During the last ten years, property in Mexico has become a lucrative and viable investment strategy, bringing with it a new breed of sophisticated investors. U.S. title insurance, bonded escrow accounts and comprehensive title searches are "in"... promises and handshakes are "out".

Owning property in Mexico is easier and safer than ever, because now there are established and well defined rules regarding non-Mexicans owning land in Mexico. These rules are in place to protect your ownership rights and to promote the sale of real estate to foreign investors. The key is a safe, established and perpetually renewable Mexican Property Trust called a "Fideicomiso".

What is a "Fideicomiso" or Mexican Property Trust?
With the advent of North American Treaty Agreement, the Mexican Government recognized that it was critical to make foreign investment in Mexico safer and easier than ever. Because the Mexican Constitution prohibits foreigners from purchasing or owning real estate within 60 miles of an international border or within 30 miles of the Mexican Coast, a new, safe method of holding title was created. This new instrument, modeled after the one in Monaco, allows ownership through a Mexican Property Trust, called a "Fideicomiso". This is a trust agreement, much like an estate trust, giving you all the rights of ownership.

The Department of Foreign Affairs in Mexico City issues a permit to a Mexican Bank of your choice, allowing the bank to act as purchaser for the property. The bank acts as the "Trustee" for the Trust and you are the "Beneficiary" of the Trust. This is not an asset of the bank; they simply act as the Trustee to hold the Trust. Much like Living Wills or Estate Trusts in the U.S., the Mexican Bank, or Trustee, takes instructions only from the Beneficiary of the Trust (You). The Beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The Beneficiary may also sell the property by instructing the Trustee to transfer the rights to another qualified owner, or bequeath the property to an inheritor. The initial term of the trust is 50 years, and it can be renewed for an additional periods of 50 years indefinitely, providing for long-term control of the asset.
You have all the rights of a property owner in the U.S. or Canada, including the right to enjoy the property, sell the property, rent the property, improve the property, etc. This is not to be confused with a "land lease." The property you buy is placed in a trust with you named as the Beneficiary of the trust - you are not a lessee. If the property you purchase is already held in a Trust, you have the option of assuming that Trust, or having the property vested in a new Trust.

How Long Does It Take To Get A Trust?

On average, you can obtain your Trust within 60 days and in some cases, in as few as a few weeks.

You would be amazed how many people have only a simple buy/sell agreement between themselves and the seller as evidence of ownership. This is not a safe method of ownership and is not recommended .

Always get your Trust.

When Do I Pay For My Property?

When you have clear title, exactly like you would anywhere else. By using our U.S., bonded, third party Escrow service your money is held in an individually numbered, bonded and insured escrow account until your Trust is complete and the property rights have been transferred to you.

We do not recommend that you release funds to a seller unless you have received your Trust first. Purchasing property without receiving a Trust is simply buying without receiving the title in your name, which is risky and not recommended.

Fact: Until you have received your Trust, and rights to the property have been transferred to you, the legal owner of record in Mexico is still the previous owner.

Fact: You cannot bypass Mexican Taxes or fees by not getting your Trust, even if you sell the property to someone else before you have your Trust in place.

Do I Need Title Insurance?

Whether you buy real estate in the U.S. or Mexico, title insurance for every property you purchase is recommended. You have insurance for your car, your home and your health, why not purchase it for one of your largest investments, your property.

Fact: U.S. Title Insurance is available for properties in Mexico purchased by U.S. Citizens.

Fact: Just because you have a Trust does not ensure you have free and clear title.
In a Title Insurance search, the property's title is searched all the way back to the Mexican Revolution. Most title searches to secure a Trust only go back one or two owners of record.

How Can I Own My Property?

In the Trust document, you must name the Beneficiary or foreign owner for the property. This can be you personally, multiple partners, a foreign corporation, an estate trust, a living will, or other entity. The Trustee of the Trust (the Mexican Bank) will take direction from whomever you name as the Beneficiary.

Fact: You can name a U.S. Corporation as the Beneficiary of the Trust. This is perfectly legal.


