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How To Invest in Mexico: Useful Tips for Buying a Property

by Alice Genes

Ten years ago, maybe even less than a few years ago, most Western companies and individuals looking for ideas on how to invest in Mexico would not have had this country on top of their list . Despite the proximity of this Latin American country to the United States, it was thought to be a place to invest mostly by locals.

Fortunately, in the recent years, the Mexicans began to understand the importance of foreign investors and as a consequence, the government has begun to make significant changes. Mexico began to open itself to foreign investments mostly by not imposing restrictions to private companies and individuals who were looking to buy properties or operating import-export businesses. The country is currently competing with lower-cost havens in Asia when it comes to business investments and workforce moving.

Since the collapse of the Mexican economy in the 1990s, the currency of the country has gradually improved due to all-encompassing economic policies. Despite the fact that the peso was down at the beginning of 2009, Mexico was able to avoid a total collapse by preventing reactionary economic policies and controlling the money supply. Investors who plan on buying companies and put large amounts of money on Mexican soil should be happy that the Mexican currency has weathered the last economic storm. Every transaction carried out by an investment bank is made in local currency, which means that a robust peso makes more for foreign investments.

If you are looking to invest in Mexico, whether as a company or an individual, real estate is nowadays one of the most profitable sectors. The best thing about investing in Mexico properties is that you do not need to be extremely business-savvy in order to make a profit. All you need to do is have a sound knowledge of the laws governing property in this country and consider your locations well.

The first thing to know about property investments is that Mexico is low-priced, but it is gradually becoming more expensive. As the value of properties in on the rise, particularly in resort areas, investors wonder how to invest in Mexico with great profits. Of course, Mexico is still very cheap when compared to major U.S. cities, but values have really mounted in the past 10 years.

There are some things that you need to pay attention to when it comes to purchasing a property in Mexico. For example, Mexico prohibits foreigners to own land in resort areas, but this does not mean you cannot be an owner in this country. Investors work around this prohibition through side units in associations and property developments.

Foreign tenure is only limited to the “restricted zone,” a term that refers to the land located within 100 kilometers of the Mexican border, and within 50 kilometers of coastline. Since foreigners cannot enter into contracts when it comes to investing in real estate, they need to have a local bank act on their behalf, something that works similarly to a trust that is used to hold property for minors. If you are a potential buyer, you should always get advice in these matters and have the entire process overseen by a licensed attorney.

As you can see, Mexican real estate transactions are not conducted in the same manner as real estate transactions in the United States. Brokers and real estate agents are not officially licensed in Mexico. As a consequence, a foreign buyer cannot permanently be subject to the regular protections that would be applied to real estate transactions in the United States.

The Mexican government does not have any direct incentives put in place for foreigners who are interested in real estate purchases. However, this generally does not act as a real deterrent, simply because when one asks how to invest in Mexico with great profits, properties are on top of the list. There are numerous benefits to investing in Mexico real estate. The most significant of them is the value of property taxes, which are infinitesimal when compared to U.S. or Canada. The rule of thumb for a property in Mexico is to pay a few hundred dollars a year. Moreover, if you prove that you are a resident of the property for at least six months a year, you can apply for exemption from paying capital gains tax.

The Mexican economy is reeling right now and there are more and more funding opportunities available for U.S. and Canadian residents who are interested in property investments in Mexico. Besides that, buying a house would not only cost you less than in the U.S. or Canada, but you will save even more should you decide to move to Mexico, as the living costs in this country are minuscule. Property investments are also a good idea for those who love vacationing in Mexico on a regular basis, as they can save money on accommodation and make profits in the long run.




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