Florida, Arizona, California, North Carolina—The United States has its fair share of pleasant places to live, work and retire. But Americans don’t have to limit themselves to the 50 states. More investors are realizing a double dream of vacation home ownership and good returns by taking a look at Mexico. The rapidly developing country to our south is what some experts see as one of the greatest real estate investment opportunities in decades.
Mitch Creekmore, co-author of Cashing In on a Second Home in Mexico and senior vice president of Stewart Information in Houston, says investments in residential real estate in the resort areas of Mexico have seen healthy appreciation. Developments in Cabo San Lucas have appreciated as much as 300 percent in five years, although Creekmore says 100 percent appreciation over six years is much more realistic and common in these resort areas. Bruce D. Greenberg, a real estate consultant and appraiser who has been appraising properties in Mexico for more than 10 years, echoes Creekmore’s estimates. Greenberg has compiled his own proprietary database of comparable home values in Mexico and says that over the last five years a conservative average appreciation in value per year in the resort areas is 15 percent, with 10 percent at the low end and 25 percent in the more highly desirable areas.
Creekmore believes the real estate market for Americans in Mexico is on the verge of an explosion as more mortgage financing becomes available and the Baby Boomer generation begins to retire. “Mexico will be the ‘Florida’ of the Baby Boomer generation,” says syndicated real estate columnist and radio show host Tom Kelly—who happens to be Creekmore’s co-author of Cashing In on a Second Home in Mexico. “Baby Boomers are looking for a more exotic, adventurous locale to retire,” Kelly says. And with approximately $70 billion of wealth coming to the Boomers over the next 10 years, Creekmore believes a good chunk of that will be used to invest in real estate—especially real estate in Mexico.
Part of the reason for the upsurge in American real estate investment in Mexico is that purchasing has become easier for foreign nationals in recent years. However, as Greenberg cautions, “Don’t leave your brains at the border.” Buyers must be familiar with property ownership laws in Mexico as well as tax laws both in Mexico and the U.S. Greenberg encourages all buyers to assemble a competent team of advisors on both sides of the border who are familiar with Mexican property purchases and tax laws. Financial planner Bill Carter of Carter Financial Management in Dallas, advises his clients to make sure they understand all of the risks of buying real estate in a foreign country. “You have to understand the political risks such as what may happen when the government changes hands,” Carter says. He advises clients to know the local market where they are buying, and he recommends they seek out an area with a stable economy.