Fact: If you sell more than 25% of the shares in the U.S. Corporation, you have created a real estate transaction in Mexico, and all Mexican Taxes apply.
(This is Article 151 of the Mexican Revenue Code and is also declared in the International Tax Treaty between the U.S. and Mexico. If this is done, and you do not pay the Mexican Taxes, you will have created a tax burden over the property for the new owner.)

Fact: You can own a property in a Mexican Corporation and take title fee simple only if the property is for development or investment purposes.

Fact: You cannot own property through Mexican Corporation to by-pass the Trust process.

Fact: It is against the law for a foreigner to own property in a Mexican Corporation for residential purposes.

Click Here For: The History of Real Estate Ownership in Mexico

A REALITY CHECK ON MEXICO

Mexico is in a unique position to reap many of the benefits of the decline of the US economy. In order to not violate NAFTA and other agreements the U.S.A. cannot use direct protectionism, so it is content to allow the media to play this protectionist role. The U.S. media - over the last few years - has portrayed Mexico as being on the brink of economic collapse and civil war. The Mexican people are either beheaded, kidnapped, poor, corrupt, or narco-traffickers. The American news media is particularly aggressive in the weeks leading up to spring break. The main reason for this is money. During this two-week period, over 120,000 young American citizens pour into Mexico and leave behind hundreds of millions of dollars.


It is critical to understand, however that the horrific violence in Mexico is over 95% confined to the three transshipping cities, Tijuana, Nogales, and Juarez. The Mexican government is so serious about fighting this, that they have committed over 30,000 soldiers to these borders towns. In a thoughtful article written by a professor at the University of Juarez. He was reminded of the Prohibition years in the U.S.A. and compared Juarez to Chicago when Al Capone was conducting his reign of terror capped off with The Saint Valentine's Day Massacre. During these years, just like Juarez today, 99% of the citizens went about their daily lives and attended classes, went to the movies, restaurants, and parks.


What is just getting underway is what many are calling the "Largest southern migration to Mexico of people and real estate assets since the Civil War" A significant percentage of the Baby Boomers have been doing the research and are making the life changing decision to move out of the U.S.A. The number one retirement destination in the world is Mexico. There are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who are on their way to owning property in Mexico for full or part time living in the next 15 years is over 6,000,000..

Mexico has avoided completely the subprime problem that has devastated the U.S. banking industry. The Mexican banks are healthy and profitable. Mexico has a growing and very healthy middle and upper middle class. The higher end markets ($2-20 million) in many of these destinations are going through a modest correction. The Baby Boomers market here is between $200,000 and $600,000.


Mexico is currently sitting on a cash surplus and an almost balanced budget. Most Americans have never heard of Carlos Slim until he loaned the New York Times $250 million. After that it became clear to many investors around the world what Mexicans already knew: that Mexico had been able to avoid the worst of the U.S. economic devastation. Mexico's resilience is to be admired. When the U.S. Federal Reserve granted a $30 billion loan to each of Mexico, Singapore, South Korea, and Brazil, Mexico reinvested the money in Treasury bonds in an account in New York City.


The following is a quote from Rosalind Wilson, President of the Canadian Chamber of Commerce. "The strength of the Mexican economic system makes the country a favorite destination for Canadian investment".

OPPORTUNITIES: WHY LOS CABOS?

The answer is simple and old fashioned: SUPPLY AND DEMAND.

The area Los Cabos is an investor's dream. This area has the comprehensive infrastructure in place, world class hospitals and dental care, nonexistent crime, international airport, first class private bilingual schools and higher than average appreciation potential. Like many areas in Mexico there is large demand for full and part time retirement living and a lot of construction underway to meet this demand. Pre construction of course is where the best bargains are available.

Do not be seduced by the endless natural beauty that is everywhere, both inland in colonial towns and along thousands of miles of beach. Apply conservative medium and long term investment strategies without emotion. The demand for full and part time living by American and Canadian Baby Boomers is evident throughout the country. The top two choice locations are ocean front, and ocean view. This makes Los Cabos the ideal place to shop with Cabo San Lucas Real Estate for Cabo Homes.

