FAQ’s

FAQ’s


What are the investment opportunities for a rental property?

There are opportunities to earn 5% – 10% return on investment for a rental property in Mexico. There are also development investment opportunities that can earn greater returns. Contact us for more details

How do we rent the properties out and what are the costs?

Property managers are typically paid $60 – $100 per month. Rental managers providng full rental services (marketing, screening, contracts, payment coordination, inventory, check in, coordinating cleanings, check out services) are typically paid a 20% commission to handle everything for you (if another agent brings a client they split that 10%/10%).

Many owners also post their properties on VRBO.com, kijiji, Craigslist, Facebook, and other websites, and then pay their property manager a “check in” fee.

Can we own more than one property?

Yes, of course you can own as many properties as you wish

What are the costs we need to be aware of?

Downpayments in Mexico are typically 10% – 20% when paying cash (i.e. if you had a line of credit). Costs you need to be aware of:

Closing costs in Mexico are higher than Canada or the USA, and only paid by the buyer. They are 3% of the purchase price in government property transfer taxes plus about $8,000 dollars in set fees (varies per property and with law changes but this will give you a general idea of what to expect). Included in the closing costs are the legal fees, permits and registrations, appraisal, and the fees to set up your own Trust for the property (legal entity that holds the title, your name goes on the deed. Ownership rights protected in a Trust, no probate, no death taxes, no creditors can take the property from you) and also prepayment of the first years fees. The yearly fee for your Trust is about $500 USD.

Escrow services for a transaction is $800 USD (one time fee). This is optional, and strongly recommended. Lawyers, notaries, and real estate agents should not hold any escrow money. In Mexico, an entity must be specifically designated to provide escrow services. We commonly work with Stewart Title, which is one of North America’s largest escrow companies.

Furniture may be needed. If the place is unfurnished or needs some work, you will budget for these items. Pricing for furniture in Mexico is similar to Canada and the USA. For example, all furniture, appliances and electronics for a 2 bedroom condo starts at about $10,000 dollars and goes up from there depending on taste.

Insurance is not mandatory. If you will be renting your property out, liability insurance is strongly recommended.

What do I do for insurance?

Homeowners insurance is typically $350 – $500 dollars per year for basic coverage and up to $50,000 in contents. If it is a condo they also have building insurance.

Car insurance is 1/3 of the price of BC, same price as Alberta. It varies per vehicle, but to give you an example our 2006 SUV is $350 per year for collision, comprehensive and theft.

Health insurance is available through major companies (I am 34 and pay about $500 US a year for major medical coverage in Mexico, USA and Canada), or you can get extraction insurance for a few hundred dollars a year (stabilize and take you back to Canada for treatment) or you can just ‘pay as you go’ (doctors visit runs about $30).

How difficult is it to sell a property in Mexico if I want to upgrade later?

This depends on the property, and market. You do have higher closing costs here (front loaded: closing costs are paid by the Buyer, and all real estate commissions are paid by the seller. So, you don’t have to pay closing costs when you sell (just capital gains if applicable, real estate commissions 8% + tax, and a small fee to shut down the Trust. If you have a mortgage there is a fee to clear it. So, this is not a buy and flip market, but it is possible to sell and upgrade in the future.

We don’t have a crystal ball but the statistics show the market is picking up. We have had a 8.9% increase in the # of condo sales in 2014, and a good start to 2015.

What does property tax look like there?

Property taxes are 0.05% of the estimated value recorded in the deed, so most places pay just $100 to $200 a year in property taxes.

Are the prices listed in USD?

All prices here are listed in USD. It is possible to purchase in other currencies. We can send you info on exchange companies that can give you the best rates, and when they are favorable you just lock in the rate and get all your money in USD, then you don’t need to think about it.

How much are the condo fees typically?

Monthly Home Owners Association fees range widely from $30 a month to over $1,000 dollars a month (see each property for details of what is included). Most fees cover common area maintenance, pool cleaning, garbage pick up, sewer, administration, staff, and building insurance. Others include all utilities, cable tv, internet, and optional cleaning services. For a 2 bedroom 1400 sq ft ocean view condo $300 a month is typical. Prices vary per development, and size of property.

What Property Management Services are Available?

Full services are available to completely look after your property (pay bills, repair items, conduct pest spraying periodically, and more). Property management is available from $60+ a month for basic services and varies on the size of the property and what services you require (pool cleaning etc). Most people prefer to buy in a gated community (condo association) because they look after most things for you – can be easier than owning a house here. In Mexico there are squatters rights which can be a hassle if you have a house outside a gated community and someone decides to live there. Alternatively, you can have a live in caretaker. Inside a gated community, you don’t an issue with this at all.

What financing options are available?

You can get a mortgage in Mexico, however they typically want you to come up with 40% of the purchase price cash, and interest rates are 8.9%+ depending on credit score. There is lots of paperwork to apply, and application fees in the range of 3% of the total purchase price. A Mexican mortgage is a viable option for some.
Canadian and American banks won’t give you a mortgage for Mexico since they can’t foreclose on it if you stop making payments. They need to secure an asset in order to give you money.

There are different types of mortgages, some which have no prepayment penalties so if you get a chunk of money you can pay it down.

Some private sellers and developers will provide owner financing with a large downpayment (typically 40% – 50%) and carry the property 1 to 2 years (in some cases up to 7 years). The property would typically be deeded into your name with a mortgage registered on the title in favor of the seller. With this potential option, you will not get the best “cash” price since you are asking for a vendor take back mortgage.

