The capital city of Baja California Sur is a place where you can enjoy the benefits of the scenic Sea of Cortez, while also experiencing a lively and authentic culture that is rich in history. La Paz is located 137 miles north of Cabo San Lucas on the east coast of the Baja Peninsula that overlooking the largest bay of the Sea of Cortez. La Paz offers great value as an investment including: low prices, preserved Mexican culture, strong infrastructure, and all the water activities you can find in other popular beach destinations.

History
A defining part of La Paz is its rich history. In 1941, John Steinbeck wrote that “[A] cloud of delight hangs over the distant city from the time when it was the great pearl city of the world”. The Spanish first landed in La Paz in the early 16th century and the rich pearl resources attracted the Spanish conquistador Cortes who was able to make peace with the Amerindians and set up a settlement. La Paz was also a center for the Jesuits missions in the Baja Peninsula.

Attractions
One of the well-known attractions in La Paz is the Malecon, a 5 km walkway along the sea. You can also experience the culture by visiting the historic cathedrals, museums, The Library of the Californias, and the 1,500 seat performance center. Other activities available include observing the busy aquatic life, eco-tourism, several nearby islands to explore, and “very good” offshore fishing according to the 2007 book Moon Cabo.

Infrastructure
As the capital of Baja California Sur, La Paz has benefited from resources to put into infrastructure improvement. There are state-of-the-art hospitals and several universities that cater to one of the richest per capita populations in Mexico according to an article by NuWire.com. La Paz also features an international airport with direct flights to the US for easy access.

Sources: Moon Cabo by By Joe Cummings, Nikki Goth Itoi

Lifestyle
For someone who is interested in the tropical life combined with a rich cultural center, Mazatlan could be your ideal location. Some of the features of Mazatlan include Latin America’s largest aquarium, the world famous Carnival festival, the second tallest lighthouse in the world, and Cathedral Basilica de la Purisima Conception (Immaculate Conception Cathedral). The annual Carnival festival in Mazatlan is one of the country’s largest celebrations, attracting hundreds of thousands of people. Old Mazatlan dates back to the 19th century and has several impressive well curated museums. The fishing industry brings in thousands of tons of shrimp, tuna, and swordfish so it makes sense that Mazatlan is famous for its fresh seafood. Two well known resort developments, El Cid and Estrella del Mar have championship golf courses.

Infrastructure
Mazatlan is easily accessible by roads via Mexican highway 15, a 4 lane superhighway that connects Mazatlan to the US for a span of 743 miles. Highway 15 is a well maintained privately owned toll road that costs about $60 per car. The Mazatlan international airport named General Rafael Buelna International Airport is 16 miles south of Zona Dorada (Hotel Zone). It handled 819,200 passengers in 2006 and is serviced by Alaska, Continental, and US Airways. A non-stop flight to Los Angeles takes less than 3 hours for a direct flight without delays. There are several high quality hospitals including Hospital Milatar, which has specialists on duty 24 hours a day and Hospital Sharp, a renown facility known for having the best equipment. Retail options include a Walmart, Sam’s Club, and Home Depot. The low lying areas are susceptible to flooding during the rainy season in the summer.

Outlook
Mazatlan is a desirable location to live but will become increasingly scarce as the supply of available beachfront property diminishes. The Sierra Madre mountains limit outward expansion that usually occur when a city is saturated. Overflow from the top tier locations like Cancun and Los Cabos, will likely spillover to alternative locations with an equally good climate meaning increased demand for a limited supply. Factors driving demand are Mazatlan’s ideal location with tropical climate and it is easy access through their international airport or superhighway that connects to the US. Mazatlan has recently attracted a $500 million foreign investment by a United Arab Emirates company, Hydra Properties. The $500 million dollar Hydra Wave project has been underway since June 2007 and will consist of a 500 room 5 star hotel, 1000 ocean view apartments, a 1000 seat conference center, and a 100,000 square foot shopping center. The CEO, Dr. Sulaiman Al Fahim, said “We have chosen to launch our property in Mazatlan because, like UAE, it offers visitors diverse choices in tourism including its rich heritage and traditions, and colorful colonial-style architecture”. This mega development is one sign that foreign investors are optimistic on Mazatlan’s future.

Sources
Cashing in on a Second Home in Mexico by Tom Kelly
Moon Pacifico By Bruce Whipperman 2007
Mazatlan is Paradise 2003
“Hydra properties launches usd 500m sea-based ‘hydra waves’ project at mazatlan in mexico.” Middle East (June 11, 2007).
Alisau, Patricia. “A pearl on the pacific: Mazatlan polishes its growing reputation.” Business Mexico (June 2005): 56(4).

