# Mexican homes as rental investments



## Haskins (May 21, 2017)

As I'm getting closer to retirement (1 school year to go), I'm weighing all my options. One is to receive a nice monthly income of about $3200 per month as well as a lump sum that can provide me with the ability to purchase 2-3 homes in Mexico and use them as rental properties. A second option is to not receive a lump sum and increase my monthly pension by $1000. 
Does anyone own rental properties in Mexico? I'm wondering which would be the better option. My wife just retired with her own pension similar to mine. She went with the full pension without the lump sum. We'd also have 3 rental properties in Texas. Decisions, decisions....


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## TundraGreen (Jul 15, 2010)

Haskins said:


> As I'm getting closer to retirement (1 school year to go), I'm weighing all my options. One is to receive a nice monthly income of about $3200 per month as well as a lump sum that can provide me with the ability to purchase 2-3 homes in Mexico and use them as rental properties. A second option is to not receive a lump sum and increase my monthly pension by $1000.
> Does anyone own rental properties in Mexico? I'm wondering which would be the better option. My wife just retired with her own pension similar to mine. She went with the full pension without the lump sum. We'd also have 3 rental properties in Texas. Decisions, decisions....


From the perspective of the owner, rentals in Mexico are different than in the US. Tenants have more rights; even squatters have rights if the place is left unattended for too long. If renters don't pay the utility bills, they automatically devolve to the owners.


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## chicois8 (Aug 8, 2009)

Plus you would probably need an accountant to help with the Taxes you would have to pay and your visa would have to come with a work permit...As TG mentioned sometimes renters take not only advantage of owners, they take everything like light fixtures, door knobs, plumbing pipes and sometimes even the kitchen sink....And selling real estate can take years to sell...You will probably be renting to collage kids in GTO....


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## Haskins (May 21, 2017)

TundraGreen said:


> From the perspective of the owner, rentals in Mexico are different than in the US. Tenants have more rights; even squatters have rights if the place is left unattended for too long. If renters don't pay the utility bills, they automatically devolve to the owners.


That explains why most of the rentals I've been looking into provide utilities.


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## Haskins (May 21, 2017)

chicois8 said:


> Plus you would probably need an accountant to help with the Taxes you would have to pay and your visa would have to come with a work permit...As TG mentioned sometimes renters take not only advantage of owners, they take everything like light fixtures, door knobs, plumbing pipes and sometimes even the kitchen sink....And selling real estate can take years to sell...You will probably be renting to collage kids in GTO....


I don't think I would need a work permit since I'm a Mexican citizen already. I guess prospective renters would have to be thoroughly vetted. I was planning on buying homes in Guanajuato and San Miguel de Allende, and perhaps in Queretaro.


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## chicois8 (Aug 8, 2009)

So I guess you already have you RFC number, that makes it easier if you a citizen already...I do not need headaches so I just sold a beach house in Nayarit and my ranch in Dolores Hidalgo ....


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## Sirpete (Jun 25, 2017)

More questions to ask yourself:
How tied down do you want to be to these rental units?
Are you living in the same town so you can keep an eye on them?
Are you looking for short term rentals, that generate more income per month or long term, less income but potenially less problems.
And as chicois8 pointed out, reselling and take a lot of time. So can you hold it for the long term without need the money from it?

I can think of a lot more question but there is a start for you to think about.

TTFN
Kirby


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## Haskins (May 21, 2017)

Things I hadn't looked at. Do I want the headaches that come with rental upkeep? Perhaps I should look at other ways to invest, or receive a larger pension instead. Thank you all for the advice and perspectives. I'll be seeking more advice as we approach retirement and as we continue our quest to move to Mexico. Love this amazing resource!


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## RVGRINGO (May 16, 2007)

I suggest that you keep your resources safely in the USA, especially if you are dual citizens, and live happily in Mexico without worries or burdens of being a landlord. 
How much of a target do you want to be in Mexico, for anybody from opportunists to really bad guys? 
Best to live a low-profile life....no matter where.


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## Orfin (Sep 26, 2016)

$3200 a month is all you need in Mexico. Unless you need extravagant house, cars and dinning. Enough for a couple to live comfortably anywhere in Mexico. If you are simple people, you may even need $1000 less than $3200. Putting away the need for an extra $1000 after the $3200.

Some of the cheapest places to buy a home in USA are also the cheapest property taxes, +/- 1% tax per year. And you can get around $600 rents per every $50,000 spent to buy a house if you buy smart. They sell $50,000 houses renting for $600 a month and maybe some rent higher than that. Or getting a $150,000 buildng with 4 small apartments in it and still that averages out to about $600 rent per every $50,000 spent on building purchase.

