Many people wrongly think they cannot buy property in Mexico as a foreigner. This is not true and many people are doing it. In this article, we look at the four main reasons why people buy property in Mexico.
Buying a Vacation Home
Many of us in the US and Canada go to Mexico on holiday and then keep going back year after year or even several times a year and other countries as well for that matter. Getting to the Mexican sand beaches and turquoise water is very accessible with direct flights from an impressive number of countries and cities. Think about how much time you spend waiting at customs upon landing.
Buying a property in Mexico that we can use for ourselves and rent when we do not generally turns out to be not only much more cost-effective but also very profitable. The property could basically pay for itself and, even better, make a nice profit, sometimes even if you stay in it for a significant part of the year.
Imagine going to your favorite holiday place without having to find and pay for a hotel or short-term rental. Having a home away from home where you immediately feel at home. A place where you can invite your friends and family to spend quality time with you. It is also likely that the property will increase in value over time, making it a solid investment over the long term. In addition to this, you save on numerous vacation costs (i.e., rental accommodations, eating out, renting transportation, etc.). Lastly, the icing on the cake: the travel required to scout for, purchase, manage and sell an international real estate investment can be tax deductible.
Buying a Retirement Home for Immediate or Future Use
With a great quality of life, a lot of natural beauty, a warm climate throughout the year and modern infrastructure, Mexico has become one of the most popular places to retire.
Mexico is the largest overseas retirement location for Americans and Canadians as it provides an incredible lifestyle compared to what they can get/afford at home. If you like sport fishing, Mexico has some of the best fishing spots to catch a Marlin. If you are a passionate golfer, Mexico is home to many golf courses designed by pro golfers like Greg Norman or Jack Nicklaus. In addition, its great weather, low cost of living and closeness to North America makes Mexico one of the best places to retire.
Cost of Living
A majority of North Americans don’t anticipate having enough money to afford retirement at home due to stagnating income and constant increases in the cost of living. In Mexico, your retirement income will stretch much further than at home, allowing for a very comfortable lifestyle. The cost of living in Mexico is very affordable and less than half that of the US or Canada.
One of the biggest preoccupations of retirees is healthcare. In Mexico, healthcare is excellent and the health system infrastructure such as hospitals and dental clinics is top notch. The cost of procedures is much cheaper in Mexico for the same quality. As a result, Mexico has become a top destination for medical tourism. I know of a Mexican surgeon educated in the US who performs the same operations in both countries. Yet, he charges five times less in Mexico. Prescriptions are also more affordable in Mexico when compared to the US and Canada.
Buying a Home to Work Remotely
Of the four reasons to buy property in Mexico, this one is the most recent. Over the last ten years or so, Mexico has become a haven for digital nomads and people who work remotely looking for new cultures to explore. COVID-19 has substantially accelerated the trend. Working remotely all of a sudden became the new normal for millions of people almost overnight. More and more people realize that it makes absolutely no sense paying thousands of dollars in rent every month and commuting long hours when you can do your job after an early morning run on a pristine beach and save a lot of money living somewhere warm and dreamy.
If you can work remotely, you could easily spend half of the year in Mexico. Owning property in Mexico would make much more financial sense than renting at costly short-term rental rates. Indeed, instead of paying rent, you would collect rent on your property when you are not using it. The property will not cost you an arm and a leg and you will get your money back through rental income (and capital gains if you eventually sell), which could also cover your lifestyle. Many people think that lifestyle is only suited for singles or young couples but more and more families are doing it as well.
Mexico offers a 6-month tourist visa for most nationalities including the US, Canada, the UK and EU countries. This will get you covered if you are looking at staying just part of the year there. In case you are looking for longer stays, you can look for a temporary resident visa which can give you up to four years and is very easy to get.
Buying an Investment Property
A Growing Number of Visitors
Over the last decades, Mexico has become one of the world’s biggest tourism destinations. It had a steady climb up to the 7th position pre-pandemic and then jumped to the 3rd spot during the Covid-19 pandemic. Beautiful beaches, tropical weather, rich culture, authentic food and reasonable prices are just a few of the many reasons attracting travelers to Mexico in ever bigger numbers. The jump during the pandemic is due to Mexico still welcoming visitors with open arms.
Visitors are not only tourists. Mexico has also become the destination of choice for many snowbirds as they are guaranteed nice and hot weather all year round, more so than in Florida or Arizona. Also, as mentioned above, Mexico is also the number one destination for retirees from the US and Canada.
The Best Possible Regulatory Climate
Short-term rentals represent the most profitable type of real estate investment in Mexico. This is especially true given the number of visitors in the country. In the US, Canada and Europe, there is a trend towards stricter regulations that drastically limit the profitability of short-term rentals when they don’t make them downright illegal.
The situation in Mexico is totally different. Short-term rentals are unregulated and that is unlikely to change anytime soon. Hotels have already a very high occupancy rate so they are not bothered by the competition. Short and local long-term renters do not compete for the same kind of properties. Moreover, the various levels of government in Mexico support short-term rentals as they need the tourism dollars.
Much Lower Prices and Costs
Similar properties are much less expensive in Mexico than in the US and Canada. The price can sometimes be as low as the downpayment for a similar property in the US and Canada. Same down payment but no debt and therefore a much higher return on investment!
Coupled with the low operating costs and a property tax close to 0 makes investing in a property in Mexico a no-brainer.
When you concentrate your real estate investments in one location/country, you’re at the mercy of that market. It’s way too risky and so many people lost everything during the Global Financial Crisis by being fully/overly invested in US real estate. Buying real estate in Mexico is a great option for portfolio diversification and risk management. It can be seen as taking an insurance policy against a fall in property and asset prices at home.
To sum up, a growing number of visitors and a great regulatory climate make Mexico an ideal place to operate short-term rentals. Coupled with lower prices and operating costs, Mexico becomes an ideal place to invest in real estate and short-term rentals in particular. Let us note that with the explosion in the number of digital nomads and remote workers, long-term rentals have become a great alternative with the right property in the right places. While adding diversification to your portfolio, imagine also the great feeling of owning a property in a dreamy destination.
In this article, we just reviewed four reasons why foreigners buy property in Mexico. There are many more but we did not want to make this introductory article too long. Yet, we would think that at least one of the reasons mentioned pretty much applies to most people.
Many people would love to own property in beautiful Mexico but end up not taking action because they are scared as a result of media sensationalism. We think this is sad and we are here to support readers realizing their dreams when it comes to buying property in Mexico or other foreign countries for that matter.
If you are interested in buying or investing in real estate in Mexico, check out our article about Why Mexico Is a Great Country to Buy or Invest in Real Estate
If you want more information on this topic or any other topic pertaining to buying or investing in real estate in Mexico, reach out to us through the contact form.
What about you? What are your reasons to buy a property in Mexico?