Tuesday, October 08, 2013

Moving to Mexico to "simplify your life"

Many people, myself included, wanted to move to Mexico to "simplify my life".  I sold 98% of what I had acquired over my life and decided to start a "new season".

It has worked for me.  I decided to rent rather then buy because it is less expensive to rent in Mexico.

  I wasn't sure if San Miguel was where I would always want to be since I'm a "water person" and avid sailor.  Lo, how I ended up in the mountains still amazes me.

I purposely chose to rent because buying in Mexico requires full cash.  There are no mortgages.  Then the property becomes a dead asset as you can't borrow against it.  The only way to get your money back is to sell it.  Something that is not always easy to do.  Especially for those who bought high in the years between 2002 and 2006.  Some have been trying to sell for four or five years because they think they'll get all their money back.  Possibly not.

Moving possessions to Mexico is very expensive as I mentioned yesterday and fairly complicated.  A document must be prepared called a "menaje" with serial numbers of all electronic items, and a detailed list of all items in the load.  A mover can help you with that.  Be sure, if you are moving furniture down here and personal possessions that you use a mover who is familiar with the requirements at the border and that they are reputable.

Until about 1986 ex-pats could not move furnishings into Mexico.  It was to protect the furniture making industry.  I must say, there is not much you can't have made in Mexico.  The quality and beauty are exquisite.  If you know where to go and how to communicate your wants and desires.

So, the topic today is rent, buy or build.

I always suggest you rent for a year until you have time to check out the "lay of the land".  Is this the place you want to be?  Is this the area of the town you want to be in?  Are you going to be able to handle the climate, the altitude, the day to day life that is so different?  Just a few of the things that will be part of the adjustment.  Mexico is a cash society.  No paying bills online.  It is walking to this place and that to pay utilities, rent or whatever.  I like it.  But, it is an adjustment.

Then buying is not difficult as long as you work with a reputable realtor.  In most of Mexico, there are Remax, Century 21, Sotheby's and a host of other agencies with realtors to help you.  Unlike the USA, these realtors are not licensed and do not have to go to school to be realtors.  It can be interesting.

A long time realtor with a good reputation is an important person to seek out if you are buying.

They will walk you through the process of closing on the house and all the documents that are required according to Mexican law.  Oh yes, by the way, Mexican law is by the Napoleonic Code and is not like anything that you normally deal with in the USA so a knowledgeable realtor is muy importante.

Real estate in San Miguel, for the most part, is way more expensive then property in Texas.  Just an FYI.

Buying on the coast is a whole other game.  No property can be owned outright as it was all designated ejido land after the Revolution.  I don't know all the particulars but a bank trust for 99 years is the method that is most trustworthy and legal.  I suggest you do a LOT of research and talking to people who are knowledgeable before jumping into that process.  At this moment I know two people who still do not have deeds for their property.  One has been over 7 years the other well over 10 years.  It is nerve wracking and costly.  In addition, if you don't have a deed, obviously you can't sell it.

If you are going to build, good luck.  Nothing is built in Mexico as it is in the USA.  I'm not saying that is bad because the houses here will be standing long after the drywall and wood houses in the USA have deteriorated.  But, they don't build with pages of plans.  Many builders refer to themselves as architects but they are not schooled or licensed as architects.  I don't quite understand how that can happen, but it does.

Yes, you can build for an inexpensive price per sq. ft but it is not a fast process.  I have seen many, many, many people say that they would be in their house in six months and 2 1/2 years later they finally get in.  I've seen many who have said the house was going to cost $300,000 USD and it was far more then that when finished.  IF you don't have a complete set of plans to build from, no one can tell you what the finished product is going to cost.

On the other hand, I've seen people build a bare bones house for about $80USD per sq ft and have a nice, simple, liveable house without all the bells and whistles.  It's all up to you and who the contractor is you work with.  You MUST have lots of patience.

Things like dishwashers, garbage disposals, air conditioning are seldom found in houses here.  Heck, bathtubs are seldom found because of the need to conserve water.  Remember, many of us came here to simplify.......