The most cost effective option usually is to get a home equity line of credit from your home country if possible, however you may want to speak with a mortgage professional in Mexico to discuss your personal situation. Contact us for more details.

Is financing available for a home in Mexico?

Many people dream of a home in Mexico, but paying for it completely may be out of reach for them.  Financing  is currently available for them, although at somewhat higher rates than in the US or Canada.  Some people prefer to have a loan against their property here, however, instead of purchasing it with a home equity line of credit on their permanent home in another country. There are now many loan brokerage firms in the Puerto Vallarta area that are making these people’s dreams a reality.

What is the meaning of the “fideicomiso” or bank trust, and how does it affect me?

Again, take a look at the sections under LIFESTYLES on the web site for a more in-depth description of the bank trust, know as a “fideicomiso”. But in a nutshell, the fideicomiso is just the process by which, at this time (because it is changing greatly and quickly), foreigners (non-Mexicans) are allowed to own property that is near a coastline of Mexico  or near a border of Mexico.  In this process, the deed to the property is held “in trust” by a recognized and approved banking institution of Mexico, but is completely renewable, inheritable, and continuous for the property owner.

What about Capital Gains taxes? How could they affect me ?

Mexico currently has created three levels of capital gains taxes: total exemption, partial exemption, and no-exemption.  As within any other country, Mexico levies these taxes and also continually changes these tax codes, and always will.  It is important that you discuss with your Global Team member your specific property and qualifications in order to understand where these types of taxes may directly affect you.  But, in a nutshell and for a general understanding, here is an overview of the current types of capital gains taxes here in Mexico.

No Exemption:  Basically, if you do not qualify for either of the other types of capital gains taxes, you must pay 25% of the gross sales price or 28% of the net gain after the application of deductions that include brokerage fees, capital improvements that are verified with “facturas” (official receipts) or an independent appraisal, and an allowance for inflation.

Total Exemption:  If you reside in the property for 5 years or more, have a Permanent or Temporary Visa (formerly FM2 or FM3), working status with an RFC number, an escritura and receipts of electricity (CFE) or telephone bills, you are not taxed on an unlimited amount of gain on the sale of your property.  This exemption is intended to be for residents and the requirements for it are meant to prove to the Notario and to Hacienda, Mexico’s taxing authority, that you are indeed a resident of Mexico.

Partial Exemption:  Under this classification, only a portion of the gain is taxable under a very complex calculation that must be determined by a Notario since the factors of it change almost daily.  The same requirements apply as with the Total Exemption, but the property can be help for a little as 6 months or more.  Because of the intricacy of the calculations, it is important to work closely with your Global agent to insure that the process is complete and that you receive the most exemption that you can qualify for.

What if the property I like is “ejido” property?

Ejido property is basically property that was given by the Mexican government to the people of an area as communal, co-op farm land, many years ago.  It is not “regularized” property, or property that has a legal title and deed, but is communally owned by the group of indigenous people of that community.  A non-Mexican person cannot own such property unless it goes thru an extensive and expensive process in the government of the state to become regularized.  Basically, unless the ejido, or tribal council, approves it, the title would never be in your name, and therefore, there would always be a chance, even if a remote one, that the ejido or some member of it, would reclaim the property at some future time.

There are many, many properties of all types available in every area of Mexico that are not ejido properties.  We will be glad to help you find the perfect place that you will be able to own with the confidence and security that you will want to have now and for generations to come.

Is it legal for me, a non-Mexican, to own property in Mexico? Absolutely!

Read the information under “LIFESTYLES” in this website.

You will see that it is not only legal to own property here, but also a relatively painless, easy process to purchase your dream vacation getaway or retirement home in Mexico.  At Global we make sure that you not only understand every step of the transaction, we also make sure that all of it is completed in a professional and thorough manner.

What will a Global Agent do for you as your realtor?

Understanding what your realtor does is important.  At Global we go “the extra mile” for each and every one of our clients.  If you are looking for a property to buy, we will provide you with information to make sure you have all the facts to make a good decision.  If you are selling your property, we will do extensive research into comparable properties, the minute aspects of the market in the area, and into many other areas in order to help price your property at a price that is both attractive to buyers and advantageous for you.  With extensive advertising, both locally and internationally, you can be sure that your property will be marketed professionally and completely.

Does he know the area that you are interested in and have a working knowledge of the benefits and challenges of each area and developments in that area?

At Global Real Estate Vallarta, our agents live and work in the area and understand not only the benefits of each development, but we delve into the deeper aspects of them so that we can effectively communicate this information to help make your choices easier.

Are they a member of a professional real estate association like AMPI?

Fred Ayotte is Global Real Estate Group Managing Broker. Fred is a fully licensed AMPI Broker Associate meeting all the licensing guidelines from AMPI the Accredited Real Estate Association that governs licensing for Mexico.

As a member of AMPI, our Team will work within the guidelines of the association and perform both ethically and legally in all manners.  The realtors at Global pride themselves on being members of AMPI and on being completely professional, understanding the laws and regulations that may affect your transactions in Mexico.

Fred Ayotte in addition holds the position of Vice President of AMPI Compostela Real Estate Board.

He is currently an active Member of Multiple Listing Service Committee and Compliance Board of Realtors.

He also an active member in good standing on the following boards and services committees for AMPI and AMPI.

  • AMPI MLS Compliance Board of Realtors ( 2013-2015 Active) 
  • AMPI MLS Education Committee Board of Realtors (2014-2015 Active) 
  • AMPI Honour and Justice Committee Board of Realtors (2014 -2015 Active) 
  • NAR, International Member (U.S. National Association of Realtors) (2011-2015) Active
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