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Beach Property Bargains in Baja

Beach property

Foreigners can enjoy all the benefits and security of ownership in Baja Mexico

The dream of millions of Americans is to own a beach home in baja. The only obstacle for most folks is money. A postage size lot in Southern California, with an ocean view, costs in excess of one million dollars. In Ensenada, a beachfront home and land can be had for less than $200,000.00.

If the beach is not your cup of tea, you can buy a three bedroom two bath home in a middle class Ensenada neighborhood for $85,000.00. I have never seen a better "buyers market" in Ensenada or San Felipe. Baja California, with zero unemployment and proximity to the border, is attracting workers from all over Mexico and Latin America. Foreign owned manufacturing (maquiladoras) are spreading to Rosarito, Ensenada and environs as Tijuana has become industrially saturated. Tijuana is home to almost one half of the entire country's maquiladoras.

Consequently, Baja is the fastest growing state in Mexico. This is reflected in the lack of rentals available. The housing demand has doubled rents in the past five years. The problem, for Mexican buyers and sellers of property, is the unavailability of credit. The banks are broke and few folks have the ability to pay cash for a home.

I believe the credit (financing) situation will turn around, This should unleash a wave of new buyers and cause home values to appreciate significantly. Ensenada home values have actually depreciated in the last five years while rents have skyrocketed. These market conditions have caused sellers to carry their own financing. Seller financing, interest rates and payment schedules, often compares favorably with stateside mortgage contracts.

Baja property - A safe investment?

Mexican TitleThe safe way to buy property in Baja is a process that is no different (exactly the same) as the process used to assure a safe investment in the United States:

  1. Check title and certify property is free of liens at the County Department of Public Records
  2. Certify that no property taxes or utility bills are owed
  3. Obtain an appraisal on the property by a licensed appraiser.
  4. Legally transfer title, pay the applicable taxes, and register the title change in the Department of Public Records.

Foreigners, who do not speak Spanish, typically use Mexican lawyers or consultants to complete the due diligence and manage the transfer process. Banks will become involved in the purchase if you are a foreigner wishing to buy a personal residence. If the property is for your personal residence (non commercial use) the law requires foreigners to hold coastal property in a trust (bank trust). Commercial use of land by foreigners allows them to purchase property "fee simple" in a 100% foreign owned Mexican Corporation.

Mexican trusts (fideicomisos), provide all the advantages and security of ownership: sell the property to a third party, either foreigner or Mexican, pass the property rights on to your heirs in perpetuity. You can be assured that the bank will insist on all the proper due diligence.
You will not find trust departments in small town banks. In Baja California, most of the banks who have trust departments are located in Tijuana. The only other city that has a trust department is Bancomer in La Paz. The trust officer's name is Lic. Narda Canseco, she is efficient and helpful, unlike most fiduciaries in Tijuana.

Real Estate Tips

lease property mexicoDon't invest in property leases. Mexican leases are only valid for ten years, unless it is ejido land (farm cooperative). Ejido leases can be written for a maximum of 30years. There are so many good investment opportunities for purchase I see no good reason to improve somebody elses property with your money.

Buy a home already built unless you plan to daily supervise the construction. It is difficult enough to manage a contractor in the States. Add language, cultural and business practice differences and your dream home could become a nightmare. Ask for foreign client references of builders, get three competitive bids and create a written contract with the builder you select. Get legal assistance in writing the contract. Notarios are a good option because the contract will be made part of the public record.

NOTARIOS in Mexico are keepers of the public record. Lawyers who give up private practice to assure that all documents that become "public" are done in accordance with proper legal protocol. They are the gatekeepers in the transfer of all property tittles and must sign the title transfer documents before acceptance by the Department of Public Record.

Don't pay a developer the full price of your purchase until all subdivision improvements are completed. The state enforcement of completing all subdivision obligations is almost non existent. Civil suits against developers for non infrastructure completion is often the only recourse. A legally registered homeowner's association can fight those battles effectively and distribute the legal costs to reduce the individual homeowner's burden.

If a homeowner association exists or is in the process of formation make sure it is a legal entity now or in its formation. An "Asociacion Civil" is a non profit corporation under Mexican law that, in a dispute, is guaranteed the same rights of a Mexican citizen . In addition to legal defense with developers, without becoming a legal entity a home owner's association has no clout. You can be assured that many homeowners will not pay maintenance dues and you will be stuck with a deteriorating subdivision.

Federal Zone Concession Rights - If your beach house is not 20 meters from mean high tide you are on the federal zone and you cannot be there by law without a special concession. The federal zone belongs to the Republic. If the home is on the federal zone make sure that said presence has been approved by SEMARNAP, the agency that governs the federal zone. If the property, either on the federal zone or adjoining the zone, does not have a federal zone concession, apply for it. Be sure that the concession does not belong to someone else. If it does belong to someone else they could develop "your beach".

Apply for an FM-3 resident permit from immigration. If you have property in Mexico you are required to have said documentation. In order to defend yourself in a legal dispute or solicit permits that affect your property you must have an FM-3.

If you follow the above guidelines you should have a safe investment that you and your heirs can enjoy without fear of losing it. If you have any questions about the above or wish a consultation to review a property We will be happy to provide same at no charge.

You can call us for a quotation on insuring your home in Mexico at the numbers and email to the bottom of your screen.

Remember you can insure your home anytime during or after purchase.


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