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Investing in real estate in Mexico is a safe investment and the best way to protect your money in times of crisis. If you’re interested in investing in real estate and don’t know where to start, here you’ll learn what it is, why you should, where the opportunities are, how much money you need, and how to do it.
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What is real estate?
To understand what real estate is, we must first understand the origin of the term, which comes from the English words “Real Estate” or “Estado Real,” which originally meant “King’s Property” and referred to the lands and properties belonging to the king. Over time, trade made some people wealthy, and then social movements emerged that changed the law, allowing people to buy land.
The term Real Estate has remained in the English language, but in Spanish we call it “real estate” which comes from the words “bienes” and “real” (real estate), where “goods” are merchandise and properties with an economic value and “roots” are related to the land, so real estate or real estate are properties that cannot be moved or changed to another location because they are attached to the land, for example: a house or an apartment, where the building is attached to the land.
Why invest in real estate in times of crisis?
Here are 15 reasons to invest in the real estate market:
1. A very safe investment
Real estate is a low-risk, highly profitable investment that provides recurring, passive income.
If you’re a foreigner, you’ll need a trust, which will further protect your investment, as it can’t be confiscated by any person or government, including Mexico.
2. Low interest rates
It’s the best time to apply for a mortgage loan, as the Bank of Mexico has cut interest rates by almost half since the start of the COVID pandemic, to just 4.75% on this date (November 2021), down from 8.25% in December 2018. As Winston Churchill said: “Never waste a good crisis.”
If you are a foreigner and work for a Mexican company in Mexico, you can also apply for mortgage loans from Mexican financial institutions.
3. Real estate is better than saving
Money loses value every year due to inflation, but real estate increases in value by up to 13% annually, and if you rent out your property, you’ll earn an additional profit.
4. Real estate is better than currency trading
Currency exchange or saving in foreign currencies like the US dollar and the euro can be a good business, but currencies devalue and are affected by inflation, supply and demand through the exchange rate, and also by the economy and policies caused by economic uncertainty and financial crises.
If you’re a foreigner and use a strong currency, you can benefit from the exchange rate to Mexican pesos, making property prices more affordable for you.
5. Real estate is better than other types of investments
Buying and selling real estate is a safer and more profitable investment strategy compared to investing in the stock market, cryptocurrencies, gold, and Cetes (Treasury Bonds).
There’s a lot of talk about investing in the stock market, and even advice about buying shares in large companies like Amazon, Tesla, and Facebook, but in reality, you’re risking losing your money because their shares are overvalued and subject to speculation.
Cryptocurrencies are also affected by speculation, there are many frauds and thefts, and several governments are developing their own digital currencies and banning the use of cryptocurrencies like Bitcoin. In the case of gold and Cetes, the gains are minimal as they are heavily affected by inflation.
6. Cash flow
You generate a steady stream of cash, extra income that feels like a second salary, providing security for the future and improving your retirement outlook.
If you are a foreigner, your earnings can be obtained in cash, free of declarations and taxes in your country.
7. High return on investment (ROI)
You can generate a return on investment of 8% to 13% per year if you decide to list your home for long-term or vacation rentals. The vast majority of developments offer property management services, where they will manage your property for you, or you can also manage it yourself with the help of platforms like Airbnb, Booking.com, Vrbo, TripAdvisor, and social media.
8. High capital gains
In addition to generating short-term profits, when you sell your property you’ll benefit from the increase in value that real estate experiences over time. You can earn an annual capital gain of up to 15%.
9. A flexible investment
It’s a short-, medium-, or long-term investment that you can leverage at any time. You can rent or sell it at any time to generate profits, or simply withdraw your initial investment; you never lose money.
There are also different real estate investment options. You can invest in houses, apartments, land, commercial spaces, offices, etc. Properties for sale include immediate delivery, pre-sale, resale, and Friends and Family properties, with different payment plans and financing options.
10. Tax benefits
You can reduce and deduct taxes when you buy, rent, and sell your property. Contact a real estate advisor, who will help you find the best property for your investment strategy.
11. Second residence
You’ll have another address that you can use at any time for living or vacationing, and you can also use it for retirement in the future.
12. Inheritable Investment
You can transfer your assets and rights through inheritance, donation, or transfer of inheritance rights during your lifetime, thus protecting your family’s assets.
