Frequently Asked Questions

From advice on paperwork to the best places to live, if you are dreaming of buying, selling or investing in paradisiacal properties, you are in the right place, here you will find answers to your questions!

What are Trusts used for?

A Trust works by having a Mexican bank purchase the property on behalf of the foreigner and hold it in trust for the duration of the trust. The bank has a fiduciary relationship with the beneficiary (i.e., the foreign buyer), which means that it must always act in the best interest of the foreign buyer. The sole beneficiary of the trust will be the owner of the trust, or failing that, the persons designated by the owner. The bank acts only as trustee. The trust of your property in Mexico is held by the bank but is not considered an asset of the bank. Therefore it is not exposed to any legal action in which the bank may find itself. The trust is initially established for a period of 50 years and can be renewed at any time for a very simple form and a nominal fee.

Mexican banks have governmental bankruptcy protection. This means that the trust is indirectly guaranteed by the government. In addition, as mentioned above, the properties held in trust are not assets of the bank. In the rare event that the bank has financial difficulties, the property is assigned to one of the other qualified banks.

Here are some of the benefits of using a trust to purchase property in Mexico:

Allows foreigners to buy property within the restricted zone, i.e. you will be able to buy a house in one of the beautiful beach destinations in Mexico.

It gives foreigners the same rights as Mexican citizens when it comes to owning property. That is, you can buy, sell, rent or modify the property.

The trust can be used to purchase multiple properties in Mexico.

In the trust you can designate heirs in the event of your death.

The trust can be renewed every 50 years.

The trust also facilitates the sale to another foreign buyer by simply changing the name through a process with the Mexican bank.

Restrictions on buying real estate as a foreigner in Mexico

The Mexican Foreign Investment Law and the Mexican Land Law contain some important restrictions on real estate trusts for foreigners, beyond not being able to directly own real estate located within the restricted zone:

Foreigners may not own properties destined for activities that are considered strategic, natural resource exploitation, directed to radio, television or transportation services.

Depending on the location, properties may not exceed an area limit that is stipulated by law.

The property may not be used for commercial purposes, acting outside the law.

Types of Trusts that exist

It is important to emphasize the different trusts that foreigners can apply for in Mexico and the difference between them.

Bank trust: Also known as financial trust, this is a trust in which a bank or financial institution acts as trustee to manage the resources of a settlor for the benefit of one or more beneficiaries.

Testamentary trust: This type of trust is created through a will and is intended to ensure that a person’s assets are distributed according to his or her wishes after his or her death. The trustee will be in charge of distributing the settlor’s assets according to the instructions of the will.

Real Estate Trust: A real estate trust is one in which the object of the trust is real estate or a group of real estate properties. Real estate trusts are frequently used in Mexico to allow foreigners to acquire real estate in restricted areas.

What do you need as a foreigner to request a trust?

Requirements may vary by trust institution, so it is vital to have a good lawyer and legal advice to guide you through the process.

Subsequently, you must provide the bank with your personal information by means of official identification and the details of the property you wish to purchase.

Fill out the application form to formalize the process; include name, surname, nationality, immigration document number, immigration status, address and details of a person authorized to receive the certificate. This documentation must be signed by the applicant of the purchase, accredit its condition of stay and present the original request together with two copies to the pertinent authorities. In case the documentation from the country of origin must be translated, this process must be carried out by an expert translator.

Pay the fees and commissions for this type of process.

Documents required to purchase real estate as a foreigner

Waiver agreement for the acquisition of real estate outside the restricted zone (27th article of the Constitution and 10th article of the Foreign Investment Law) (Individual or legal entity, as the case may be)

Document of accreditation of legal stay

Annex indicating the details of the real estate to be acquired.

Issuance of a certificate for obtaining concessions for the exploration and exploitation of mines and waters in national territory (It has a cost of $7,540 MXN).

Purchasing times and processes

To reserve a unit, a deposit of 5000 USD is required. This step ensures that the unit is locked and cannot be purchased by anyone else.

Generally, the booking period is 15 working days, during which several steps will be carried out:

First, a letter of offer should be prepared and, if necessary, the terms negotiated.

In addition, the necessary documents must be submitted for the preparation of the sales contract.

Once these steps are completed, the developer will send the contract to the client for review.

If all the terms of the contract are correct and both parties agree on all points, the contract will be signed and the down payment, which is generally 30% of the value of the property, will be made.

This entire process, from the moment the reservation payment is made to the signing of the sales contract, usually takes approximately one month.

In the event that an agreement is not reached during the 15-day reservation period, for any reason, the developer will refund the full value of the reservation to the client within 72 business hours.

How to buy a house close to the beach?

In recent years, real estate investment figures have been growing steadily. Whether for housing, commercial or corporate spaces, Mexico attracts both local and international investors. The way to acquire a property in Mexico as a foreigner is through legal agreements. Among them, the easiest and simplest is the trust.

The Mexican Constitution (ARTICLE 27) establishes that certain territories are “restricted zones”, and cannot be purchased by foreigners. That is why the trust is created, through it, foreigners can buy real estate, since the bank holds the title to the property. The only beneficiary of the trust will be the owner of the trust, or in its absence, the persons designated by the owner. The bank acts only as administrator. The trust of your property in Mexico is held by the bank but is not considered an asset of the bank. Therefore, it is not exposed to any legal action in which the bank may be involved. The trust is initially established for a period of 50 years and can be renewed at any time for a very simple form and a nominal fee.