Those who have been in the construction industry in the USA and come down here to build are the ones who become the most frustrated and disenchanted.  They think they are going to build it the way they did in the past, without knowing the way things work here.  Eventually they learn that it is not going to happen their way but the old fashioned ways of Mexico.  A word to the wise.

Again, none of what I say is meant to dissuade you, it's just the way it is.  The unvarnished truth.

A question from yesterday's post.  Someone asked, if they don't have enough income to qualify for the immigrante visa, can they live here on a tourist visa and just drive back every 180 days to the border (9 hours) cross into the USA, spend the night, turn in their car permit, pay another deposit and then come back in.  Yes, it is possible to do.  Driving round trip with gas, tolls and a hotel night runs close to $500USD roundtrip. If you're going to live here full time on a tourist visa, I suggest you buy a car in Mexico and ride the bus to the border.  That is less expensive and you don't have the permit hassle.

More tomorrow.
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Brenda Maas said...

Babs, not all land along the coast is ejido land; but there is a law in place that says foreigners cannot own property withing 50 km of the coast and also a certain distance from the border.
For this they came up with a work around which is known as a Fideicomiso which translates as a bank trust. The bank holds the title to your property; but you can will it to your heirs, sell it, etc.. Naturally for this you pay the bank a fee each year.
Finding a reputable Realtor is a MUST. Talk to LOTS of people locally before choosing one as they are not all on the up and up and people have lost their money to bad ones.
I agree, rent until your "honeymoon, rose glasses phase" has worn off and you can see the good and the bad of your chosen area.
Good advice you are giving and much needed I am sure.

Charles said...

Great advice! How cool that you are taking the time to write these...I did exactly as you did...sold everything and arrived in Mexico with only two pieces of luggage and the dog. It is not nearly as expensive starting over with furniture etc. as it would have been to move everything down here. Never ever considered buying real estate down here..."owning" is very overrated...but it is instilled in so many that it is an obsession with some...mostly ego I think and maybe a desire to have a sense of permanence...and as you said, rent is so reasonable in most of Mexico...hardest part has been stocking the kitchen from scratch...pots, pans, dishes, utensils...but we're almost there!Like you...I came for a simpler life...tired of the rat race that the US has become...almost three years now and have never had one moment of regret...thanks again for this series of blogs...I'm sure many will find it very helpful...saludos!

Anonymous said...

To other readers:

If you are going to buy property in Mexico, I STRONGLY RECOMMEND having a competent Mexican attorney review the transaction before you sign anything. Yes, it might cost you a thousand or two (USD), but that's likely money well spent. The fact of the matter is that very few gringos (myself included) know the first thing about real estate transactions SOB, and mistakes can be expensive.

I have a very good Mexican attorney in DF who graduated from Mexican law school, then went to Boston University and got an American law degree before returning to DF to practice in the firm founded by his grandfather. I've used him for other things, and trust him completely.

If you want his name, leave me a comment on my blog, or e-mail me at the address in the "about me" section.

Barbara, the Mexican constitution prohibits foreigners from owning land within 50 KM of the sea and within 100 KM of the border. That's why you have to use a Fideicomiso. Under this structure, the bank technically owns the land, but holds it in trust for you. Such an arrangement requires an annual fee to the bank, too.

Great post!


Kim G
Boston, Ma
Where we've wanted for a long time to buy something in Mexico, but now are leaning more toward renting.

Babs said...

Thanks Brenda - I think I did mention the bank trust as I know that Puerto Vallarta operates on the bank trust.........but in remote areas on the Pacific coast they use a prestanombre (I probably am misspelling that) and it is a dicey deal......real dicey instead of the bank trust. The bank trust is a 99 year trust.
Mexican citizens can own land on the coast and beaches outright without any of those requirements.

Babs said...

Charles thanks for writing. I've found Walmart, Sears and Costco and even Home Depot to be invaluable in Mexico for kitchen things, mattress pads, and some bedding along with towels, etc.
Of course the magnificent talavera dishes and ceramics add to the beauty of dining!

Babs said...