Some places even cheaper in bad areas of town where a $30,000 house can rent for $600 a month, a lot of poor people on housing assistance have government pay the rent. It may sound lucrative but comes with added expenses that come with being in rough neighborhoods or catering to a single mother in the house with 4 wild kids who constantly rip the building apart. 

These considerations apply to Mexico. Yes you can find a small town for cheap property to buy, but even harder to rent in if it is not the right small town. A Small town like Sayulita is very expensive to buy in and maybe easy to rent out in the right season, but the rent to purchase ratio may not be so good. 
Taxes? no clue. Could they be as low as 1% a year? 

I looked at renting and Buying in Mexico. Renting seems cheap compared to even cheap cities in USA. But buying does not. So the rent to purchase ratio is not favorable in Mexico unless you get into a special niche like renting by the day, vacation rentals along the lines of hotels. Or even buy a motel/hotel. In Mexico, lots of Mexicans pay lots of money for hotels. The same Mexicans who consitently pay very little in rent. 
I looked at where i stayed a year in Mexico. 3 unit building in bad shape, selling for minimum $150,000. Renting for $300 a month per each unit when rented to foreign tourist. Mexicans who rented the same units as i did, they paid half the $300 price i paid. Maybe they got less furnishings and minor extras than i did. $900 a month total for the whole row of three units, and only during months with enough foreign tourists because Mexicans refuse to pay that kind of money for such a place. 

Same $150,000 can buy a 4 unit building that rents for $1800 or more a month in cheaper cities of USA. And this Mexican rental building i mentioned, is in bad phyisical shape with terrible water supply, terrible sewage system and more issues.
You can get a building in very nice shape asking $300,000 in decent parts of Mexico but will be lucky to consistently rent it out for $900 a month even in the booming tourist cities. 

The market of Realestate buying and selling is a wider gap apart from the market of renting, in Mexico when compared to USA. There are far fewer Mexicans who can afford realestate and even those that own lots of realestate are most often people who inherited it but not with the amount of money it takes to develop or upkeep the properties. Some who sit on Half a million dollars of realestate but can barely bring in $1000 a month to live off of. Most Mexicans inherited the land or house and making any money at all is worthwhile to them. Most mexicans cannot afford to buy. They just inherited if they do have property and some still live off of a few hundred dollars a month while sitting on hundreds of thousands of dollars worth of land they cannot sell or make into earning enough for them without ending up in serious debt. 

There are niches you can find but it is not easy for someone who is not experienced with mexico and you will never have it easy competing against local Mexicans for a spot in a gorcery store line, much less a spot in the market for very lucrative niches. And when you consider the root of a lot of mexican investment money, it is not always a friendly game of competition you will easily find yourself in.
Some invested Mexicans find themselves put out of business by extortionists. Entire booming tourists niches like Alcapulco, ground down to a trickle all because of the very unfriendly game of competition where very violent extortion comes in to play for a spot in the niche.

I keep my house in USA. I have it rented out and use a real-estate company to manage it for me(same company that represented whoever i bought the house from). 

They take 10% of the rental income but they find renters, handle the rents. I bring in my personal picks of repair and maintainances people and have the management use them in areas that they do best. Also management company brings in their own trusted people to do jobs my guys cannnot.
I get to keep the house, maintain it, have it managed while i wander the world, and if it were paid off with no mortgage, i would have enough money left on average to pay rent for myself in mexico or south America. 
Above all, even if no money made ,due to constant repairs, i get to keep the house and have it pay for itself and then have it as a home or an appreciating value asset to cash out or pass on to kids when i get too old to know what i have and don’t have. 
At this point, i am looking towards getting another property in USA to rent out in the same way, and at least as a long term investment. I do this in cheaper cities in USA, Ohio-Indiana area. But you have also other cheap places in the mid-west USA from Arkansas to Oklahoma and Kansas. All depends on whats closer to home. Even for expensive cities like NewYork, there is always upstate NewYork where houses are cheap. 
And being from an area where it is cheapest in USA, it looks absurd for me to buy in Mexico where even decrepit small towns list raw land for $150,000 in sizes that i can get in USA for 10% of that value and not have it come with title inconsistencies and rampant negligence, the unpredictable actions of government and extortion gangs, poor utilities and Zoning or environmental controls such as never knowing if a loud music bar is going to move in next door and blast every night until 3am, or a workshop with constant noxious fumes, or whatever else. And yes i have had to move and even lost rent due to paying to stay and finding noxious fumes out of a workshop venting into my window, loud restaurant bar music til 3am every night, and burning all kinds of trash with plastics, foam and toxic stuff, all next door, all in my 8 years of constantly wandering around less developed countries with a lower standard of poverty compared to USA. 