Mexico, with the world's 13th largest GDP, is no longer a "Third World Country", but rather a fast growing, economically secure state. Los Cabos leads the way for investment opportunity. Make your next vacation destination Los Cabos. Rent one of the many Houses in Cabo and get a feel for the incredible lifestyle as well as investment Los Cabos offers.


RE: Cabo Waterfront Investment Opportunity – UD Nov 2016

Hello potential investors – Please see the links and info below for the suite that I have for sale that is located in San Jose del Cabo, Mexico (#203-Villa 2– El Zalate) It is 15 minutes from the airport and 20 minutes. drive to Cabo San Lucas.
#203 - Villa 2 - For Sale http://bcforsale.net/m--79-32349-2-203--el-zalate

Or our suite video for our rental suite #402 – Villa 4 http://www.youtube.com/watch?v=36_ZO1Csky4&feature=youtu.be

Or
#402 - Suite For Rent On VRBO

Or our suite web site that I created www.sonjapedersen.com/cabo .

El Zalate Web Site http://www.sonjapedersen.com/elzalate/

El Zalate web site on another server www.6717000.com/elzalate

The property is located 1 KM South from San Jose Del Cabo, Mexico and about 29 KM North of Cabo San Lucas. http://www.6717000.com/cabo/maps.html For comparisons sake, we will use suite #302 – Villa 4  that sold at $380,000 (without parking stall – parking stalls are around $40,000-$50,000 extra). Suites 302 and 502 suite are both 2 bedroom, 2 bath & are 1396 sf in size (1000 sf inside & 400 sf patio – see floor plan link below).

For example if you can pull the money out of Canada or the US from one of your existing properties at an interest rate of approximately 3%.

If you were to finance the full amount of $430,000 (including the garage) in Canada or the US at 3%, your payments would be around $2,030/mo.

Maintenance Fees are $443/mo (2014), Taxes $50/mo, Management fee $50/mo, Utilities $250/mo (Satellite, Electricity, Telephone, Internet) = total is approx. $800/mo

Therefore your cost to own this investment is $2800/month.

We are generating $45,000/year or $3750/mo from rental income for our suite #402-Villa 4  for the last 3 years & We use the condo at least 2-3 months a year personally. The bottom line – you can make up to $1000/month net income on this investment after all expenses or in other words your $150,000 that you are investing is giving you a return of $1000/mo.

Prices have come down in Cabo 40% in the last 7 years – this is the bottom of the market & prices are starting to creep up again. There have been no sales in El Zalate from 2009 – 2012. In 2013 there have been 4 sales with #402 Villa 4 selling for $380,000 (no garage) Suite #301 Villa 1 which is a 700 sf 1 bed also just sold for $300,000 with no garage in December 2014.

Cabo has 330 days of sun a year and the average temperature is 25 degrees with no humidity (except in July/August & September). Cabo has all the modern conveniences of Canada (Costco, Home Depot, Sam’s Club, Walmart) and is very safe as compared to mainland Mexico (Check out the Drug Cartel map in the middle of this site http://www.6717000.com/elzalate/)

Properties can be registered through a trust (Fideicomiso) or in Fee Simple (The laws just recently got changed in Jan 2014 re the fee simple process – I need to look into this some more but most accountants in Mexico suggest that the purchase should be thru a Fideicomiso) - Please call me if you have any more questions at 604-671-7000. More info on the trust at http://www.banderasnews.com/1310/re-tropicasa-mexico-real-estate-fideicomiso.htm

Here is a link to the web site that I developed for this complex http://www.6717000.com/elzalate/

Check out a video of the area http://mexicomyspace.ning.com/group/cabosanlucas?xg_source=activity

Or another video of the area that a local real estate agent put together; http://www.youtube.com/embed/rUWd_qTXEeo

Or our personal Condo (#402) that we currently rent out making $45,000/year in rental income & we use it for 2-3 months a year: www.6717000.com/cabo/

