Buying property in Mexico as a foreigner

Owning property in Mexico has always appealed to expats- from sandy beaches to welcoming locals, delicious food and the promise of plentiful sunshine, there’s little not to love about the North American destination.

For many foreigners, owning homes Mexico City proves to be the easiest option thanks to the restaurants, nightlife, shopping, museums, parks and looser restrictions. While beachfront properties are still considered prime, inland properties in CDMX, Ecatepec, Guadalajara, and other major cities aren't tied to the same residential property laws that make buying by the beach difficult for expats.

While foreigners may not always have the easiest time buying property, it is the norm to own in Mexico- 80% of residents live in owner occupied houses. And while there are some hoops to jump through, in most places buying property is straightforward.

This guide will walk you through everything you need to know about buying property in Mexico.

What’s the property market like in Mexico?

Generally, the property market in Mexico is strong and on the rise. The country’s economy is holding fast despite the threat of trade alterations from the US, and is growing more swiftly in 2017 than economists previously predicted. Because of this, national buyers are snapping up property as foreign investors rush to take a cut as well. It’s a seller’s market, meaning home prices may be a little high- but so are the values.

Can foreigners buy property in Mexico?

Yes- with some restrictions. Mexican citizens are able to buy land without any real barriers, but foreigners face some geographically-based barriers that can restrict some from buying in the most desirable areas.

Residential property that’s 31 miles or closer to the coastline or 62 miles from a border will need to do so via a trust through a Mexican bank. These can be created and used, but it’s often a long process. Foreigners are typically encouraged to work with a notary and a lawyer as they navigate their purchase.

What’s the approximate cost of different properties in Mexico?

While prices vary from place to place, the cost of properties on the beach and in major cities are roughly the same. The table below will give you an idea of some average property prices around Mexico.

How can I find a property in Mexico?

Property agencies and agents

It’s a good idea to engage a real estate agent if you’re planning to buy property in Mexico. Online listings are still growing in popularity, and if you choose to search on your own you may find that you’re missing more than half of the available properties in your desired area.

Luckily, realtor fees in Mexico aren’t too high to start with, and it’s common to negotiate them down before you get started.

Avoiding scams

New scams are being tried every day, and it can feel like it’s impossible to protect yourself when you set out to buy a home. However, the following principles will go a long way towards making sure you and your investment remain safe throughout the process.

• Get a referral. Real estate agents in Mexico aren't required to be licensed or trained, and can act independently of an agency- meaning, there’s no real way to make sure you’re getting an agent who has your best interest in mind without getting a referral from a friend. If you can, using your network to find a trusted agent is always a good idea.
• Know the market. You may find that, as a foreigner, the prices of the homes you’re looking at seem to rise out of nowhere. If you’re not aware of what prices around you should be, you could get taken for a lot more money than your property is worth.
• Meet the seller. Working through an agent is fine, but it’s important to meet and talk to the seller so you know they're in fact selling their property, and they have the right to sell that property.
• Get an inspection. Many homes in Mexico are on the newer side and won’t have many problems, but it’s still a good idea to have your new property checked for things like pests and mold, which can crop up pretty swiftly in the warm climate.
• Never mail money. If the seller isn’t willing to make transactions face to face, it’s probably a good idea to walk away.
• Trust your gut. If something seems off to you, it probably is. Trust your gut, and don’t go through with a purchase you’re not sure about.

Property websites in Mexico

Online property listings are still growing in Mexico, and it can be tough to find sites with good information about what’s available. Still, using the web to get a feel for locations, home styles and prices is a good idea. The following sites are good places to get started in your search:

• Realtor.com
• Point 2 Homes
• Viviun

How do I choose the right property?

Property types

Depending on where you choose to buy, what type of property you can get will vary. In the major cities, look for apartments and townhouses- you’ll struggle to find land or freestanding homes. By the beach, however, keep an eye out for larger villas, land parcels and plenty of apartments, many of which are in residential hotels.

Condition of the property

Technically, there are no official building standards for property in Mexico. If you’re buying a prefabricated home, you’ll want to hire a surveyor to do a thorough inspection before you settle on your new place.

Tip: Don’t hire a surveyor recommended by the seller or your real estate agent; this is a common scam.

What are the steps to buying a property as a foreigner?

The steps for buying a home in Mexico are pretty simple, even if you’re choosing to buy in the restricted zone. While they vary from transaction to transaction, the process should be something like the following:

1. Investigate a Mortgage or, if you’re in the restricted zone, a bank trust or fideicomiso
2. Engage a real estate agent
3. Find your property and make an offer
4. Have a sale contract written by a notary
5. Finalize your fideicomiso or mortgage with the bank.
6. Sign the contract
7. Pay taxes

What are the legal requirements to buying a property in Mexico?

Buying property in Mexico will require you to engage a notary to draw up a sale contract, but otherwise the legal requirements are pretty thin.

You’ll want to:

• Look into how you will hold the title. If it’s in the restricted zone, the title will be held by a Mexican Bank in the form of a fideicomiso. If you’re outside of the restricted zone, you’ll hold the title in your own name.
• Have all of your contracts drawn up in English, or use a translator to do so. Good firms will take care of this for you.
• Thoroughly read your regimen de condominio, which outlines owners rights and restrictions, as well as obligations.

How do I get a bank loan/mortgage?

To get a mortgage, you can go to any major Mexican or a bank in your home country. You don't need to be a Mexican resident or even have a visa to buy property in Mexico.

If you need a fideicomiso to make your purchase, you’ll also find a wealth of options- many of the larger international banks that work in Mexico will help you get a trust, as will local Mexican banks like Banorte and Banamex.

If you’re planning to pay your down payment from a foreign bank account, you’ll want to keep an eye on the exchange rate and associated fees from your bank to make sure you’re not going way over budget. If you want to protect yourself from fees and bad or inflatex exchange calculations, you can use Wise to get the mid-market exchange rate and seriously cut down on fees.

What kind of taxes and fees will I need to pay?

Unfortunately it can be a little hard to pin down exactly what level of fees you’ll pay due to looser regulations, but some good ones to look out for include:

• Agency/Agent fees, which are variable and can be negotiated
• Notary/Lawyer fees, which are variable but are taxed at 16% VAT
• Acquisition Tax, between .2 and 4.5%
• Registration Fee, which can be anywhere from .02 to 1.8%
• Title insurance, at roughly .5%

Beyond the somewhat tedious process of setting up a bank trust, the real estate process in Mexico is fairly straightforward. With a relatively small budget, you can enjoy a beautiful beachfront villa or a modern urban apartment. As far as investment in Mexico is concerned, there’s never been a better time as the nation’s citizens and a multitude of tourists rush to enjoy the Mexican seaside. Good luck with your property purchase!