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 Puerto Vallarta Real Estate | June 2008 
Mexico Resort Real Estate Update
 John K. Glaab - CIPS
 |  | New studies made by Met Life Mature Market Institute, show there are 77 million baby boomers which represent 27.5% of the entire US population. They have spending power of 2.1 trillion US dollars. This provides an outstanding base for growth of the second home and retirement home market in Mexico. |  | | | |
Welcome to the Settlement Company's Summer 2008 Newsletter. Historically in this edition, we would make reference to the "Low Season." But, for the past several years a true distinction cannot be made. Investors now arrive all year long looking for exciting properties in all parts of Mexico!
Strong Economic Growth in Baja California Sur and Quintana Roo
An economic growth study was completed for 2007 by Banco Nacional de Mexico (Banamex). According to their statistics, the two states with the most rapid growth were Quintana Roo (8.4%) and Baja California Sur (7.2%). Other states with major increases were Aquascalientes (5.2%) and Queretaro (5.1%).
Rental Property Purchase and Ownership Strategies in Mexico
Mexico real estate continues to be an attractive investment for foreigners. Many are purchasing property as a retirement or second home. This influx of foreigners has led to a demand for housing and has made the acquisition of rental properties an increasingly attractive investment.
Investors can pay all cash, use funds from a self directed IRA account or even negotiate seller financing to establish long term gains.
Institutional financing on Mexican properties is still not that common. There are a few companies that offer some limited financial options. Availability of this type of financing is largely regional and inquiries should be made, locally.
Once an investor acquires a property, it is important to understand the tax laws in this country. Mexico’s tax laws are patterned after those of Canada and The United States. The law says:
"Physical persons, (individuals) and legal persons (companies) who are residents of Mexico and who receive income in this country, are obligated to register with Hacienda, (the equivalent of Revenue Canada and the Internal Revenue Service of Canada and the US) declare their income and pay their taxes regardless of the sources and... Physical and legal persons who are residents in a foreign country (outside Mexico) must declare their income and pay their taxes on all income generated in Mexico."
Should the property be held in a Mexican corporation, a Mexican accountant will need to prepare the monthly declarations and estimated taxes to be paid. If the property is in a fideicomiso, or in a Mexican deed, a Mexican accounting firm can perform all necessary tax and accounting services, including the monthly filings and tax payments and can also provide the foreigner owner with accounting and documents for obtaining tax credits on Canadian or US taxes.
Since many investors owning Mexican property either do not often come to Mexico OR want assistance in making sure things are done legally, The Settlement Company has developed a new service. It is now able to contract with owners, collect rents and calculate and pay taxes.
Real Estate Fair, Ixtapa/Zihuatanejo:
In early March, The Settlement Company and the magazine, "Another Day in Paradise," were co-sponsors of a week long Real Estate Fair. The event included a Property showcase, featuring tours of developments and properties for sale in the Ixtapa-Zihuatanejo area.
Also included were two days of bilingual education seminars attended by members of the real estate industry and the public in general. Among those making presentations and serving on panels were; Tim Sullivan, (Ixtapa Real Estate), Raoul Rodriguez Walters (Mexico Advisor) David Connell (Connell and Associates, Attorneys with offices in Mexico City, Ixtapa and Puerto Vallarta) Lucia Bello (Century-21) and from The Settlement Company, John Glaab and Linda Neil. The latter also made presentations on the Mexican Association of Real Estate Professionals (AMPI) and encouraged those in real estate to join this Mexican association.
AMPI La Paz, Thriving:
The La Paz Section of the Mexican Association of Real Estate Professionals has shown strong growth in recent years. Membership in 2007 grew to 52 members from 16 in 2006. The Section meets regularly on the third Thursday of each month. Meetings are conducted primarily in Spanish with English assistance available as needed. Several developers have sponsored meetings including Real de Santa Ana a new community in Todos Santos about a one hour drive from La Paz. The association also conducts property tours and educational events.