The link to the suite that is for sale is: www.6717000.com/elzalate/forsale/index.html

SOLD $600,000 - Suite #301 – Villa 4 – 2100 sf (For Sale $625,000) 

Sold at $380,000 - Suite #302 – Villa 4 – 1400 sf – no garage (was For Sale $460,000) http://www.6717000.com/elzalate/forsale/villa302/index.html  

Sold at $380,000 (Dec 2013) - Suite #403 – Villa 4 – no garage www.6717000.com/listings/condos/30470-403-4-el-zalate-other.html

http://www.6717000.com/FP31391-31391-5024elzalateother

To View all El Zalate MLS Listings to compare – click this link & follow the instructions http://www.6717000.com/elzalate/construction.html

To view all El Zalate VRBO rentals click www.vrbo.com/vacation-rentals/mexico/baja-california-sur/san-jose-del-cabo/el-zalate

http://www.6717000.com/FP31571-31571-40losvallesclubcampestrother - Another property (House) at Club Campestre Gated Community in the Los Valles neighbourhood that I am selling (5 minutes away).

http://www.6717000.com/elzalate/villas/villa1/index.html - Villa 1 floor Plans

http://www.6717000.com/elzalate/villas/villa2/index.html - Villa 2 floor plans

http://www.6717000.com/elzalate/villas/villa3/index.html  - Villa 3 floor plans

http://www.6717000.com/elzalate/villas/villa4/index.html - Villa 4 floor plans

What is the Cabo Corridor?

It's the 20 mile stretch between the two towns of Cabo San Lucas and San Jose del Cabo. It is where many of the hotel resorts, golf courses, and housing developments lie. When looking for real estate here in Cabo you will definitely have to consider the many projects situated either on the beach or back up into the mountains offering fantastic views of the Sea of Cortez.

Whether you are looking for a 1 bedroom condo under 200k or a $2 million house the Cabo Corridor offers it all. If you want beachfront or just ocean views keep in mind this: the four lane highway creates a man made division between the beach and many of the houses and condos offered here in Cabo. Even though this might be a drawback in some people's eyes this is a HUGE benefit to others' pocketbooks because the prices are substantially lower on the other side of the highway, and many times the views of the water are better because you are higher up into the mountains.

To really understand how ownership in Mexico works, it is important to understand the history of property ownership and its evolution in Mexico. If you picture a country that has been dominated by foreign owners since the early 1500's, you will begin to see why Mexico is so protective of its most valuable resource...land.

In 1517, when Hernandez de Cordoba sailed from Spain to the Yucatan Peninsula, foreigners laid claim to Mexican lands. Spain decided that since they had landed here, it was now theirs. It was not until 1822 that Mexico declared its independence from Spain, much like the U.S. declared independence from England, but even with this new independence, the lands of Mexico were still owned by wealthy foreigners, the Mexican upper class and the Church. Porfirio Diaz, a former President of Mexico for over 30 years, nearly sold all of Mexico to foreigners during his term.

The end result was the Mexican Revolution, which cost over one million lives and was the basis for the Federal Constitution of 1917. The new constitution imposed new laws and restrictions on foreign ownership and ownership of lands by the Catholic Church. Article 27 of the constitution allows Mexican Nationals and Mexican Companies to own property, however it restricts foreigners from owning land with the restricted zone. It is also said that the U.S. was involved in this new zoning in an effort to prevent the installation of foreign military bases on our borders or near our coastlines. This "restricted zone" is defined as property within 60 miles from any Mexican border or within 30 miles of any Mexican coastline.

Not until the 1930's did the Mexican people truly see the property being returned to them. President Lazaro Cardenas disassembled the large property holding and distributed them in the form of cooperative farms or "Ejidos". The people were given ownership of these properties and were allowed to farm and cultivate them and receive the profit from their efforts. After nearly 400 years, over 50 million acres of land was back in the hands of the Mexican people, however, it was still owned by the Federal Government.

