Buying a Resort in Wine Country, Baja, Mexico
Hello I recently bought a resort in Valle de Guadalupe, Mexico, wine country 1 hr drive from San Diego, CA. I had owner finance $3,000,000 dollars, 4% interest rate, 10 year term. The resort is in a 7.7 acre land, has a hotel with 30+ rooms, restaurant, bar, wine cellar, vineyard, cabins, pool, event venue, etc.
I am looking for additional capital to invest in remodeling, where can I get some funding if the property or business is in Mexico?
If I move the business and taxes to the USA through an LLC, would that be a smart move to get funding and better interest rates than Mexico's banks, even though the property is in Mexico?
I am even considering partnering to accelerate growth. I have worked the business for 1.5 years and know the market...
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Quote from @Abraham Pereda:
Hello I recently bought a resort in Valle de Guadalupe, Mexico, wine country 1 hr drive from San Diego, CA. I had owner finance $3,000,000 dollars, 4% interest rate, 10 year term. The resort is in a 7.7 acre land, has a hotel with 30+ rooms, restaurant, bar, wine cellar, vineyard, cabins, pool, event venue, etc.
I am looking for additional capital to invest in remodeling, where can I get some funding if the property or business is in Mexico?
If I move the business and taxes to the USA through an LLC, would that be a smart move to get funding and better interest rates than Mexico's banks, even though the property is in Mexico?
I am even considering partnering to accelerate growth. I have worked the business for 1.5 years and know the market...
That seems like a lot of money in Mexico. I am sure it is awesome, but valuations are very different in Mexico.
On BP @mike lambert is one of the most knowledgeable on investing in Mexico. Maybe connect with him and pose the question. I suspect there will be no easy way to get additional financing using the property. You best choice may be a secured loan in the US.
Good luck
@Dan Heuschele, your tagging of me didn't work (I think you can't tag somebody that hasn't commented yet in the thread) but Abraham sent me a DM.
I'm still putting a brief answer here to benefit everybody else. Basically, the financing has to come from the country where the collateral is. So that would be Mexico, unless Abraham can give some collateral in the US or another country and get financing there.
Quote from @Mike Lambert:
@Dan Heuschele, your tagging of me didn't work (I think you can't tag somebody that hasn't commented yet in the thread) but Abraham sent me a DM.
I'm still putting a brief answer here to benefit everybody else. Basically, the financing has to come from the country where the collateral is. So that would be Mexico, unless Abraham can give some collateral in the US or another country and get financing there.
Thank you @Mike Lambert for your answer. I understand this, now Mexico average interest is about 10-12% right now. Do you have any idea if there is a loan product in the US given to an LLC, not necesarily to buy real estate, but maybe capital to invest in your business. What I was thinking was to send the revenue the hotel makes to an LLC in the US, so the LLC has some money flowing in and can qualify for a business loan or open a line of credit. Maybe between 50k to 100k would be nice and that way have a better interest rate than Mexico.
Do you think this is feasible?
@Abraham Pereda you're welcome.
Two things here:
1. A US bank won't lend to a business in Mexico, unless your US LLC has an established business in the US with a strong balance sheet that makes your LLC bankable regardless of the Mexican business.
2. You're basically asking for an unsecured line of credit, which you'd only get if you have an established business with a strong balance sheet in the US (and you already do business with the lender).
Add 1 and 2 and it sounds like mission impossible to me. The problem here is the risk for the lender and such a structure would make their risk even higher.
By the way, these days, interest rates in Mexico aren't that much lower than those in the US. Moreover, assuming that you could get the kind of loan you're talking about in the US, I suspect your interest rate won't be lower than the 10-12% in the US.
That place is awesome. Been there a number of times. Very cool
Quote from @Ryan Ruppert:
That place is awesome. Been there a number of times. Very cool
Let me known when you come, youre welcome to visit. www.fincaselah.com
Quote from @Mike Lambert:Interesting, thanks you Mike. In case your aré interested, I am selling a 12 Unit in Playa del Carmen, 10min from the beach. It Is a fixer, good for rentals.
@Abraham Pereda you're welcome.
Two things here:
1. A US bank won't lend to a business in Mexico, unless your US LLC has an established business in the US with a strong balance sheet that makes your LLC bankable regardless of the Mexican business.
2. You're basically asking for an unsecured line of credit, which you'd only get if you have an established business with a strong balance sheet in the US (and you already do business with the lender).
Add 1 and 2 and it sounds like mission impossible to me. The problem here is the risk for the lender and such a structure would make their risk even higher.
By the way, these days, interest rates in Mexico aren't that much lower than those in the US. Moreover, assuming that you could get the kind of loan you're talking about in the US, I suspect your interest rate won't be lower than the 10-12% in the US.
Hey @Abraham Pereda, you're welcome. Thank you for thinking about me but I generally only buy prime properties in Mexico and, these days, I focus more on the Pacific Coast.
By the way, as I indicated, your questions were focusing on things that are unlikely to work but there are still things you can do. I didn't mention them because it would take a long reply so we might as well discuss that when you call.