Property Investment in Mexico
Property investment can be a rewarding venture, but it’s not something you should attempt to do without being fully informed. If you don’t know the risks, there is a lot of money to be lost when you make a mistake. However, Mexico is a location that’s particularly friendly to first-time or beginner investors who want to look outside of the US or Canada. In this post, we’ll teach you the fundamentals of real estate investment in Mexico. Such as its benefits and drawbacks and the home-buying process.
The Fundamentals
There are two main styles of property investment: buy and hold, and buy-low, sell-high. For the first approach, buyers typically invest in a property to sell it when the equity increases. It can be in the far future (i.e., 15-20 years) or after just a year or two. Generally with buy and hold investing, the longer you hold a property, the more it will appreciate. In most cases, buyers even rent out the property to maximize the profit they receive and offset upkeep costs.
The buy-low, sell-high approach is more focused on purchasing a property, increasing its value artificially, and then selling it at a high profit. This approach has a much higher potential for reward, but it’s also much more high-risk. If investors spend more on renovations than the property is worth, they will lose money when they sell. There is more risk because buyers need to find promising neighborhoods. And at the same time to compete with other savvy buyers for good deals.
Investing in Mexico
Investing overseas or outside of country lines is very different than investing in a property in the same city, or even in another state.
You’ll need to find trustworthy professionals who can help you through the process. And, unless you plan to visit Mexico frequently or live there, you may end up buying some properties sight-unseen.
These things can be daunting, but Mexico’s hot market can make it very rewarding if you do it right!
To begin with, the US is the top destination for American expats to live. It’s extremely popular as a tourist and retirement destination. Mexico has become so popular for several reasons:
â—Â Â Â Â Â Proximity to the US
â—Â Â Â Â Â Modern amenities and influence from the neighboring US
â—Â Â Â Â Â Properties are an excellent value for the money
â—Â Â Â Â Â Attractive housing market
â—Â Â Â Â Â Beautiful climate
Still, there is one big thing to keep in mind: Mexico has very high tax rates on real estate income for nonresidents. If you don’t live in Mexico, you’ll generally be looking at a 25% tax on rental income. As well as a 25-30% tax on capital gains.
Because of its popularity as a vacation destination, the buy-and-hold strategy is the no-brainer choice here. However, Mexico’s 25% rental income tax for nonresidents is something to think about, too. The same applies to flip properties in Mexico. However, Mexico’s market is so hot that you can make that 25% back and more if you research. Alternatively, you could just live there!
Remember, at Top Mexico Real Estate … we make it happen!
Article by Crissy Jones