states like California who are 1%. To do the math, a $250,000 home in Mexico pays only about $250 a year in property taxes. Not bad.
The Bad news – Forget about Financing
At one time, you could actually get financing and purchase a home in Mexico. After the real estate market crashed, that went almost completely away. Most people are either refinancing their home in the U.S. to purchase a home here outright or they have the cash to swing it. Once in a while, if you are lucky, you might find a seller who is willing to finance you for a very short term (5-10 years) but there is usually a significant upfront payment and a balloon payment at the end of the term.
Where to Start – Find a Great Agent
It’s super important if you do decide to make a purchase in Mexico that you find a good agent to help you navigate the process. you will find a lot of larger towns have Americans who have become agents in Mexico. It’s best to interview a few agents and do your homework. You want someone who knows the local area thoroughly, knows the process like the back of their hand, speaks Spanish and English, and is on your side, not the sellers.
Homeowners Insurance – Get that investment protected
Now that you’ve bought your dream home, you need to insure it against anything that might happen to it from the weather or perhaps other things, like if your home was broken into. In the past, Mexican homeowners insurance policies were incredibly confusing unless you were fluent in Spanish. Today, you can purchase a homeowners insurance policy only in just 10-15 minutes, and they are in English. The policies read very much like a U.S. policy would and they are very affordable but issued by Mexican insurance companies.