Why invest in real estate properties in Mexico ?
Even as Mexican’s real estate sector wasn’t really affected by the great recession experienced in the United States and other nations from the 2008 to 2009 worldwide economic crash, it actually suffered a little downturn. Investment resources became scarce, and at this point, investors and a lot of foreign property owners sold off their real estate properties at reduced costs to cut misfortunes. However, the country experienced some sort of turnaround with a gradually growing Mexican economy combined with the expectation of economic and political stability that is providing friendlier investment environment.
As a result of some changes that occurred in its constitution in recent times, the government in Mexican has tried to make it less demanding for investors to put in investment resources into real estate properties. A serious myth associated with Mexico is that the government has the right to take anyone’s land or real estate property at any time. Yet, that is not totally evident. The fact is that ever since 1995; foreign investors can sell and purchase properties in Mexico using some Direct Property Deed. This deed provides the investors with complete possession of the property, which implies the real estate property cannot be collected by the government as they please.
There is, notwithstanding, an alternate arrangement of standards for properties on Mexico’s fringes and coastline. Investors can invest in real estate property within about 30 miles to the coast and 60 miles to the periphery. However, the investor can only do such through what is known as a “fideicomiso.” It is basically a system that is processed through a Mexican bank that helps to hold the agreement deed for an investor, yet they hold every privileges of proprietorship. All trust deeds are valid for a period of 50 years and however can be reassigned subsequently. The property isn’t for the bank’s benefits, and the investor can remodel, lease, offer or transfer the ownership to their beneficiaries.
However, the Mexican government has the power to collect property, in the same way as other different nations, if the property is in its important area provided in the Mexican constitution. Nonetheless, it was altered through the Free Transaction Agreement by North Americans in 1994, which restricts any takeover of real estate property to only public reasons. But it is not common for the government to take over a private property; however, compensation is always involved. The government will give the investor generous incentive for the real estate property if they actually need to take it over.
The vast majority of the business transactions for investments in real estate are transacted with cash. However, financing is accessible from financial organizations, Mexican banks, and developers of real estate. However, their loan fees are higher than their remote partners. Apart from purchasing directly, in March 2011, Mexico extended its real estate investment opportunities by offering the first-historically real estate stock trade. Recorded on Mexican stock market, which sold about $300 million values in trade, at its initial turn around. Investors are expecting more stock trading opportunities in the real estate sector.
Obviously, real estate transaction in Mexico implies tax payment. There is business transaction tax in place that can be about six percent of the financial transaction, and you are expected to pay a yearly tax on real estate properties in Mexico that can be about one percent value of the property. Alongside charges, financial specialists and investors are confronted with a Mexican real estate market that is still recouping. At this moment Mexicans are taking a gander at already developed properties closer to their respective workplace to reduce expenses, instead of purchasing new homes. It implies that new home deals are down.
Other than the economy and taxes, investors need to consider a considerably more eminent issue with regards to Mexican properties and real estate, the reoccurring dangerous violence due to the drug related issues. Mexico is much the same as some other place in the world, in that it’s better to be at a safe distance from violence-prone areas. You simply should be careful of every move you make. Mexico is also a place that attracts tourist; the Mexican government would not like it’s tourism to die, so the government is doing everything that they can do to reduce the viciousness.
Despite the viciousness, several foreign investors say that Mexican properties and real estate sector can be a decent investment. For investors and any other person seeking investment opportunities in real estate, it is worth taking the chances of putting resources into Mexican real estates.