We all like to talk about our real estate purchases as “investments.†In fact, on this blog, we use the word pretty liberally in that sense. In this is with good cause; a property – especially one in Mexico – is, in fact, an excellent investment in many senses of the word.
Yet, with Mexico’s economic strength and the current reforms which promise to increase that even more, it’s not a bad idea for you as a buyer to ask yourself the question:
“Do I consider this property an investment?â€
Or, perhaps more accurately:
“To what extent do I consider this an investment, and what kind of investment do I consider it?â€
The “Non-Investmet†Investment
There are most certainly cases when the answer to the first question will be “probably not†and to the second “not much.â€
This is completely fair, and it’s healthy for you to recognize that you are not buying your property with the expectation of financial outcomes, leaving a greater variety of properties in your range of possibilities.
Yet, even in these cases owning a property in Mexico will be a “lifestyle investment: in two senses of the phrase:
Higher Quality of Life
Warm weather, sunshine, beaches, relaxation, friendly people, nature, modern services – all of this improves your lifestyle and makes you happier and healthier.
Lower Cost of Living
Any purchase that saves you substantial money over an extended period of time is also a financial investment. Living expenses are so low in Mexico (while still providing all the benefits mentioned above) that you see “return†simply by the cash that stays in your bank account.
Casual Rental Investment
Now for the “yes, this is an investment†answers. Many buyers who aren’t planning to make a living off their property still want to see a bit of cash flow to cover expenses. The most common case is the “snowbird†lifestyle, leaving several months open for rental. One downside can be that most snowbirds use their property during the winter is also the high-season for rent. Those who come and go more frequently for shorter intervals can often do well with this, provided that they have good property management and coordinate their visits carefully.
Dedicated Rental Income Properties
Most expats what to enjoy their property in Paradise. Yet, there are a few who buy simply for the sake of generating income. One nice thing about such an investment is that Mexico offers a broad range of target markets – tourists – non-Mexican and Mexican, other expats, and Mexican residents. With booming tourism, and Mexico’s growing middle class, each of these markets has potential but requires a distinct approach.
Resale
Buying properties to generate profit from resale is also a very good approach in Mexico. There are many choices for boom-towns both in international tourism, and from Mexico’s thriving economy. There is also the option of renovating a fixer-upper.
Whatever your approach (or combination of approaches,) it is good to be clear about your goals, do your homework and choose a market and property accordingly.
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Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 16 years. In the summer of 2009, he received the first federally applied Mexico Real Estate Degree and Mexico Professional Real Estate License S.E.P. #5978657. He is the president of Top Mexico Real Estate. Contact him at (512) 879-6546.
The TOP Mexico Real Estate Network; “Mexico’s Leading Network of Specialists for Finding and Purchasing Mexican Properties Safely!â€
