Investment Requirements

The real estate industry impacts Mexico as it largely contributes to its economy. The real estate industry in Mexico continuously increased even before and after the Covid-19 pandemic. The effect of housing prices on residential investment influences economic development. Rising home prices stimulate more construction spending to take advantage of higher costs, which leads to more robust economic growth. The real estate industry generates job opportunities that significantly contribute to Mexico’s economy. In 2021, there were 872,000 individuals employed. The investors in real estate properties located only in coastal areas, beachfront, or by the ocean in Mexico are mostly foreigners, but Mexicans invest the most in Mexico. Foreigners are attracted to investing in Mexico because of some factors, such as its economic stability, investment incentives, increasing GDP, and low unemployment rate. Overall, the real estate industry in Mexico is healthy and improving. In addition, the cost of living in Mexico is cheaper than in the United States, Canada, or Europe.

Listed below are the requirements for owning a Property in Mexico.

After completing the real estate requirements, the last step is finalizing a contract. When the deal is accepted, the closing procedure starts. The individuals involved in the closing of the sale of the property are the buyer and seller, beneficiaries, the notary public, the trustee bank, the buyer’s real estate agents and lawyer. The bank officer or the closing coordinator must receive a permit from the Ministry of Foreign Affairs. To acquire a trust permit from the Foreign Affairs Ministry, the parties must provide personal data, proof of title, and the purpose of the property.

Moreover, the property agent will begin the drafts for the closing deed and review by the notary, lawyer, and bank officer. Then the buyer will sign the acts, settle the payment, and transfer the title to the bank. Paying a deposit is one of the ways How to buy property in Mexico. A 10% deposit of the property’s total price is typically needed as a deposit to verify the purchase. The money is kept either by the attorney, notary, real estate agent or in the escrow account. On the closing date, the notary public will transfer possession of the property to the buyer. The closing date is the day the property will be under the buyer’s name and the title deed is signed. The buyer and the seller agree on the date and decide by the “notario.” The notary will issue a notarized copy of the closing deeds as the first proof of possession. In Mexico, the notary public (notario público) is a public official assigned by the Governor and has the power to certify documents of business or legal transactions that require authenticity. After three months from the closing date, the Public Registry will issue the final deed. The Public Property Registry provides lawful certainty in real estate transactions. They are the institutions that record the registration. The first step in registering the property in Property Public Registry in Mexico is to make a request. Secondly, a purchase sale agreement must change the possession, rights, and titles that will transfer under the new buyer’s name if the property has a previous owner. Another alternative is to show the deeds of the property, which the notary public should sign. Lastly, show the certified copy signed and sealed by the notary public. Moreover, the delivery of the property and acquiring the title take place on different dates.

Real Estate Investments in Mexico include apartments, beachfront, condominiums, and houses. Aside from being a tourist destination, Mexico has become an ideal location to start or invest for foreigners and locals. Mexico has become known for its foreign investors and makes the real estate industry grow. Some of these investors are rich and able to purchase a luxury home for vacation, and others are those who want to enjoy the beauty of Mexico as they retire. Another reason for the buyers of real estate property in Mexico is for investment and wanting to generate income. In addition, the real estate investments with greater demand are condominiums and houses. The reason behind that is the lower prices of condominiums and houses in Mexico compared to the United States. The prices of condominiums in Mexico are relatively low compared to other U.S. coasts, which is the reason for the vast number of buyers in Mexico. As a result, foreigners and locals tend to invest more in condominiums. Furthermore, the three most popular locations for investing in real estate property in Mexico are Conchas Chinas, Amapas, and Old Town. Conchas Chinas is one of the earliest and most recognized neighborhoods in Mexico. Conchas Chinas is known for its resorts and famous residents. It is often called the “Beverly Hills” of Mexico. The lower part of the Conchas Chinas has fast access to the beaches and is close to the Old Town. Conchas Chinas has modern condominiums, traditional-style villas, beachfront homes, mansions, and commercial buildings.

