INVESTING IN LUXURY MEXICO REAL ESTATE CAN PAY DIVIDENDS

by | Jul 16, 2020 | Investment, Real Estate, Wealth Management

As we slowly emerge from COVID-19, with interest rates set to remain low for the foreseeable future, real estate investment opportunities are more within reach. But how’s about wandering off the beaten Canadian track a little? Perhaps you are a real estate investor – or just a savvy investor, period – a little adventurous, a risk-taker. If you are, then luxury real estate in Mexico remains an interesting investment target.

Related: Despite COVID-19 the upward trajectory of real estate values in prime areas of London rolls on

The border isn’t going to stay closed forever. Remember, Mexico remains and always will be a popular vacation hotspot for Canadians. I know this because I invested in real estate there – quite successfully, I should add.

Mexico real estate: Buying a stunning island home

I bought a three-bedroom, three-bathroom island home in May 2016. The home was brand new when purchased, had a backyard pool, and a rooftop deck with 360-degree Caribbean views. It was located on the serene, southern tip of Isla Mujeres, a 14-minute ferry ride from Cancun. And the views of the Caribbean off the rooftop deck were fabulous. We were situated on the highest elevation point of the island.

Working with my friend at Remax Isla Mujeres, the home was sold in October 2018 – at a profit of 34 per cent.

There remains a lot of demand from curiosity seekers looking to diversify their portfolios. Big risk equals big reward sometimes. Thinking back, I was personally amazed at the high number of Canadians and Americans who were buying land, houses and condos in the Riviera Maya region.

An effectively run short-term home rental business over platforms like VRBO or Airbnb can greatly increase the value of your investment. Eventually my property ranked in the top five percent on VRBO, in terms of positive guest reviews and search results. And the money running a Mexico real estate property rental business part-time counter-balanced any risks.

If I really focused on this as a business – buying several properties, proactively managing rentals through all of them, that income would have been well into the six figures. And I know many people down there now who are buying and renting their homes to tourists seeking out quality accommodation.

Risks of buying real estate in Mexico: Get a good lawyer

But you need a good lawyer if you are going in Mexico, someone who is reputable. He or she needs to know how to work the system, look into property titles, search the history of the property. That lawyer can check to see if there are any liens, looking into the reputation of the developer or builder.

Trust me on that last point. This is one area that you really need to pay attention to, and listen to your lawyer, since we learned the hard way there. Post-purchase, you need a quality property management team down there you can trust, who has an eye on your property.

When it comes to vacation real estate, it’s a property to go to when the cold weather settles in. It’s something to hand to on occasion to friends and family. But the underlying objective is to make money and increase your wealth.

Mexico real estate investment is also a minefield. Many of the stereotypes you read about Mexico are true to a degree. There is crime and corruption. And Canadians and Americans who have bought property there will tell you horror stories falling under the thumbs of crooks and the corrupt.

Buying a condo in Mexico: Not for the feint of heart

I can tell you stories. I saw things, heard things, and experienced things myself. There is no point in trying to smooth over all this with a layer of crap, via simplistic marketing slogans or transparent sales-speak from real estate brokers and developers.

Consider this, though – there are also stories of this happening to real estate investors in Toronto. There is organized crime in Canada, gangs, shootings in downtown Toronto.

There is vast opportunity to make money in Mexico real estate if you partner with the right people. Factor in the appreciation in the value of your real estate asset. Plus what you take home via a short-term rental vacation property business.

The bottom line – the Riviera Maya region, where I invested, remains one of the prime tourist destinations anywhere in the world. Canadians and Americans continue to flock there, drawn to the immaculate beaches, the sun, food, culture, and people.

Mexico real estate pros and cons

Canadians travel to Mexico more than any other country except the United States. I lived on the island, in our home with my wife, for one calendar year. And I can personally attest to this – Mexicans are wonderful, charitable, generous, open people. They love their family, culture, traditions and country. We never had any negative incidents where we worried about our personal safety.

Peel aside all the negative surface talk, the sensationalist news headlines, the social media chatter. Look behind the red curtain, and that’s what you will find – opportunity. It’s next to impossible for foreigners to get a mortgage down there. Last time I checked, if you could get one, the interest rates were hefty.

Real estate in Mexico: Taking advantage of low interest rates

But interest rates are at historic lows. The fact you are bringing cash down there to buy means you can push for a better price or deal with a developer. Trust me they love to sell to Canadians.

Considering all the pros and cons of buying property in Mexico, it is not for the feint-of-heart. It’s for the adventurous. It’s high risk and high reward.

Email me at [email protected] for more information or consultation about luxury real estate in Mexico. I know where the right people are, and can help you get your start.

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