When people think of buying real estate in the Yucatan Peninsula, they often concentrate solely on resort areas like Cancun, Playa del Carmen and the Riviera Maya, while overlooking other parts of the region. Many of these alternatives might be perfect for you, and can offer some quality of life benefits you may not have considered. Merida, the capital of the state of Yucatan, is one such region.

What makes this area attractive as a property investment opportunity for you? Keith Heitke, a New York City transplant and owner of Hacienda Mexico Real Estate in Merida, gave us his take on the Yucatan. “This is a real city,” he said, “with a symphony, private and public schools, good infrastructure, and most of all, a wonderful sense of history, often lacking in the beach resorts of our beautiful peninsula.”

The area’s market of buyers consists mostly of Americans, Canadians and Europeans, but it is a developing market, and one that holds real promise. According to Heitke, “if people find us here, they usually are either totally set on coming here to live, or are convinced quickly once they look around. These people don’t rely normally on selling anything in their home state (to finance their purchases); they’ve allocated monies for this move. So I see it as a steady incline of buyers, that is, until it is really on the map, at which time it will be a big jump in interest in our area.”

Returns on investment are varied, and Heitke has seen returns for his clients varying anywhere from twenty to two hundred percent. “A good friend of mine bought a ruin in the right place for 30k, cleaned out the junk, watered the small yard, and sold it for 90k.” Not all sales net 200 percent, and few properties can be found for 30k, but you can still find gems in the area. And many of them have a three hundred year head start over their cousins to the east in Quintana Roo.

The area has no shortage of older homes, and many are historic properties. Many of them are located in the centro, or city center, of Merida. “I love Centro and its old houses,” said Heitke. “I live there and give the Merida English Library House and Garden Tour there each Wednesday from October through March, and there are some great houses in neighborhoods very near the center.”

Some of these older properties are more well-preserved than others. You’ll find beautiful vintage residences that have been brought back to their original splendor, others that have been adapted to modern life, and yet others that are just begging for some TLC. These properties have good bones and architectural treasures like beamed ceilings, moldings and mosaic floors. Some of them have been forgotten for years, and with some time, love and money, they can be the right real estate investment choice.

Merida has existed since the Spanish came to the area in the 16th Century. Walking down the streets of central Merida, in the city square by the Cathedral, you can feel its history. It has the conveniences of being the state’s capital, yet it retains a certain old-world charm. Visit it once, and you just might put down roots in a new or antique place of your own.

Contact: Keith Heitke, Hacienda Mexico, http://www.haciendamexico.com

Photo Courtesy of TooFarNorth

There is perhaps no greater concern for the retiring population in America than being able to afford medical care. The medical costs in the United States have increased so significantly that it has become a luxury many can not afford, especially if you are a senior living depending on limited life savings and the fixed income of social security. One sign of the worsening state of health care is that a medical relief organization called Remote Area Medical that was intended to air drop doctors into remote areas of the world like the Amazon jungle, are diverting their efforts to help people in the US who can not afford necessary treatments. The story of RAM helping hundreds of Americans who are uninsured or under insured was chronicled in a March edition of 60 minutes and included the sad story of a retired woman who could not pay to have her eye glass prescription updated and was left virtually blind. Hopefully you have invested well enough to never be in such as situation, however thousand dollar premiums are still enough to make most retirees cringe. This is where living in Mexico can be a great benefit.

While you may prefer the Mayo Clinic level of care, if you can settle for competent providers you will be able to save thousands by finding a quality medical facility in Mexico. Seek recommendations of your fellow expatriots, who will be able to guide you toward the better hospitals and clinics. There is a great range in quality, similar to the US where you have some of the best facilities in the world as well as places where the staff fails to notice the woman dying on the floor of the ER. Mexico probably has a greater range in quality of care than the US so it pays to conduct thorough research. Here are some options to consider to take advantage of health care in Mexico.

IMSS
Foreigners legally living in Mexico are eligible to buy health coverage in the Mexican health system: the Instituto Mexicand del Seguro Social. Foreigners can sign up for coverage for a small annual cost, generally in the hundreds, which covers basic medical care. According to International Living foreigners over 60 can purchase IMSS coverage for less than $300 a year and receive full coverage health insurance including prescription medications. Any expat with a residence visa can get IMSS coverage by signing up at an IMSS office.

Private Medical Insurance Policy
Generally medical insurance purchased in Mexico is a lot less expensive than US policies and will cover more major medical expenses than the IMSS. It also gives you access to the private hospitals, which are generally higher quality and can match the level of care found in the US.