When USA or other foreigners in Mexico tell you about how cheap it is in Mexico, especially when it comes to buying property, they are probably from places like California or Seattle or any expensive city in USA. To them, a $300,000 Mexican condo or house is cheap, but in Mexico, it will never easily rent for $2500 a month like it consitently would in California and many expensive spots in USA.
I can buy the same type of house or condo for half that price or even less, in a different setting though, in parts of USA with excellent streets and utilities. And low taxes. And they will rent for over a $1000 a month which i can then turn around and use to pay rent on a condo in Mexico, near the beach somewhere where it would cost twice or more to buy, in comparison to what i bought in USA for income that gets used to pay rent in Mexico.

I feel more at peace in Mexico with renting out property in USA under paid Management, than i would being in Mexico dealing first-hand with property bought in Mexico for the purpose of renting out.
Entire Mexican towns or cities go to the pits unpredictably. Infamous Acapulco is an Example. And the factors behind it are a nationwide issue in Mexico. Which city next? And when ?

I watched people flock to Nicaragua for being so cheap and i even spent a year there myself, deciding it’s not for me. Even followed buyers and builders there who shared on youtube. Now all that is up in the winds of a Nicaragua today that is collapsing, hopefully for the better, but not without making a serious dent in the lives of people who have a lot of investment to lose. Been to 23 countries now and lived a year or more in at least 5 of them across 3 continents.

My consensus is, that after coming from the cheapest cost of living areas of USA, it is not worth it to buy in other countries. I split time between Mexico and Ecuador. I can rent as cheap as $200 without going into slum living, but the same town is hard to find property to buy for less than $50,000 outside of decrepit areas. And as more foreigners come, locals learn to not rent for less than $200 even in slums where locals make $200-$350 a month total income working 5 days a week for 8 hour days. They pay $20 for a room in a slum to survive. But a foreigner going there will hardly ever get quoted less than $100 for the same room. I stayed in a place that charges me $200 monthly for the same rooms Ecuador locals pay $100. Foreigners come and go and many tourist rentals are always listing for rent because not many stay longer than a month. I rent only 5-6 months and do so month to month just in case i get bored and need a new town. 

If you can keep your money elsewhere where you can still have it while you make gains from it, do that and live in Mexico to figure out what options can work for you. I am a nay sayer but that does not mean you cannot find something that works. But mostly, the rent to purchase cost ratio is not favorable in mexico when compared to cheap parts of USA.


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## Tye 1on (Jun 2, 2018)

That is really great information, thanks a ton for taking the time to write all that up. I was leaning toward renting in the Yucatan and renting out my house in SE Idaho, which will be paid off after the first few years, and feel that makes even more sense after reading your post.

Gracias!


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## Haskins (May 21, 2017)

Tye 1on said:


> That is really great information, thanks a ton for taking the time to write all that up. I was leaning toward renting in the Yucatan and renting out my house in SE Idaho, which will be paid off after the first few years, and feel that makes even more sense after reading your post.
> 
> Gracias!


Great information indeed! Thank you Orfin and RVgringo for your input. By the time we move we'll have 3 homes rented out in the McAllen area withought having to use retirement funds. I don't think we would need to add more rentals in Mexico. And it sounds like our pensions should be more than sufficient to cover the living costs, travel, and still have enough extra to continue to save. So much to think about at this stage in our lives. Thank you all for helping us along the way!


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## WintheWin (Jul 15, 2015)

A friend's dad opened up a series of "locales" or pretty much, office suites.

He bought a piece of land, built a 2 floor building, with 4 spaces per floor.

Has a mixture of businesses established already.

He said it was easier to work with than residential rentals because of renter's rights.


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## ElPocho (Aug 25, 2017)

Orfin,

That was simply brilliant!
Thank you for taking the time to write that.

Sent from my moto x4 using Tapatalk


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## Balboa (Nov 16, 2010)

Is the OP seeking rental return or value appreciation? 

My cousin has a rental property in Guadalajara, and he has horror stories regarding terrible tenants. Land values and real estate prices in Mexico are very high. As one person mention, "best to keep assets safely secure on the US side." Hard to argue that point.


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