Cindy Krstich was visiting Mexico for the first time, and promised a friend she would take a look at some condos the friend’s son was building in Playa del Carmen. Twenty years later, she called the decision to purchase one of the units “one of her best.”
Krstich, who lives 30 miles outside of Chicago, now spends January through April there. “I absolutely love it. I love the people, I love the ocean, I love the food, I love the music,” she said. “I think it’s the perfect place to enjoy. It takes you into a paradise that you can’t experience in the United States, it’s like a second home to me.”
It turns out Krstich was ahead of her time. One consequence of COVID-19 is the uptick in demand for second homes; it surged 100% last year, according to Redfin. The pandemic has changed where people want to spend their time and how they work. The U.S. housing market is so hot right now, and inventory is limited.
Some in the market for a second home are looking south of the U.S. border; Mexico is seeing growth in the second home market as travel restrictions ease and more people get vaccinated.
One brokerage firm in La Paz saw a 33% increase since June 2020, according to broker Victor Granados. “Clients who wanted to wait a year or two are doing it now,” he said of buyers.
There’s an urgency among the buyers, experts note. “I was surprised by the number of people who are looking for beachfront property,” said Laura Zapata, a real estate agent in the Puerto Morelos area. “Maybe being in lockdown they are saying, ‘I’ve gotta do this, and I’ve got to do it now so I can enjoy my life.’ ”
In addition to beach towns like Puerto Morelos, La Paz, Puerto Vallarta, San Jose del Cabo, Tulum and Playa del Carmen, many foreigners choose to purchase second homes in Colonial-era cities like San Miguel de Allende and Merida.
Here’s what you can expect during the buying process:
Be prepared to deal in cash
Mexico is “almost strictly a cash market. There is virtually no financing for foreigners,” San Miguel De Allende agent Ximena Domínguez said.
While financing is an option as a last resort, associate broker Bryan Townsend warned it will cost you more in the long run. “You could be looking at an extra 10 to 15% interest on a mortgage.” he said.
Yes, there’s escrow
While not required, Granados, Domínguez and Townsend all recommended using the account to securely hold your deposit.
Please, work with an agent
Agents ensure your financial and legal security. Granados, who’s been in the sales market for 15 years, always tells his clients “it’s the same as in the [United States].”
Purchasing as a foreigner is surprisingly uncomplicated
“You pretty much come, decide what you want to buy and place an offer as you would at home,” Zapata said.
The only thing that’s different is that if you’re within 31 miles (50 kilometers) of the coastline, you have to set up a bank trust. Your property is an asset held by the bank and you are the beneficiary. This, Zapata says, stems from a “slightly outdated” rule to protect coastlines and borders.
As far as visas go, both Canadians and Americans receive six-month tourist visas upon arrival. At present, nothing else is required, though Zapata said the government is encouraging people who live in Mexico part time to apply for temporary residency. As a temporary resident, you can enter and exit the country as you please and you may also apply for a work visa.
Mexico gets a bad rap
While the country certainly has security issues, real-estate agents assure buyers they rarely permeate into expat and second-home communities.
“People talk a lot about safety in Mexico, but overall it’s a safe place to live. When people ask me about that I tell them … they shouldn’t have anything to worry about,” Zapata said.
Krstich echoed that sentiment.
“I don’t feel any safety issues, but I know if anything negative happens in Playa [del Carmen], my friends in the States are the first ones to call and let me know,” she said. “Mexico sometimes gets a bad rap, but I still feel safe to go there and I’m a single, 75-year-old woman and I always travel by myself.”
Krstich was hard-pressed to come up with a challenge of owning a second home in Mexico. Where she lives in Playa del Carmen, she said the majority of people speak English, so you can get by without knowing Spanish.
Taxes are lower on these properties than in the U.S., says Townsend. “Your annual property taxes on a $400,000 home would be around $500,” he said.
Then there are the obvious benefits, the same that draw people to second-home communities around the world: A rich culture, warm weather, world-class beaches and a lower cost of living.
Additionally, most of the areas that attract foreigners tend to be walkable towns, and people tend to live healthier lifestyles.
“I have known several clients, who over time, have quit taking high blood pressure medicine and things like that because they just seem to be healthier here,” Zapata said. “They eat healthier, that kind of thing. For overall health reasons, it’s a better place to live.”
It’s no surprise that second homeowners can’t wait to get back.
This was the first year since Krstich purchased her condo that she didn’t go to Mexico. She wasn’t scared of being in the country during COVID, she said, but of crowded airports and airplanes. In the meantime, she has her condo rented out.
If the pandemic has taught us anything, it’s that nothing is guaranteed and there is no time like the present.
“If you’ve ever thought about moving to Mexico, you need to act on it and not let it be a dream you never fulfill,” Zapata said. “It was always my dream to come down here. I was about 42 when I moved so I still had to work for a while so that was a big unknown, but now there are so many opportunities for people to work from home, so it’s actually a lot easier to do.”