Kim, of course, an attorney is an essential part along with the notario in closing on property in Mexico.
Having been involved with the Mexican legal system in the last 2 1/2 years, I have learned more then I want to know.
A Mexican attorney who speaks English is essential to explain all the nuances of the deal.
And, then, upon buying property, one will want to have a Mexican will and all the other ancillary documents required in Spanish to be legal! There are several very professional and knowledgeable attys here in San Miguel. Either yesterday or today in the post I mentioned the bank trust for buying property on the cost. See my reply to Brenda above. Not all purchases are done that way!

Steve Cotton said...

I like your clever reversal photographs of the morning glory. I have one of the outside only.

Babs said...

Thanks Steve.

Unknown said...

You have us glued to your blog! We can't wait to wake up and see if you've posted again. :)

This is fabulous - all of it!

Thank you again.

Dean and Barbara

Babs said...

Dean and Barbara - Thanks so much. I must admit this has not been as much fun as just sitting down and writing what I want. I feel a real responsibility to give correct info on these posts, as much as is possible.

Stewart said...

Hi Babs,

Wanted to add a couple of comments - first, you CAN get a mortgage in Mexico nowadays, although likely requires a large down payment. Some of the banks are willing to work with foreigners.

Another option can be owner financing, specifically if you are buying from another foreigner. That is how I bought my house (now paid for) and it worked out well. Of course there is an element of needing to know/trust the seller in this case, since I am not sure how enforceable any such agreement would be.

Utility bills - actually many can be paid online nowadays. CFE (Electric) and Telmex (phone) as well as Telcel (cell phone) can all be paid online. Here in Yucatan where I live, water (JAPAY is the suppler in Yucatan) can also be paid online, that may vary according to the state. So in effect, I pay everything online. I can even pay my 'Predial' (property tax) online. The only think I have to pay in cash and in person is the annual fee for garbage collection.

There are more online services now than you would imagine - I just discovered today that I can renew my driving license on line. What IS true is that while many services are available online, very few people are aware of it, or take advantage of it. It is long ingrained in Mexican culture that to pay any bill, you have to stand for at least 2 hours in line... and most people continue to do so. Of course to pay online, you need a credit or debit card, which many people don't have. I pay all my utilities just fine with foreign credit cards.

Fideicomisos (bank trusts) for foreigners to 'own' property in the restricted zones (50km from the coast, 100km from the borders) will likely be a thing of the past within the next 12 - 18 months, as a bill to abolish them is on its way though the government, and with fairly universal support, is expected to become law.

Hope these comments help!

Babs said...

Thanks Stewart for your comments.
There was an attempt about 5 years ago to set up an Alabama co. here in SMA to handle mortgages as long as the parties still owned property in the USA. NEVER did a mortgage come to fruition. That company and no others are here, sadly. I have known of a few people who did do owner financed deals.
As far as I have been able to determine here in SMA, unless one has a Mexican credit card, bills can't be paid online. I don't mind the very short wait to pay bills or my maid does it sometimes, if I"m out of town. I'm not a long line person, so I've never ever stood in line for 2 hours for anything. We don't have those kinds of lines here. I have renewed my US drivers license in the past online. My Mx one hasn't expired yet. It will be interesting to see if I can renew that online.
It will be interesting to see if the bank trust law is abolished and then we can all watch the massive land grabs as the one in Tenacatita Bay that happened a few years ago leaving many homeowners with no place to go or live. That situation is still in the "courts".
Thanks so much for sending all the info. Every bit helps!

AshevillesHot.com said...

Oh thanks for your take on real estate in Mexico. I guess I thought that you owned since you have a home or apartment for rent. I think that Westerners are programmed to have their own homes, but I will be very happy to rent for the rest of this life - so much simpler.

Babs said...

Ashevilleshot, you are so right. I think there must have been a concerted effort to make home ownership the norm in the 50's. I went down that road until I moved to Mexico.
I rent from a Mexican family - have for 12 years. I will probably leave here feet first some day. I like the idea that if I want to move on, I just sell my stuff and go....no house to hassle with!

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