Investing in Mexico?

Question

Hello Forum,

Is anyone investing in Mexico that would like to connect as a colleague here?

Thanks! Penny

Carlos Cristiani · Answer

Hi all! I see there’s a Mexico thread going on here. I live in San Diego, CA and have done business and real estate consulting in Mexico (15+ years) for clients investing there. Mainly coastal Baja (Rosarito to Cabo and some manufacturing sites Tijuana and Tecate), Puerto Vallarta, Huatulco, Acapulco, Yucatán and Jalisco and San Miguel de Allende.

Feel free to ask any questions. I’ve worked on a wide variety of deals, such as hotels, vacation rentals, ocean front, senior care facilities, agricultural (wine country and wheat) and other niche properties.

Mike Lambert · Answer

@Eli Koren

Sorry I accidentally clicked on the reply button when responding last night and it was late so you're getting the rest today.

If you can't access the Mexican corporate banking system or if it's too expansive and/or complicated, your options are getting money from investors or pre-sales.

When it comes to investors, I started with people who knew and trust me. I actually never asked any of them to invest; I was actually had people come up to me to invest. Since them, I have had people reach out to me because, when I talk to them, they realize that I know what I'm doing and that I have very high ethical standards. And also, I'm not trying to sell them anything. Sadly, this isn't very common in a world in which there are too many people "snake oil salesmen" taking advantage of unsuspecting investors.

Then, if you have the financing, you can give financing to your buyers. Let's be clear. It's going to be much more advantageous to them than it'll be to you but you'll be better off if you're there for the long haul. This won't work if you want to make a quick buck.

Mike Lambert · Answer

@Eli Koren

The short version of it is that you'd provide seller financing to your buyers.

Eli Koren · Answer

Hello Mike, I saw that you are active in Mexico. Me as well. I am developing in Tulum, Riviera Maya and I would like to implement your investment/ purchasing model in my future developments. Its not totally clear  to me how it works. Could  you further explain and also did it actually worked out for you in Puerto Valarta?

BTW, I have 2 penthouses left in the building I have just completed in Aldea Zama, Tulum if you have any interested clients

Johan Yang · Answer

Hello fellow BP,

I am interested in buying an investment property in Mexico.

I went to Playa Del Carmen last week for 5 days and staying on 5th Ave (tourist area). I like it there that it was walkable to everywhere, so many restaurants, bars, shops (which many were open till very late), the beach is nice, and safe.  I haven’t been to Puerto Vallarta. Is it also a walkable place to everywhere?

I saw so many new constructions and saw many brochures about PRESALE condo.  I have spoken to a few RE agents when I was there and am thinking to buy the presale condo unit. But, I am a little worried about getting scammed and being a foreigner buyer. The RE agents told me to put down a small amount of money ($1K - $5K) to hold a spot of the unit I wanted. But, I did not want to do that. Should I hire a lawyer before doing that (paying $5K to hold the unit)?

Do I need to find a RE lawyer who lives in PDC?

Does anyone know any great RE lawyers to recommend who has experience with American buying properties in Mexico?

Thanks so much and as always any tips is very appreciated.

Johan

Daniel Orozco · Answer

@Mike Lambert

Thank you so much for your detailed explanation and your experience in real estate in Mexico, yes that’s what I heard that they can finance 50% or 30% but you have to make the first three payments for the first three months and then your loan would be approved , but this option was just approved there In puerto Vallarta I believe this year, I’ve also heard about investing through developer which I’m also interested but I need to learn more of it” and find investors with good reputation in the area but yea my goal was to do short term rental Airbnb on a condo and start from there since puerto Vallarta is a destination that I’m interested in”

Mike Lambert · Answer

@Daniel Orozco

I've been investing in Mexico for a few years now and I believe Puerto Vallarta is the best market. It's the best market in Mexico right now because you can get great capital appreciation and cash flow while waiting. Puerto Vallarta is obviously a typical great short-term rental market and it distinguishes itself from many other short-term rental destinations by having a strong long-term renal market as well. The average net yield you can get after all expenses is 9% depending on the location, the property and how good you are at doing short-term rentals. If you are good at short-term rentals, you can get a much bigger return because you would be rented in the low season as well.

The overall majority of people invest with 100% cash because foreign banks won't lend and it's very difficult to get a loan from a local bank. If you can get one, they will lend maximum 50% of the lower of the price and market value and charge a very high interest rate, which makes it prohibitive for most people.

I'm working on doing a development with investors over there. I'm letting you know how it works here so that you can see what you can do as a foreign investor in Puerto Vallarta so you can see how you can get even much higher rental returns. I'm not going to give you many details because I'm here to help and educate and not to sell you anything . There will be two types of investors: those who invest in the development should make a very high return quickly in and out. For those who don't want to take the development risk, they can just buy one or several condos in pre-construction. Our buyers will only pay half price for their condos and have the rest paid by rental cash flow. Buyers will pay only 50% of the price and then will either finance 50% of the price over 5 or possibly 10 years at an interest rate well below market or we're going to manage the condos for them and pay ourselves the remaining 50% of the price out of the rental income over 5 or possibly 10 years. So, after 5 years, you could average an 18% annual yield after 5 years. As mentioned, you could do much better, especially given the quality and location of the development. I don't know any other developer who does that but hopefully we're going to create a new trend in the market.

Due to a lack of developable land in Puerto Vallarta itself, most building activity is occurring now North in Nuevo Vallarta and beyond. While properties over there can be good investments, Puerto Vallarta itself commands higher prices and has more rental demand and higher yields. This shortage of developable land where most people want to buy and rent is good news for investors, as it should ensure high capital gains and rental yields in the years ahead.

I hope this helps. Feel free to send me a private message if you think I can help you any further.

Daniel Orozco · Answer

@Carlos Cristiani hey there I was actually planning a trip to puerto Vallarta to see if I can buy and invest over there do you know anything about the market over there, can a condo give good cash flow or an Airbnb??? Do you own property over there???

Ricky Hale · Answer

I am investing in Mexico lets talk.

George Blower · Answer

@Penny I.

My company helps people use their retirement funds to invest in alternative investments including real estate.  We have a population of customers that have used their retirement funds to invest in Mexican real estate.  Happy to discuss from that perspective!

Investing in Mexico?

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