Mexican banks have government protection against bankruptcy. This means that the trust is indirectly guaranteed by the government. In addition, as mentioned above, the properties held in trust are not assets of the bank. In the rare event that the bank has financial difficulties, the property is assigned to another qualified bank.

CLOSING COSTS OR CONTRACT COSTS

It is estimated between 6% and 9% of the sale price. This includes taxes, notary and appraisal fees, opening commission and application. Also taking into account, among other things, obtaining the SRE permit.

Another case would be if you are approved for financing, and opt to mortgage the property. In that case, closing costs will be closer to 7% to 10%.

The vast majority of transactions of this type in Mexico are done in cash. But we clarify the above point as financing has been becoming popular in recent years.

To calculate the buyer’s fees, you must take into account the following percentages:

3% acquisition fee

1% registration fees

1% notary fees and finally, and very important, the cost of the SRE permit. This will cost around $2,000 for the opening, and then $500 per year.

Taxes / Taxation of real estate purchases for foreigners in Mexico

When buying a property in Mexico you must pay the Real Estate Acquisition Tax (ISAI). The rates of this tax are different in each state of the country, ranging from 2% to 5% of the value of the property.

You must also pay the annual property tax, known as Predial. This tax is quite low, you must pay it every year before March 31 and its amount is calculated taking into account the size and location of your property.

What is the purpose of a Real Estate Agent?

Real estate agents provide advice and assistance to both buyers and sellers during the real estate transaction process. The above includes actions such as:

Assist clients in locating properties that meet their needs.

Prepare the property for viewings by potential buyers

Conduct market research to determine the fair value of the property

Guide negotiations between parties

May handle photographic and video evidence of a property

Prepare the necessary documents for the real estate transaction process

Advise clients on real estate laws and regulations

Can assist in finding financing for your clients

They play a key role in real estate transactions. They help buyers and sellers complete real estate transactions legally and efficiently. They must be organized, detail-oriented, great negotiators and always look for the benefit of both parties.

Project deliveries (turnkey or black/gray)

Turnkey: A turnkey house is a concept used in the real estate sector to identify a house that you can move into as soon as you are given the keys, i.e., without the need for renovations and equipped with the necessary appliances and ready to move in.

Gray work: The gray work stage is not yet finished, but we are beginning to get a glimpse of what it will look like. This is the process in which all the enclosure walls and the walls of the house or business are erected. Depending on the case, the roofs and waterproofing are also added. On the other hand, it is the process in which the installation of pipes, wiring and utilities are also completed.

Black work: This is where construction, excavation, leveling and foundation work is done. As the work progresses, certain structural details in walls, slabs, roofs and main pipes are also included. It is important to clarify that, when we are in the black work process, the house is not habitable at all.

How does the Property Management service work?

Our property management service is based on the philosophy of “long term business” where clients who acquire a property in Tulum or any part of the Riviera Maya and seek to generate income passively without worrying about the administration/management of it.

The process we carry out has essential steps to guarantee the highest rental percentages in the promotion platforms (AIRBNB, VRBO, EXPEDIA, BOOKING, TRIPADVISOR, etc.) Said process starts from the PROMOTION of the property in these platforms, we take you the ACCOUNTING through account statements, if necessary we provide LEGAL ASSISTANCE relevant to the property, the OPERATIONAL MANAGEMENT and CONCIERGE service will be available to your guests and all data/information will be reflected in our APP.

We stay at the forefront of digital innovation so we implemented an APP that controls all the information regarding your property, you will see in real time occupancy, availability, invoices, payments made, commission and net profits. In general, properties in tourist destinations generate higher capital gains as the area consolidates. In addition, the trend shows that lodging in private properties will be increasingly sought after, so the market is solid.

On the other hand, let’s not forget the possibility that it means, in personal terms, to have a property prepared for tourism. You will be able to enjoy your property whenever it is unoccupied without having to terminate contracts and enjoy a perfect vacation without paying for your stay.

How much does it cost to live in the Riviera Maya?

There are several factors that directly and indirectly influence the cost of living in the Riviera MAYA, the main and most obvious is the international tourism that increases every year.

Considered worldwide as one of the most impressive destinations and with very good opportunities for property growth due to its high rates of real estate investment. It is also home to one of the most important cultures for Mexicans, the Mayans, with their fascinating cuisine and spectacular culture stand out as the best known even worldwide.

The cost of living depends on your budget and lifestyle preferences. Whether you want to live a luxurious life or a little more modestly. Here are some of the month to month costs in the Riviera Maya:

Utilities, such as electricity, water, gas, garbage, landline phone and internet: the cost for these public and private utilities usually cost around 170 USD per month.

Cell phone service: On average, you will be spending about 35 USD per month.

Groceries: With 350 USD per month you will be able to buy a good grocery for 2 people.

Entertainment (restaurants, bars, tourist sites): this item depends entirely on your tastes and lifestyle, take as a reference between 500 and 600 USD per month.

Variables (accidents, repairs, unforeseen events, etc): it is very important that you take this into account to take care of any ailment or emergency that may arise, take into consideration 90-100 USD.

ESTIMATED TOTAL: 1180 USD AVERAGE MONTHLY EXPENDITURE (for 1-2 persons)