Even though the people were allowed to farm the properties and profit from their work, it was not until 1992 that they were allowed to sell the properties. The 1992 Agrarian Law recognizes property rights within the Ejido and allows for the owner of record to sell or lease the property to a non-Ejido member. The property can be removed from the National Agrarian Registry (removed from Federal Control) and placed in the public land registry allowing it to be sold or leased. Today, thousands of acres are being removed on a daily basis from the Ejidos, added to the public lands and being sold or leased. There are well over 50 million acres of land that will go through this process to be either leased or sold over the coming years.

Mexican Property Trusts Fideicomiso

In 1994, amendments to the Constitution permitted foreigners to purchase and own real estate in Mexico located within the "restricted zone" which is all land within 60 miles of a national border and within 30 miles of the Mexican Coast. This Law permitted ownership through a land trust or "Fideicomiso".

A "Fideicomiso" is a Mexican Trust. The way it works is the Mexican Government issues a permit to a Mexican Bank of your choice, allowing the bank to act as purchaser for the property. The bank acts as the "Trustee" for the Trust and you are the "Beneficiary" of the Trust. The "Beneficiary" rights are very similar to Living Wills or Estate Trusts in the U.S.

The law authorizes Mexican banking institutions to act as trustees. A trustee takes instructions only from the beneficiary of the trust (the foreign purchaser). The beneficiary has the right to use, occupy and possess the property, including the right to build on it or otherwise improve it. The beneficiary may also sell the rights and instruct the trustee to transfer title to a qualified owner.

Many people refer to the trust arrangement in Mexico as a lease agreement... this is not true. The home or property that you buy will be put into a trust with you named as the beneficiary of the trust - you are not a lessee. You have all the rights that an owner of property in the U.S. or Canada has, including the right to enjoy the property, sell the property, rent the property, improve the property, etc.

The initial term of the trust is 50 years. An investor can renew the trust for an additional period of 50 years within the last year of each 50-year period, and this process can be continued indefinitely, providing for long term control of the asset.

Investing in Mexico

Mexico offers the foreign investor an attractive investment opportunity in an economy that is undergoing dramatic improvement and growth. Following the country's inability in 1982 to service its escalating foreign debt, Mexico introduced structural changes in its economy designed to move the country toward an open economy with more direct foreign investment. Among the most significant changes were (1) Mexico's accession to the General Agreement on Tariffs and Trade, (2) a government willing to work with the International Monetary Fund and other sources to restructure the country's foreign debt,(3) the liberalization of policies concerning foreign ownership of Mexican companies, and (4) the encouragement of tourism development.

In an effort to promote foreign investment, Mexico enacted new regulations designed to relax the restriction on foreign investment, which formerly limited foreign ownership of Mexican companies to 49 percent. Under the new regulations, foreign investor's can now own up to 100 percent of a large number of enterprises, including hotel companies, development companies, etc. without prior authorization from the Foreign Investment Commission. Thus, foreign investors in these enterprises have been put on equal footing with local investors and are no longer required to engage a Mexican investment partner.

The Mexican Federal Corporate Income Tax ranges from 25 to 38 percent. Provisions in the income tax code have also been established to offset the detrimental effects of inflation on monetary assets and liabilities, inventories and depreciable assets.

Mexico will continue to offer foreign investors close proximity to the world's largest market, a solid communications infrastructure, ample supplies of energy, low labor costs, and skilled and trainable labor resources. The liberalization of the foreign investment rules is a clear indication of the very favorable attitude the government has taken towards foreign investment. The combination of a rapidly improving economy and stable profitable base foretell and excellent ongoing investment environment.

The Mexican government has stated that it aims to double the number of foreign tourist arrivals into Mexico, representing foreign exchange revenue of $5 billion plus annually. A key to achieving the government's goal of ten million visitors a year is to develop new tourist destinations with modern facilities and infrastructure. The Los Cabos region is a priority area for this targeted growth.

I hope you have found this information useful, and if you have any questions or comments please feel free to contact me.