Don’t Count on Medicare Benefits to Mexico
Unfortunately, in only extremely rare cases will Medicare cover care outside of the United States according to a University of Texas site. One possible situation where Medicare could be extended is if a beneficiary living at the border must be hospitalized and a Mexican hospital is closer to their home than a US hospital. Otherwise you will have to travel back to US facilities to be covered. With about a million Americans now living in Mexico, this policy will hopefully be reformed in the future.

Isla Mujeres is an island paradise just a few miles off the coast of Cancun’s hotel zone. Isla Mujeres, which means “island of women” was once frequented by the Mayan people to seek favors from Ixchel, the goddess of fertility. Experiencing the aesthetic scenes of the island would quickly help you understand why the Mayans believed it to be the home of a goddess.

Today Isla Mujeres is a booming tourist destination with several ocean front developments that have just been completed or are currently under construction. Isla Mujeres is an extension of the thriving Cancun tourism economy, so rental demand should provide a reliable source of cash flow if you invested in a second home to be used for part of the year.

Isla Mujeres is just 5 miles and length and half a mile wide so the space limitations and intimate nature of a small island may not appeal to you. Another consideration is accessibility to the mainland, which is available via ferry or small boats. One of the preferred parts of the island is the well renowned Playa Norte, which offers some of the most eye pleasing views and many enjoyable water activities to keep you entertained.

A google search of Isla Mujeres real estate, will turn up a strong supply of properties at very affordable prices. Mundaca.com is a real estate company that provides an impressive number of listings for a broad range of homes, including several new waterfront condos in the 200’s.

Image Courtesy of svachalek

Owning real estate in Mexico is great for people who don’t like to pay taxes. Although you are still obligated to pay US income taxes if you are a US citizen, significant tax savings can be achieved.

Interest is Tax Deductible
Like in the US, the interest you pay on your home loan in Mexico can be deducted from your income taxes as long as it is your primary or secondary residence. Personal use must exceed the greater of 14 days or 10 percent of rental days for mortgage interest to be fully deducted. It would be wise to consult an accountant to determine how much interest you can safely deduct.

Tax Benefits When Renting Out

If you choose to rent out your property, you can claim itemized deductions for depreciation, maintenance expenses, operating expenses, property taxes, and some insurance expenses. The property must meet requirements as a rental business, so you can’t personally use the property more than 10 percent of the rental days. Maintaining the house does not count towards personal use days.

You are required to pay taxes to Mexico’s government when you receive income from renting out property in Mexico, however you can deduct this from your US taxes so you don’t have to pay it twice.

Lower Property Taxes
Property taxes are considered a bargain compared to rates in the US. This can result in a significant savings depending on the rates set by the local government.

Deduct Taxes You Pay in Mexico
Often taxes that you pay in Mexico, such as property taxes, can be deducted from your US return.

No Death Tax
Mexico does not have an estate tax or an inheritance tax, which can be quite high in the US.

Capital Gains Taxes
If you own and use a property in Mexico as your principal residence for at least two of the last five years, you are exempt from capital gains taxes of up to $250,000 if you are single and $500,000 if you are married.

Source: Cashing in on a Second Home in Mexico

Disclaimer: This is a general overview of potential tax breaks. Consult a professional accountant for your personal situation.

Cashing in on a Second Home in Mexico, is perhaps the most comprehensive and informative books that you can find on investing in Mexico real estate. It is written by Tom Kelly and Mitch Creekmore. Kelly is the former real estate editor for The Seattle Times and Creekmore was recognized as “one of the foremost authorities on Mexican real estate in the United States” by the San Diego Business Journal.

This book is highly recommended if you are preparing for a real estate investment in Mexico or just want to learn more about it. It not only explains the nuances of the purchasing process in Mexico, but explains it in plain English without being dry. There is a wealth of information that will give you the confidence when you go down there that you can avoid major mistakes. The book highlights some useful personal success stories as well as some tragic failures so you can learn from the experiences of others. It also profiles some of the best locations in Mexico to invest in and what they have to offer. The book can be found in Amazon and some public libraries and is part of the curriculum of this site’s Mexico Real Estate 101 course.

If you know of any other great resources for Mexico investing and living, please share them in the comments!

2007 was a banner year for real estate investment in the peninsula, especially in popular areas like Cancun and the Riviera Maya, a 120-kilometer (80 mile) stretch of coastline which only a few years ago was a land of fishermen and undiscovered beaches. Today it is an area of intense development for the resort and vacation industry.

The question might be, with such an off year (to say the least) in the U.S., would you expect for the effects to be felt in the sales of real property in our area in 2008? The answer, at least in our area, would be yes and no. According to Mexican Association of Real Estate Professionals (AMPI in Spanish), sales of property in the states of Quintana Roo, Campeche and Yucatan (the three states comprising the Yucatan Peninsula) are actually up 20% so far over last year.

