1. I have heard that within 50 km of the coast, you have to use a bank trust or fideicomiso to buy property. Is this safe? Do I own the property forever or is this a fifty year lease? What happens after the fifty year term ends?
Jen: This is a VERY secure way to buy; it involves not one but three thorough title inspections, first by your "notario" (read Real Estate Attorney) then by Scotiabank Inverlat's legal department and thirdly in Mexico City by the Secretaria de Relaciones Exteriores before they will grant a permit number for your trust. All this takes about 4 weeks. There is some confusion, a mis-understanding that this is some kind of lease. It is not! You own the property, but the Mexican Constitution demands that any property within 100 km of any border or 50 km of the coast must have the title held in trust. Succession is particularly secure - your beneficiary is named in the trust, and there is no probate requirement in the case of your death. You can rent, remodel, sell, bequeath, do anything you wish with the property - it is yours in every sense.
For the initial term, the trust is set up for 50 years. At the end of this time, should you or your heirs still own the property, you simply pay for an additional 50 year extension. After 100 years... well, I haven’t gotten there yet, but the property is still yours. If at that time the legal requirement is the same, you would set up a new trust, or it might be possible to simply extend the existing one for an additional period.
2. I have been told it is better to set up a corporation to buy my house in Mexico. Is this true?
Jen: In general ,this is not the best way to go. If you are buying the house to be your home here, you should choose the fideicomiso which will allow you an exemption from capital gains tax when you sell, and which is also the correct legal process. In fact, setting up a corporation just to buy a house and avoid the fideicomiso is illegal. You will not save money overall, as you will have to employ an accountant to file monthly estimated taxes and to perform other legal functions for the corporation.
On the other hand, if your purpose is to invest in buying, remodeling and selling a number of properties, it might be the appropriate option. You should talk with an attorney and accountant before deciding whether a corporation or a trust best fits your intentions.
3. What kind of visa do I need to live in Mexico or to buy a house?
Jen: There is no special requirement to have anything more than a tourist visa. Last month an entirely revamped immigration visa system went into effect. Some legal details are still up in the air. I will soon post more information on new requirements!
4. Can I work in Mexico?
Jen: There are several ways to do this legally. If you are lucky enough to be employed by a company in Mexico, they will help you apply for a working visa.
The more usual option, as there is little work available and it generally pays poorly, is to start your own business doing almost anything you would like to do. Once your company is established (cost will be about $3,000), you then apply for a visa to work for your own corporation. You should have some qualifications in the field, but Mexico presents many opportunities for those with an entrepreneurial bent.
Note that some fields – communications, utilities, transportation (bus and truck haulage etc.) and agribusiness, are prohibited to foreigners. We are happy to recommend competent bilingual attorneys and accountants to assist you.
5. Is it safe to own a home in Yucatan and leave it unoccupied for part of the year if I am unable to rent it?
Jen: Yucatan is very, very safe, and we see few break-ins. It is unlikely that your property would suffer any damage of any kind. Insurance is also available and inexpensive.
6. What about the risk of hurricanes?
Jen: We are in the tropics, and hurricanes can happen. That said, they move from east to west and if they touch the Peninsula, they are much more likely to hit the Caribbean coast after which they typically lose intensity and veer off to the North. Merida and the Gulf are seldom affected.
Our construction here, with solid cement roofs and walls with ceramic tile floors means that actual property damage is minimal – perhaps some water or a tree or two down, a few days without electricity. Insurance, again, is inexpensive and easily available. Yucatan, in turn, has no tornados, volcanoes and no earthquakes. You have several days’ warning and time to move belongings, board up windows etc. if a hurricane threatens.
7. Will Yucatan continue to be a good investment in the short – and long- terms?
Jen: Although we saw more than 15% a year appreciation from the time I founded Tierra Yucatan in 2001 until 2009, prices have leveled off over the past three years, making it much more difficult to "flip" a newly remodeled property. The cost of an old Colonial-style house, more than 100 years old and built of solid rock, with 18 foot ceilings and mahogany doors is still very reasonable - and much less than in other parts of Mexico. Due to the large inventory of beautiful homes for sale, we have a "buyer's market" - a great time to pick up a bargain. We are now seeing a new influx of buyers, but I don't see prices rising until much of the surplus inventory has sold.
Once that happens, I expect to see prices rising monce more until our property values approach those of San Miguel de Allende, Lake Chapala and other parts of the country which were “discovered” many years ago. The coast is pretty with white sand beaches, and beach property prices are still far below those in the Caribbean. Although the price per meter has been escalating rapidly, we are still a bargain compared to other similar areas.
Second, there is no unrest whatsoever in Yucatan, and overall, I see no signs of a downturn in the Mexican economy or any type of insecurity in investing here. People are moving in droves from central Mexico to Yucatan; I have put my money where my mouth is, and every time I have a little spare cash I buy another house.
Third, renovation costs are still very reasonable, as wages are low. A bricklayer receives about $15 dollars a day in Merida (as of 2008), for a hard day's work. I too love remodeling old houses and have now done five. (Am working on 6 and 7). We will be happy to recommend a list of architects, engineers or builders for you to interview.
Fourth, there seems to be a very good demand for nice rentals in Merida. We will be happy to help with this too.