13. Pre-sale and Friends & Family prices
You can take advantage of discounted prices during the pre-sale and Friends & Family stages. When properties go on sale before they’re finished, they’re sold at lower prices, called pre-sale prices.
Better yet, just before they go on sale, while the paperwork to begin construction is still underway, some developers offer a Friends & Family promotion where you can reserve a unit at prices up to 30% lower than when they’re finished.
14. You don’t need to be a real estate expert
The process is simple, but we recommend that you seek the help of a professional real estate agent, who will help you find the best property for your needs, desires, dreams, and budget, and will also guide you throughout the entire process.
15. Community development
Everyone wins because when you buy a property, you help develop the community, support the local economy, foster local growth, create jobs, and create opportunities for many people.
Likewise, if you rent your apartment long-term, you’re providing accommodation to a local family, or with vacation rentals, you’re providing lodging to tourists while they travel.
Where to invest in real estate?
The Riviera Maya continues to grow. It has become one of the best places to invest in real estate in Mexico. It is home to some of the world’s most important tourist destinations, such as Playa del Carmen, Tulum, Cozumel, and Cancún, all within easy reach. The area is home to the world’s leading hotel chains, airlines, and travel agencies.
Cancún International Airport is the airport that receives the most international travelers in Latin America. Thanks to this, millions of domestic and international tourists arrive each year. Furthermore, with the arrival of the Mayan Train and the Tulum International Airport, the flow of visitors will increase and the area will develop more rapidly.
Investors, both domestic and international, consider the Riviera Maya one of the areas with the greatest investment potential thanks to its excellent geographic location, easy accessibility, perfect climate, beautiful white-sand beaches, and turquoise waters, but above all, due to its high real estate demand, driven by tourists looking to rent vacation homes and locals looking for long-term rentals. This guarantees a high return on investment and significant capital gains.
Buying a property in Playa del Carmen, Tulum, and the Riviera Maya is a safe investment. There are currently more than 400 new developments for sale, primarily apartments, but also houses and residential lots.
Who invests in the Riviera Maya?
USA 33.3%
Mexico 23.6%
Canada 22.4%
Europe 13.1%
Latin America 7.20%
Rest of the world 0.40%
How much money do you need to invest in real estate in Playa del Carmen and Tulum?
Real estate prices in the Riviera Maya vary greatly due to location, size, and amenities. You can find apartments for sale in Playa del Carmen starting at 1.6 million Mexican pesos (approximately $76,800 USD) and studios for sale in Tulum starting at 1.7 million Mexican pesos (approximately $95,000 USD), up to beachfront apartments for $1.2 million or beachfront homes for $3.5 million.
Can you invest in real estate without money?
Yes, it’s possible! Mexican citizens and permanent or temporary residents who are working in Mexico and whose employer has registered them with the Mexican Social Security Institute (IMSS) or who work for the government can apply for a mortgage loan with Infonavit and Fovissste. These institutions offer programs that allow beneficiaries to apply for a mortgage loan that can cover up to 100% of the home’s value.
If you are a foreigner, you may be eligible for similar schemes in your country.
On the other hand, bank mortgage loans are another excellent option for financing up to 90% of the property’s value, and in this case you would only need to make a 10% down payment.
If you’re a foreigner, you can also apply for a mortgage loan from a Mexican financial institution. Ask us how!
In addition, all developers offer pre-sale payment options with down payments of 10% to 30%, with the remainder paid in monthly installments until the property is formally registered, typically over periods of 12 to 24 months.
As Andrew Carnegie said, “90% of millionaires made their wealth by investing in real estate.”
How to invest in real estate in Mexico?
It’s very easy, you can invest in real estate in the Riviera Maya in just 6 simple steps:
- Visit our real estate search page: https://plalla.com/en/bienes-raices/
- Search for houses, land and apartments for sale
- Read the information, see images, videos and floor plans
- Contact us to help you with your search and clarify any doubts.
- Visit the properties for sale physically or virtually
- Make an offer with the help of Plalla Real Estate
CONCLUSION
The benefits of investing in real estate are many. You’re making a safe investment when you buy a home or a lot because it will increase in value over time, generating a capital gain and a high Return on Investment (ROI), without having to risk your money in the stock market, cryptocurrencies, foreign exchange, or savings that will be affected by inflation.
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