A number of factors are given as reasons for the increase:

•Americans and Canadians who might normally invest in the U.S. are drawn by attractive deals in the area. The real estate slump, and price dumping in the U.S. notwithstanding, prices here per square foot are still often a bargain compared to properties in Florida, Texas and California. Many times they are half what they are in these areas.

•Mexican nationals are investing heavily in the area as well. According to AMPI, this year domestic investors have made up an astonishing 60% of this year’s sales demographic. American investment has dipped as much as 15% in some markets in the peninsula, but enough national investment has been present to offset the dip. A dollar that has weakened by as much as 10% has made dollar-priced properties attractive. This presence keeps the market moving, and diversification keeps building and planning efforts moving forward, allowing for the advancement of infrastructure for new development. This way, by the time the U.S. economy picks up, new services will be in place for American buyers to really take advantage of opportunities.

•The European market is growing. Another consequence of a weakened dollar internationally is that Europeans, who may have been wary of investing in dollar-denominated properties, are using their stronger euros and pounds to buy now. Whether for speculative purposes or for use as vacation properties, the Europeans are here. The surge in the amount of real estate professionals taking French, Italian and German language classes is one sign that the market is changing. The area’s ability to evolve to meet the needs of its market also ensures a healthy future.

And the outlook is strong for the next 5 to 10 years. The development in Cancun like Puerto Cancun, which is being billed as a “city within the city”, with thousands of condominium units being built as we speak, newer developments just north of Cancun like Isla Blanca, and areas along the beach in Campeche and Progreso in the state of Yucatan are all experiencing sales surges. Campeche has become especially popular with Mexican nationals looking for areas richer in local tradition, and that are close to cities like Villahermosa, Tabasco.

While other parts of the country that cater to an exclusively American demographic are feeling a bit of the pinch, the Yucatan continues to be an attractive area to invest your dollars, pesos, pounds and euros. The diversification of the client base in the area ensures that both the government and the private sector will continue to support the area, as it did incredibly after the hurricane season of 2005.

Image courtesy of Sean Dockery

Driving through Cancun’s Hotel Zone these days, you’d never know that this part of Mexico had been struck by Hurricane Wilma only a couple of years ago. All branches of government, along with the private sector, have not only erased the signs of damage, but have taken advantage and have renovated both the Hotel Zone and the city of Cancun. And now with the area’s building and development efforts back in full swing, it might be easy to forget about the real estate pinch affecting markets in the US.

For many here, in fact, there are so many opportunities not only in Cancun, but the state of Quintana Roo, the Yucatan Peninsula and Mexico in general, that the question oftentimes isn’t what to buy or how, but how much can I buy and where do I sign?

Resort areas in Mexico that were originally created for development as hotel properties have paved the way for the timeshare and fractional ownership industries, and which have laid the groundwork for the promotion of these areas as full-time beachfront residential properties. Changes in property laws, proximity to international airports and the ability of foreign citizens to secure financing for purchases here has made the entire Yucatan Peninsula attractive for both national and international real estate investors.

And for many investors, the short-term results have been extremely encouraging:

In 2006, Dave and Raine Ayeres of Phoenix, Arizona purchased a 2500 square-meter (0.6 acre) property with a two-bedroom single family vacation-style home in Puerto Morelos, Quintana Roo for $250,000. It was bought in trust with Banco del Bajio, one of a growing number of national banks concentrating on land trusts in resort areas like Cancun. The sale was handled by real estate lawyers in Cancun, and the entire transaction was handled, mostly via conference calls and e-mails, in less than two months. Last month, the Ayeres received an offer of $500,000 for the property in cash. It was their third offer in that range this year. While they love the property and the area, they are seriously considering the offer, and have loved their short-term returns, to say the least.

The whole process represented a learning curve for the couple, but after finding proper representation to handle the transaction, they wouldn’t hesitate to do it again. In fact, they have their sights set on an adjoining piece of property to build their retirement home. The key for the Ayeres, as is the case for anyone considering the purchase of property in Mexico, is to find a reputable firm to take care of all the details from a to z. While trying to do it yourself may save you a few pesos here and there, nothing buys the peace of mind of knowing that your investment is secure and legal.

The Ayeres Family purchased land and a home, but the condo boom is definitely in full swing in the entire area. Ten, twelve, and sixteen story high-rise towers, much like you’d find along Biscayne Bay in Miami, are dotting the landscape in Cancun, and many more are under construction. And they are selling out. Playa del Carmen, to the south, is seeing similar growth, and developments to the west along the Peninsula’s northern coastline are being planned and designed, much of it with the backing of FONATUR, Mexico’s land development arm of the federal government.