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Investing in Mexico, Back to Basic Workshop

Last May 19, the Making Money in Real Estate team talked about one of the hottest and new spot in Real Estate which is Mexico. Joe asked Manuel Saburit, the president of GS Company, the developing company that they are working with on a project in Mexico, as to why is everyone excited about international investing in Mexico and what has caused this. Manuel answered that this is because the Mexican government has been trying to promote their tourism as the largest industry in the country for the next couple of years. The government is helping not only Mexicans but international investors as well.

Joe then wondered why, despite the fact that to stay in a Mexican hotel you have to pay a couple of thousand dollars a night and their haves and have nots, its tourism still gets busier and busier. Maureen responded with a couple of reasons:

There are more and more airlines traveling to Mexico
It’s easier to own and travel in Mexico, people are buying property in Mexico and going there to buy one
Huge international destination to look for property and the type of resorts that are being built are gorgeous
They’re becoming worldwide destinations — the very wealthy in the US are building beautiful places that they want to go see

The team again emphasized that the key in investing on condo hotels is location. If people are going there then there’s a reason to invest. The number of people going to Mexico are going up and that number is increasing every single day!

The team also discussed NAFTA or North American Free Trade Agreement which was started with the Salinas during the late 90’s. Joe said that the agreement spurned more international investing to Mexico which Manuel agreed with. He elaborated that it’s because free trade means not only goods but as well in services, as well as financial and taxation — so that means that everything has been easier not only for US and Mexico but as well as Canada.

Manuel also explained that if you want to get richer, you should learn to diversify and follow the leaders. Mexico is determined to grow and is not just another international real estate bubble so they do not over supply and just grow exactly as the same place as the demand.

Then the team also discussed how a foreigner can own a land in Mexico, Manuel explained that before, foreigners are forbidden to own a piece of land in Mexico but it all changed when the government allowed it but they should use the title of trust that the government creates. A foreigner can own a land for 99 years, the owner can sell or transfer the lease from owner to owner for 99 years and without taxation and when the trust expire, they should renew it.

Mau cited several concerns by people interested in Mexico and they are:

How does the trust works?
Mau answered this by saying that you have a 99-year lease on the property. Unless you are Mexican citizen you don’t physically own the land but you have a 99-year ease.
“Am I buying the property in US Dollars or in Mexican Peso?”
The reality is that people get to buy the property in US Dollar,
How is their money protected?
The title companies down there are the same in title companies and banks we have in the US. There’s been tremendous change in the last ten years in Mexico. It is very much an extension of the US.

One of the advantages that Mexico have over US, as the team discussed is that the materials are right in their fingertips unlike in the States where we have to import them.

The team also discussed that if you have a property both here and in Mexico, you’ll be able to get the best of both worlds. You could go buy a house down there (in Mexico) two, three times the size of what you can get here for the same money. If you could keep maybe a condo or something in the US, in Chicago, for the summer when it’s extremely hot in South America or in Mexico area. If you could do that… and then during the winter, from the fall until spring, go down to Mexico.