Buy smart, just as you would in Canada, former Vancouverite recommends
Michael Sasges
Sun
Blue sky, blue ocean and a church, Our Lady of Guadalupe, dominating the immediate built environment speaks of Mexico’s Pacific coast on which the tourist destination of Puerto Vallarta is located. ‘ As residents of the Puerto Vallarta area, we have seen increased security personnel and we feel safe in that protection is there and, if one is not part of a criminal lifestyle, one should not be affected,’ reports Victoria Pratt of her adopted town.
In Mexico, the asking price of a new-construction home is one-quarter to one-third the asking price of a comparable Canadian home. But property ownership by foreigners is restricted. The weather is lovely, but . . . And the scenery is so different, but . . .
A recent Mexican real-estate seminar by Canada2Mexico Consulting provided an opportunity to investigate the dream and the reality. Providing the answers below is Victoria Pratt, a former Vancouverite now selling Mexican real estate.
Q: At which Canadians was the Canada2Mexico Consulting seminar aimed?
A: We are seeking Canadians interested in buying a vacation home or a second residence, which could be either a condo or a single-family dwelling, on the Costa Vallarta of Mexico.
This zone is anchored by Puerto Vallarta and the greater Bay of Banderas, and includes towns and resort destinations that Vancouverites may have heard of, such as Nuevo Vallarta, Sayulita and San Francisco in the states of Jalisco and Nayarit.
Q: If a holiday or retirement home in Canada, on average, costs X, what is the Mexican equivalent, or Y?
A: The cost of a resort residence in our area is generally one-third to one-quarter the cost in Canada. Good developments are ranging from about $150 US to $250 US per square foot, completely outfitted with quality ceramic or marble floors, granite countertops, integrated kitchen cabinets and good carpentry for closets and finishes.
I have a buyer who bought a three-bedroom condo in Mexico as a second home for $425,000 US and jokingly commented that he had paid $1.2 million US for his False Creek condo of smaller square footage. Both were bought in pre-construction and both are waterfront properties.
Some listing examples:
[1] An excellent pre-construction condo development on the El Tigre golf course offers large two-bedroom plans for less than $250,000 US and includes beach-club and health-club memberships and golf-club privileges.
[2] A three-bedroom oceanfront townhouse with about 2,500 square feet, and fully-furnished, is listed at $789,000 US.
[3] A two-bedroom oceanview condo of about 1,400 square feet, fully-furnished, is listed for $445,000 US.
The very highest end condos and homes with the finest finishes and most exclusive locations would be in the $300 to $400 per-square-foot range.
Q: The seminar news release says rising house prices, an unstable economy and increasingly expensive medical and health-care costs in Canada are changing the way many Canadians consider their future. Is the Mexican economy stable? What’s stability?
A: As a resident of Mexico, I consider the Mexico economy as stable as the global economic conditions currently permit. I am not an economist so can’t elaborate on what stability is in technical terms, but can give you my sense of the economic environment in my area.
The tax base is increasing – more people are paying taxes – and tourism has steadily grown over the past 10 years, along with tourism infrastructure in our area, as has real estate development and investment. We will be most affected on a national basis by declining oil prices, similar to the factors that are currently affecting Canada.
Q: Can gringos own real property in Mexico?
A: Yes, foreigners can own property fee simple in the non-restricted area, which is 50 kilometres beyond the ocean borders and 100 kilometres beyond the national borders.
The restricted zone was established within the Mexican constitution for sovereignty reasons. In the mid-1970s, an administrative mechanism was created to permit foreigners to own in the restricted zone by way of deeding the property within a trust.
The trusts are administered by the chartered banks of Mexico and ownership is registered with the secretary of foreign affairs. The owner is named as the first beneficiary of the trust and has all the rights of being able to sell, bequeath, rent or chattel the property in the same manner as a fee-simple regime.
Q: How easy or difficult is probate down there? Is there probate in the Napoleonic Code? Is there joint tenancy? Tenancy in common?
A: A lawyer and the Canadian consulate could be your resource to answer those technicalities.
A foreigner buying real estate in the area in which I sell is required to register title to the property under a trust, as it is located in the “restricted zone.” The trust offers the advantage that one can name one’s heirs as beneficiaries and the process for claim is as simple as proving identity and presenting a death certificate to the authorities in Mexico, notarized and legitimized, of course.
Q: The last half-dozen headlines atop Mexican dispatches published on the Vancouver Sun’s news pages, and published before the seminar, suggest that Mexico is plagued by cultural and natural violence. People do ask, I am sure. What do you say?
A: The violence to which the headlines refer is all related to the crackdown on corruption and particularly drug trafficking that is the mandate of Mexico‘s presidente, Felipe Calderon. The violence is occurring between factions and in retaliation for policing and convictions, as the president implements his anti-corruption campaign.
My personal viewpoint is that there is a lot of money at stake and there is bound to be a power struggle, but it is infighting and the violence is not targeted at the public.
I know similar issues are affecting Vancouverites as one sees the reports and debate on rampant gun use, escalating gang violence and cross-border drug and gun-smuggling.
As residents of the Puerto Vallarta area, we have seen increased security personnel and we feel safe in that protection is there and, if one is not part of a criminal lifestyle, one should not be affected.
With regard to hurricanes, I chose the Costa Vallarta, as it is relatively safe from those perils, being protected by Mexico‘s third largest bay and having what sailors refer to as a meteorological trough off the coast and that buffets drastic weather. Hurricane risk is mainly in the Atlantic/Gulf/Caribbean area of Mexico and is seasonal.
Q: Please share with Sun readers one “horror story” and its lessons and one life-should-be-so-good story and its lessons.
A: In my 10 years as an owner and nine years living on the Costa Vallarta, I have not had any horror stories among my friends or clients that I could say are unique to Mexico.
There have been a couple of instances of medical emergencies for which my friends rave about the level of medical care. People are happily living their life of retirement, semi-retirement or on vacation.
One hears of folks making silly real-estate deals from time to time. I would say they have likely not acted in the manner they might at home and perhaps made snap decisions or have not consulted with credible professionals.
The lesson is to align yourself with reputable advisers and make an educated decision — same as in Canada.
Q: Am I wrong to think that in September, when your cross-Canada meetings were announced, they were anything but extraordinary, and now are extraordinary, with so much wealth disappearing around the world?
A: Of the two conferences staged by Canada2Mexico, I have identified buyers for my area. The common denominators are that they have funds earmarked for a vacation-home purchase.
There is, however, warranted concern on where the dollar will settle, but it has not stopped them from actively looking with a purchase goal in mind.
Many developers are considering setting an advantageous peso exchange rate or publishing in pesos (rather than the traditional U.S.-dollar-based price lists) to give a sense of stability to both national and foreign buyers.
We have had, and continue to have, many positive factors as stimulants in our market and we certainly hope they will at least partially offset the effects of the economic crisis . . . .
Victoria Pratt is a sales associate with Pacific Boutique Properties. Her Mexican telephone number is 011 52 1 322 779 9283. Her email address is [email protected]
