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Investment Property in Mexico

It is common knowledge that many Americansincreasingly taking advantage of the trend,
are finding that investment property inbuilding gated communities, condominiums and
Mexico may provide an interesting option. Isgolf courses and are selling directly to the
buying property for sale in Mexico still aretirees and to those wishing to hold the
good way to reposition equity fromproperty as part of their real estate
appreciated  domestic  property?investment  portfolio.
Trends show older people and retirees areOn the negative side, there are a couple of
looking for inexpensive places to live andfactors  to  keep  in  mind:
enjoy the rest of their lives and are finding
places like Mexico very attractive. ShouldFirst, if you are planning on using
you be the one who sells or rents thisinvestment property in Mexico as a
property to Americans? Is this a good way torepositioning strategy, remember you cannot
put some of your appreciation from youruse the popular 1031 exchange approach
property in the United States to work? Webecause the rules limit replacement
will explore some factors for you toproperties to domestic replacements (i.e.
consider:land  in  the  United  States).
Overall, the appeal of owning investmentAlso, many land-seekers are encountering a
property in Mexico is evidenced across thevariety of obstacles with the investment
country.  For  example:itself, including skyrocketing real estate
prices and confusing laws. Under the Mexican
In the last couple of years there has been aconstitution, foreigners are allowed to own
land rush in the Riviera Maya, a smallland outright anywhere except within 50
idyllic slice of Mexico's Yucatan peninsula.kilometers (31 miles) of the coastline or 100
It is this combination of beautiful beacheskilometers from a national border. Within the
(or other geographical features) withrestricted zone, they can hold the property
inexpensive cost of living this bringingin a trust, or fideicomiso. While they don't
Americans by the hundreds to this place andofficially own it, they retain the right to
many  others.use it and sell it for a renewable 50-year
period. For example, in Tulum, several miles
From the long-time artists' enclave of Sanof virgin beachfront are claimed by an
Miguel de Allende in the hills of centralejido--a form of communal ownership that's
Mexico to fast-growing sports-fishing andfairly common in Mexico. Under current law,
beach communities of the Baja peninsula toejidos can be "privatized," subdivided and
Puerto Vallarta on the Pacific coast, theresold, subject to unanimous approval by ejido
is  plenty  to  lure  a  sun-seeking retiree.members and time-consuming government
approvals. Until that happens, foreigners are
No place has boomed in recent years like theblocked  from  buying  pieces  of  it.
state of Quintana Roo in Mexico's far
southeast corner. Anchored by the high-riseFinally, if you're interested in investment
resort destination Cancun at one end andproperty in Mexico, experts say there are a
cosmopolitan Playa del Carmen an hour to thefew basic steps to help avoid heartache.
south, Quintana Roo is the country'sFirst, ask a prospective seller to provide
fastest-growing state, with over a millionthree documents before proceeding with any
residents. An estimated 1,500 to 3,000negotiations: 1) a copy of the title, known
American citizens live there more than sixinformally in Spanish as an escritura; 2) a
months out of the year, along with a fewcertificate of freedom of liens and
thousand more Canadians, Europeans and Southencumbrances; and 3) the latest tax statement
Americans.for the property. These documents will help
establish that the seller really owns the
The hottest section is near Tulum, just downproperty free and clear. Second, hire a
the beach from a massive Mayan fortressreputable attorney before signing any
overlooking the Caribbean. While the areadocuments. The nearest U.S. consulate can
retains a funky 60's vibe (there's a nudeprovide a list of attorneys in good standing.
beach--unusual for conservative Mexico), inThird, arrange for title insurance. In recent
the past several years some swanky hotels andyears major U.S. players such as Stewart
real  estate developments have been launched.Title and First American Title have gone into
business in Mexico and there is a thriving
Indeed, with more than 70 million Americanlocally based industry, as well. For a cost
baby boomers expected to retire in the nextof about $5 per $1,000 of property, a title
two decades, many without adequate pensionsinsurer will protect a buyer against prior
or health plans, some experts predict a vastliens by tax authorities in the event that
migration to warmer--and cheaper--climates.somebody else claims title. Finally, make
Often, such buyers purchase a property 10 tosure to place the property in a fideicomiso,
15 years before retirement, use it as aor trust. Fees run around $1,000 to $1,500 up
vacation home, and then eventually move therefront, plus about $400 a year, but that is
for most of the year. Developers areoffset by the very low property-tax burden.



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