A REALITY CHECK ON MEXICO

Mexico is in a unique position to reap many of the benefits of the decline of the US economy. In order to not violate NAFTA and other agreements the U.S.A. cannot use direct protectionism, so it is content to allow the media to play this protectionist role. The U.S. media - over the last few years - has portrayed Mexico as being on the brink of economic collapse and civil war. The Mexican people are either beheaded, kidnapped, poor, corrupt, or narco-traffickers. The American news media is particularly aggressive in the weeks leading up to spring break. The main reason for this is money. During this two-week period, over 120,000 young American citizens pour into Mexico and leave behind hundreds of millions of dollars.

It is critical to understand, however that the horrific violence in Mexico is over 95% confined to the three transshipping cities, Tijuana, Nogales, and Juarez. The Mexican government is so serious about fighting this, that they have committed over 30,000 soldiers to these borders towns. In a thoughtful article written by a professor at the University of Juarez. He was reminded of the Prohibition years in the U.S.A. and compared Juarez to Chicago when Al Capone was conducting his reign of terror capped off with The Saint Valentine's Day Massacre. During these years, just like Juarez today, 99% of the citizens went about their daily lives and attended classes, went to the movies, restaurants, and parks.

What is just getting underway is what many are calling the "Largest southern migration to Mexico of people and real estate assets since the Civil War" A significant percentage of the Baby Boomers have been doing the research and are making the life changing decision to move out of the U.S.A. The number one retirement destination in the world is Mexico. There are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who are on their way to owning property in Mexico for full or part time living in the next 15 years is over 6,000,000..

Mexico has avoided completely the subprime problem that has devastated the U.S. banking industry. The Mexican banks are healthy and profitable. Mexico has a growing and very healthy middle and upper middle class. The higher end markets ($2-20 million) in many of these destinations are going through a modest correction. The Baby Boomers market here is between $200,000 and $600,000.

Mexico is currently sitting on a cash surplus and an almost balanced budget. Most Americans have never heard of Carlos Slim until he loaned the New York Times $250 million. After that it became clear to many investors around the world what Mexicans already knew: that Mexico had been able to avoid the worst of the U.S. economic devastation. Mexico's resilience is to be admired. When the U.S. Federal Reserve granted a $30 billion loan to each of Mexico, Singapore, South Korea, and Brazil, Mexico reinvested the money in Treasury bonds in an account in New York City.

The following is a quote from Rosalind Wilson, President of the Canadian Chamber of Commerce. "The strength of the Mexican economic system makes the country a favorite destination for Canadian investment".

OPPORTUNITIES: WHY LOS CABOS?

The answer is simple and old fashioned: SUPPLY AND DEMAND.

The area Los Cabos is an investor's dream. This area has the comprehensive infrastructure in place, world class hospitals and dental care, nonexistent crime, international airport, first class private bilingual schools and higher than average appreciation potential. Like many areas in Mexico there is large demand for full and part time retirement living and a lot of construction underway to meet this demand. Pre construction of course is where the best bargains are available.

Do not be seduced by the endless natural beauty that is everywhere, both inland in colonial towns and along thousands of miles of beach. Apply conservative medium and long term investment strategies without emotion. The demand for full and part time living by American and Canadian Baby Boomers is evident throughout the country. The top two choice locations are ocean front, and ocean view. This makes Los Cabos the ideal place to shop with Cabo San Lucas Real Estate for Cabo Homes.

Mexico, with the world's 13th largest GDP, is no longer a "Third World Country", but rather a fast growing, economically secure state. Los Cabos leads the way for investment opportunity. Make your next vacation destination Los Cabos. Rent one of the many Houses in Cabo and get a feel for the incredible lifestyle as well as investment Los Cabos offers.

Les


Les Twarog
RE/MAX Crest Realty (Westside)
1428 W 7th Avenue Vancouver, BC,
Canada V6H 1C1
Office: 604-671-7000
Fax: 604-688-8000
E-mail: Les


Sonja Pedersen
RE/MAX Crest Realty (Westside)
1428 W 7th Avenue Vancouver, BC,
Canada V6H 1C1
Office: 604-805-1283
Fax: 604-688-8000
E-mail: Sonja