All Points South:
The Mexican company, Consultores Phoenix, S.C. has three operating Divisions. It s original Davison, The Settlement Company started in Mexico seventeen years ago and is Mexico’s original Title and Escrow company. In the beginning it focused on Los Cabos, at the time Mexico’s booming real estate market. It is now doing Closings country-wide using the Virtual Closing process developed by the company.
Linda Neil Properties started operating as a Buyer’s Broker in 2006. Focusing on the state of Baja California Sur, it helps buyers find their dream property and then guide them safely through the acquisition of title.
The Company’s newest division is All Points South Property Management. Its objective is "providing professional property management services that are tailored to the individual homeowner. Our goals are to assist homeowners in obtaining maximum rental income, protecting the homeowner’s investment by coordinating maintenance and repairs and providing services that assist homeowners in calculating and supervising all tax requirements."
Editor’s Note: The last service is quite unique. Other property management companies do not get involved in helping owners pay their tax obligations. Too often, people come to Mexico, purchase a property and rent it. Quite a number do not pay taxes. Frequently this is because they do not understand the system and do not know where to begin. More and more, IRS, CRA and the Mexican authorities are starting to fine owners who are not paying. Consequences can be substantial for non-compliance. All Points South Property Management can help these people do things in a legal way.
Income Property Investment Talk:
This Internet talk show emanates from Howell, New Jersey. On January 2nd and again on March 12th the topic discussed was billed as, "Experts to Detail Truth, Dispel Myths about Investing in Mexican Real Estate." Guests on the program were; Adrian Arriaga, CCIM, Linda Neil, ABR and John Glaab, CIPS. Adrian is Broker Owner of AAA Real estate in Mc Allen Texas.
Realtor of Record for such companies, including Costco, FedEx/Kinko’s & J.P. Morgan Chase in South Texas, Adrian has also served as the National Association of Realtor´s (NAR) Ambassador to the Mexican Association of Real Estate Professionals (AMPI) and has recently been appointed a Real Estate Commissioner in Texas.
He and Linda Neil are co-authors of the NAR course, "Doing Business in Mexico." Linda Neil is Founder of The Settlement Company and Broker for Linda Neil Properties. John Glaab is a Certified International Property Specialist, a real estate journalist and Vice President of International Marketing for The Settlement Company.
Host for the programs is Peter Mosca who has over twenty two years of communications and media consulting experience. He has served a variety of nonprofit organizations including the CCIM Institute of the National Association of Realtors at the national, state and local levels. Joining Peter as host was J. Dean Essa. His team of Realtors specializes in bank pre-disclosures, auctions, distressed properties and deeply discounted builder specs.
The three guests fielded a wide variety of questions on the subject of buying and investing in Mexican real estate
B.C.S. A Popular Place for Tourists:
According to Alberto Trevino, Secretary of Tourism for Baja California Sur, occupation levels for the Easter Holiday, 2008 were impressive, The financial situation in the U.S.A. did not appear to have a negative impact on our state. Hotel occupancy levels were reported as follows: Los Cabos 95%, La Paz 85% and Loreto 78%.
While the majority of visitors came from the U.S.A. there were many Canadians, in all three destinations and a large number of Mexican Nationals in La Paz. March arrivals at the Los Cabos International airport were up 15% versus March 2007. More than 320,000 passengers disembarked in Los Cabos, an average of 10,850 per day.
MEXICO An Outstanding place for Baby Boomers!
New studies made by Met Life Mature Market Institute, show there are 77 million baby boomers which represent 27.5% of the entire US population. They have spending power of 2.1 trillion US dollars. This provides an outstanding base for growth of the second home and retirement home market in Mexico, with its proximity to the United States.
For further information, feel free to contact me via email at john.glaab(at)settlement-co.com
 John Glaab has been a member of NAR's International Section for over a decade. He has earned the Certified International Property Specialist designation and is a founding member of AMPI Los Cabos. He spends half the year in La Paz, Baja California Sur and the other half in Uruapan, Michoacan. For further information, contact John at John.Glaab(at)settlement-co.com. |
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