All Forum Posts by: Mike Lambert

@Eric Ticas

Hi Eric,

No bank from one country will take a mortgage in another country so you're limited to Mexico when it comes to banks. Beware that 1) some lenders might not lend in Tulum because they deem it too risky given the oversupply situation and 2) other lenders won't lend if the purchase price is below $750k because you can't get title insurance in Tulum specifically.

Finally, beware also that there's a huge difference between a lifestyle purchase and a (profitable) investment purchase, the latter being all about numbers. I'm sure you can still buy in Tulum and cover your costs if you rent when you're not using the property provided that 1) you don't use the property too much of the time and 2) you pay 100% in cash so you don't have a mortgage payment to cover. In that case, my advice is to try to find a property as unique as possible as the competition for rentals is going to get even more intense given the huge amount of supply that's going to hit the market in the coming years.

When it comes to Mexico, I'm first and foremost an investor. However, even if I wanted to spend time in Tulum, I'd buy a property in a more profitable area (of Mexico) and use the cash flow to rent for cheap in Tulum to get money and lifestyle together.

I'm not sure where you can make 10% gross yields in Miami or any gross yield close to that unless you go for short-term rentals but I'll leave people who know that market to comment on that part.

I love investing in Spain, especially in the Costa del Sol, which I call the Florida of Europe although most call it the California of Europe, alongside Portugal's Algarve. The area is booming, it's internationalized, much cheaper than Florida, higher yields, lower interest rates, less short-term regulations. I'm not affected by any of the things you mentioned.

Real estate is local. There are good and bad areas to invest in any country (and even in Madrid, I've heard of people making much higher yields than those you mentioned).

@Carlos O.

Buying as a citizen or as a foreigner doesn't mean anything. You buy either in your own name or through a fideicomiso (or a Mexican corporation). The only benefit you'd get from a fideicomiso is asset protection so you have to decide if it's worth the cost. Just to be clear for other readers, if a non-citizen wants to buy in the forbidden/registered zone, they cannot buy in their own name so they have to use the fideicomiso (or a Mexican corporation).

@Christian Romano

You're welcome. I'm not sure what you mean by the best deal possible and why it'd matter. There will always be people getting a better deal than you and others getting a worse deal than you. Also, what could appear as a better deal might not be as a lower price might mean a higher risk in certain cases.

I guess what matters is to find a good deal by yourself or get a better one by working with other people. That's already hard enough so why look for perfection (which doesn't exist anyway) and often leads to inaction.

Hi Francis, welcome to BP. I just sent you a DM because I think we have a few things in common. Mike

@Sebastian Papworth Trovit, that's the site I wanted to mention but forgot the name. And, yes, Inmuebles24 too. I didn't mention it as I believe it's the same company as Vivanuncios. Not sure if you're aware but, nowadays, Google Translate translates any web page so there shouldn't be any language issue on these sites for non-Spanish speakers.

@Christian Romano what you're looking for doesn't exist because there's no unique way for the developers to advertise their projects (or not). So it's not easy for anyone to do and then it's even more difficult to separate the wheat from the chaff. But, it is easy finding a great deal in the US these days?

Aside from Google searches and Facebook groups, you have the website of developers, the website of real estate agents and master brokers, Mexican sites like Vivanuncios and another one I can't remember the name of, Point2Homes (beware that many if not most of the listings in that one are old, fake or even possibly scams - buyer beware in this one: if it looks too god to be true, it probably is).

Bear in mind two other points:

1. Some agents or brokers are exclusive sales agents of some developments so you might never know about them unless you know the right people.

2. Typically, Mexican developers have a "friends and family" round before going to the market. These are the best deals and, if they sell everything at that time and you're not "in", you'll never get the opportunity to buy into the project, even at retail price later on. Speaking of which, for example, as I mentioned to you on the phone, I deal exclusively with "friends and family" so you'd never know what I've got unless you know and/or contact me. You bet others are doing that too.

Hey @Christian Romano you're welcome. The standard reply is it depends on your objective and the level of risk you want to take. Also, the best locations for pre-construction are no different than the best location for resales.

So like everywhere else, the best locations are those that have the best supply/demand parameters. When it comes to demand, you want mass tourism and the three main tourist destinations in Mexico are the Riviera Maya, BajaSur and the Puerto Vallarta / Riviera Nayarit areas. You could bet on less established destinations but it's much more speculative. When it comes to supply, you want to avoid oversupply, as it's the best one-way ticket to losing (a lot of) money.

I'd avoid Tulum with a 10-foot pole as it's already hugely overbuilt and it's going to get much worse in the coming years. For that reason, I didn't go ahead with the development I mentioned in my initial post in this thread and I'm so happy and relieved I did. Generally, you need to be careful with the Riviera Maya, as that risk is higher there, not to mention the sargassum risk.

You're welcome @Vidyadhar R.. To best answer you and to make sure I don't mislead you, let me give you some context before replying to your specific question.

I've never applied for a mortgage in Mexico. I've never needed to, as I've invested with investors and also we've benefited from seller financing. I therefore haven't dealt with the lenders' department that deal with personal mortgages and so there's nobody I can recommend you personally.

I get my information on the topic through my relationships with the commercial lending departments of the banks (I used to lend to them when I was a banker). As I now invest into developments, I regularly talk to these bankers to make sure that our condo buyers will be able get a mortgage if needed and to make sure that their risk when buying will be as low as possible. The idea is that if a conservative bank will grant a mortgage, it's a seal of approval for the project. If it's too risky for them, I don't want to have a situation in which the buyers', investors' and my money are at (too much) risk.

I was recently taking to them about a market in another part of Mexico that's performing very well but has a pocket of overbuilding in a specific area. Therefore, I wasn't that surprised when a bank told me that they won't lend there. To be clear, I haven't asked them about Tulum, simply because I've moved on from investing in that area. However, what's happening in Tulum is the same as what's happening in that area where the bank won't lend but on a much grander scale. Therefore, I suspect that lenders might have even more of an issue lending in Tulum as well, aside from the title insurance issue. That's what logic says to me but that might not be the case. Indeed, logic doesn't always dictate behavior, especially when there's an opportunity for the banks to make a lot of money. We've seen that movie before in the US, haven't we?

Generally speaking, it's not that easy for everyone to qualify for a mortgage in Mexico and, given the potential additional constraints related to Tulum, your best bet is to check with all the banks. It's not like in the US, there is just a handful of them.

Hope this helps.

Hey Brandon, Mexico can a great place buy a 50k down payment limits what you can do if you want to stick to the best areas.