Who Here Owns Property in Mexico? and How does it compare to U.S.

Question

Hi, I'm interested in knowing more about real estate in Mexico. I've done some research on properties there and they look full of potential and not just because of the price. But yes mainly because of the price and location. For example like Tijuana or Quintana roo, any type of tourist place with attractions. Either for renting out long term or short term such as utilizing air BnB(anything to build wealth or make a profitable investment). I don't know how the ROI would be since I do not hear many people talk about out-of-country real state. Mexico is a beautiful place with a lot of opportunities and would love to know if anyone has any experience or properties there. Is this a bad idea for a beginner real estate investor?

Mike Lambert · Answer

@Garrett Binder

You shouldn't normally fear that the Mexican government confiscate your property. Yet, some people here and elsewhere have that fear so let's dig in for everyone's benefit.

There are generally two reasons why people believe that the Mexican government could expropriate their property:

1. They have heard or read about expropriations happening. While expropriations can happen in any country for different reasons, I'd bet, without having seen any statistics, that the number of expropriations (of foreigners) in Mexico has been higher than elsewhere, even though still very low. There's a reason for that. After the revolution of 1916, the government gave property to peasants but with an ejido title, which isn't a clear title. Ejido properties are much cheaper because a) even a little money is a lot of money for the seller but above all b) you don't get a clear title. So, if you buy an ejido property, you (should) know that you run the risk of being expropriated because somebody else has a claim on the property, which is what should happen as the law has to be respected. My advice is to never buy ejido property unless you absolutely want a given piece of property which is ejido and/or it's so cheap that you don't mind running the risk of losing it.

2. Others fear that Mexico is gonna turn into another Cuba or Venezuela. The risk of that happening is extremely low. Mexicans, like everybody else including their leftist president AMLO, has seen how Cuba and Venezuela have turn into economic disasters and have no interest in getting there. After AMLO's election, there was fear that the government would become hostile to foreign investors. None of that happened because it'd have been economical and political suicide.

Conclusion: just make sure you have a clear title and you'll be just fine!

Mike Lambert · Answer

Hi, I've responded to hundreds of posts about investing in Mexico. You can find them through my profile.

Is it a good place to start? There are plenty of opportunities there but it depends. Do you live in the US or Mexico? What is your objective and what do you want to do? In any case, make sure you know what you're doing or work with people who do, at least to start with.

Even though I'm not Mexican and have never lived in the country, I had been doing business in Mexico for more than 15 years before I started investing there so I had the right knowledge and connections. Mind you, if you just want to buy vacation homes and rent them out, anybody can pretty much do that. Mind you, even in that case, your knowledge and connections could make a big difference between getting a good, great or bad deal.

Mike Lambert · Answer

@Garrett Binder

What you mentioned is nothing specific to Mexico. Expropriation "for the greater good" can happen in any country. They're currently building a high speed train between Cancun, Playa del Carmen and Tulum and expropriations inevitably are going to have to take place like they would in any country. Expropriating a tennis club is one thing but I don't think homes would be expropriated for a park in any country.

Mexico is a country where the rule of law prevails. The law isn't always followed to a T as a result of corruption but that, again, happens in every country, to different degrees of course. I'm not sure that it's actually relevant to expropriation, which is something that the government of any country basically has the right to do by decree whenever if it pleases them, in Mexico or elsewhere for that matter.

Garrett Binder · Answer

I'm basically the opposite of @Mike Lambert here where I do live in Mexico but am relatively new to investing both in Mexico and in general. My family moved from San Diego to Tijuana nearly 3 years ago so I am happy to talk about what it's like living down here (both good and bad) and from my experience with our home, it has appreciated and we should be able to get decent rent for it if we move out but we are staying put for now.  The biggest thing that scares me (even though my wife is Mexican) is the lack of certainty about what our property is really worth, and trusting the government won't just take our property from us citing some obscure rule or something.  Happy to be a resource if you have any questions about life down here.

Garrett Binder · Answer

Great points @Mike Lambert, thanks for the insight. Only reason I mentioned the fear of them possibly taking our property is just a couple months ago the local tennis club near our home was threatened to be taken down and turned into a park. Some properties in the area would have also been affected as well. That's about all the specifics I know so not sure what is or isn't true there but I just hear these stories and since I don't know how the law works AND also know from experience in Mexico the law isn't always followed to a T, it just made me a little weary.  So far, our property in Tijuana has gone up nearly $200k in value in a little over 3 years we have been here so it's been a good investment so far.

Tak Ogihara · Answer

Brilliant! As always with the solid advice and insight, thanks for dropping some knowledge.

Who Here Owns Property in Mexico? and How does it compare to U.S.

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