Fifth, there is still an active resale market for redone homes, particularly for smaller places. Your profit, of course, will depend on how well you choose your house and the project. Many people in the last year or so came to Merida with the same idea, some buying a number of houses, and these are now on the market. This means there is quite a bit of competition between sellers and has perhaps brought prices down overall. Whereas several years ago one could easily double one's money, now you have to be satisfied with perhaps a 25% return. Still pretty good, I think.
Sixth, you can escape Mexican capital gains completely if the property is purchased with a fideicomiso, you need to also have a residence (Imigrante) visa when you sell and have the utilities in your name. You can sell one house every five year tax-free as your residence. I don't believe most of my clients declare the profit in Canada or the US... but that is between themselves and their accountant.
8. Is financing available?
Jen: In the past, this has been a problem and most of our transactions continue to be in cash. I would recommend looking for an owner willing to finance if you need it.
9. What amenities are available in Merida and at the coast? High speed Internet? Cable TV? Is the electricity reliable? What about the water?
Jen: We have satellite TV available even in the most remote areas and cable in major cities.
High speed internet is almost everywhere except out along the coast, where you can install an antenna for satellite high speed service if you need it. There is free wireless internet in most Merida parks.
We have both 110 and 220 volt electricity, and service is as reliable as in the US. You can plug in your US appliances without any adapter.
In most areas,(not always if you are a long way out on the beach) there is city water and many homes also have a well for irrigation, filling the pool etc. All of Yucatan is on private septic tanks. Most people buy 5 gallon bottled water for drinking ($1.20 a bottle). At minimal expense, if you desire, a plumber can install a water purifier in your kitchen and you can drink from the tap.
10. What are most homes built of?
Jen: Homes older than 30 years or so are generally built of solid limestone rock and mortar with cement roofs. Newer construction is of cement block with cement roof - very solid! Most floors are ceramic tile – cool and easy to clean. Finish materials often include local hand-cut stone and local hardwoods – mahogany and Spanish cedar.
11. Can I bring my cat or dog? How do I do this?
Jen: It is no problem to bring in your pet. You need a valid rabies certificate and another certificate from your vet dated within 10 days of travel to say your animal is healthy. You should check with your airline for special requirements and cost, as there is a lot of variation.
12. How Far is Merida from the beach?
Jen: Progreso is on the Gulf Coast about 30km (18 miles) from Merida. There are express buses every 30 minutes most of the day if you’d like to go and swim!
13. Will I be able to rent my home when I am not using it?
Jen: Our company will be glad to assist with rentals. You should not expect much more than enough to cover the day to day holding expenses of the property, as rentals are unpredictable. Your main investment value is in appreciation of the property over time, provided it is properly maintained.
14. Can I bring my car with me?
Jen: Yes; as a tourist you can get a permit at the border - there will be a deposit required which can be paid with a credit card. With a non-resident visa, you can bring in a vehicle. Only you or your immediate family may drive it and you cannot sell it in Mexico. If you don't keep your residence visa renewed, you must remove the car from the country. You can get insurance for your vehicle here in Mexico at reasonable cost - civil liability insurance is required on all foreign vehicles being driven in Mexico, and full coverage is a wise choice.
15. Are there good medical and dental facilities in the area?
Jen: Merida has state of the art medical care available for about 1/10th the US cost! The new high-specialty Star Medical Center is in the process of being certified by several US insurers and eventually we have hopes your Medicare can be used here, (not yet!) Merida is a center for "medical tourism" for people from all over Latin America and other parts of Mexico... the US and Canada too. Many doctors and dentists here are fluent in English and some have trained in the US.
If you are taking an unusual specific medication, please check on its availablity in Mexico.
16. Is medical insurance available?
Jen: Yes; If you are under age 65 and have no serious pre-existing conditions, private insurance is very reasonably priced. You can also sign up for Mexican Social Security (IMSS) medical insurance as a resident in the country, I believe whatever your age, which is quite inexpensive and gives good coverage.
17. Where can I find a good map of Yucatan?
Jen: Try Maps of Mexico.
18. Where can I get good weather data on Yucatan?
Jen: Try Weather Base. Click on Mexico, then Merida (or any of our other office locations). This one is good for averages year-round. To get today’s weather, Weather.com has Caribbean satellite images and 10 day forecasts.
19. What is there to do in Merida?
Jen: Merida is a cultural Mecca! Great symphony, opera, dance, art galleries, and street music of every kind. On Sunday, the center is closed to traffic and becomes purely pedestrian, with street food, artesanias, music and dancing. Paseo Motejo, the most beautiful avenue, becomes a bicycle and walking route which Merida families and tourists alike get out and enjoy.
Merida has excellent restaurants. There is a large and well-equipped English Language Library for you readers which also acts as a gathering point where you can meet other ex-pats – particularly at the First-Friday-of-Every-Month party.
The coast is nearby should you want to spend a day or two at the beach as are Maya ruins – interesting and lesser known amongst them is Dzibilchaltun, on the way to Progreso, where you can enjoy a swim in the cenote. A little further but still close, Chichen Itza and Uxmal – either one is a pleasant day trip when you have friends visiting. Explore the old haciendas, travel the Maya Missions convent route... the area abounds in history. Great bird-watching, too, as we have forest, semi-arid land, lagoons and beach... the famous breeding colonies of flamingos alone are worth a short drive to see at Celestun or close to Progreso.
Read Yucatan Living for more great ideas and info on this area!