On the other hand, Amapas is one of the famous places in Mexico for real estate investing and is north of the Conchas Chinas. Amapas is known for their peacefulness and calmness in an isolated part of Mexico. Amapas has access to the beach and hillside and have the scenery of the Pacific Ocean. The primary real estates found in Amapas are condominiums and villas. While the Old Town is the central area of Mexico. Old Town is known as the “romantic area” and a busy place compared to the Concha Chinas and Amapas. The real estate investments in Old Town are apartments, single-family houses, and condominiums.

Anyone can buy properties in Mexico, irrespective of their citizenship or nationality, whether locals or foreigners. However, foreign nationals should follow some guidelines. 

According to the Mexican Constitution of 1917, only Mexicans could purchase properties in Mexico. In 1973, foreigners were permitted to buy properties outside the restricted area under the Foreign Investment Law and enjoyed the same privileges and duties as Mexican citizens. The restricted area is 31.0686 miles within the coast and 62.1371 miles within the international boundary line. The foreigner must go with a trust fund for 50 years if the property is in a restricted area. A trust fund in Mexico is known as Fideicomiso. In Fideicomiso, the non-citizen is the beneficiary of a Mexican trust, and the bank is the legitimate property owner to gain the beneficiary in the trust.

A real estate investment in Mexico usually takes 2–3 months or less. Still, the length of acquiring a property depends on the number of properties the investor views until deciding which one to purchase. Overall, buying a real estate investment in Mexico is straightforward. In finalizing a contract and taking possession of the property, the length is about 45 to 90 days. However, it depends on factors such as if the property is still pre-owned or in the pre-selling stage. Additionally, it depends on some circumstances, including difficulties in certifying the title and the non-debt certificates; and the volume of work on the bank and notary.

In owning a property in Mexico, aside from the total contract price, expect to pay for the fees, such as legal and notary fees, bank trust fees, tax and duties, and property tax. The legal and notary costs usually vary between 0.5% to 1%, but it depends on the property’s purchasing price. In Mexican Law, the deed to the property must be prepared and processed by a Notary Public. In a bank trust, the initial fee depends on the property and institution, but typically, the average expense ranges from $700 to $1,600, and the yearly fee is about $450 to $600. Tax and Duties include the title deed registry, transfer tax, and the Government closing documents and appraisal. The tax ranges from 2% to 6% of the property’s value. However, Mexico’s property taxes commonly cost about $300 or less and rarely cost about $600 or more. The ongoing property costs in Mexico include property taxes, maintenance fees, land trust fees, and electric and water bills.

There are instances when the investor wants to renovate and remodel the purchased property in Mexico, which is an additional expense. As per the experts, there is a general rule about the cost of renovating and remodeling the property. The expense should be less than 10% of the property’s current market value. The average expense of renovating and refurbishing a property ranges from $15,000 to $200,000. Depending on the changes, the holder wants to make and the price changes. Renovating a property is cheaper than rebuilding it. There are expenses in renovating or remodeling a property in Mexico, such as the payment for the workers, engineers, designers, and architects, a new set of furniture, and materials.

No, real estate investment in Mexico is not expensive. Real estate investment in Mexico is more inexpensive than in the United States. Anyhow, the price of a property in Mexico depends on the location. There are parts of Mexico where real estate investment expenses are higher than others, including the Pacific coast, the Caribbean, and the Riviera Maya. The average property expense in Mexico ranges from $100,000 to $1 million. Even though property in Mexico is more inexpensive than in the US, note that the price increases as the economy of Mexico rises and develops. Moreover, the price of a property in Mexico depends on the property type. Beachfront properties in Mexico are more expensive than those miles away from the beach.

Yes, it is okay to buy and sell a property in Mexico. Mexicans and foreigners are free to buy and sell property. Non-citizens are permitted to buy and sell property in Mexico if they have Fideicomiso if the property is in a restricted area. In Mexico, real estate owners must pay the annual Mexico Property Taxes and Tax Rates, local or foreign.