Should you buy a home in Los Cabos? If you are thinking of buying your dream home in Cabo San Lucas, San José del Cabo or points between, you first need answers to the myriad of questions that most expat first-time buyers have.
The first thing you should know is there is something for most everyone in Los Cabos. You can find one-bedroom condos for as little as US$75,000 or you could spend upwards of US$10,000,000 for a luxury ocean-front villa. And, there are a ton of options in between. New condos and homes are being built in virtually every part of Los Cabos. And there are a lot of resales on the market as well, over 1,200 listings on MLS, our real estate multi-listing site.
One sign that Cabo is healthy is the amount of luxury hotels and residences that are being built. Solaz, A Luxury Collection Resort; Montage; The Ritz Carlton Zadun, a Ritz Carlton Reserve property; Hard Rock; and, Nobu are some of the brand names that have arrived or are planning to arrive in Los Cabos within the next year. Additionally, our international airport is in the middle of a multi-year refurbishment and expansion, adding five new gates and a VIP lounge.
The bigger question is not should I buy, but what am I looking for in a home or condo here in Los Cabos? Do you want ocean, golf or a mountain view? Do you want to be closer to Cabo San Lucas or to San José del Cabo? Do you like privacy or do you want to be in a neighborhood with lots of activities within or close-by the community? Do you want beachfront or beach access? Do you plan to rent it out or live there year-round?
These are all questions to think about along with the basics, like how much do you want to spend and how large a home or condo are you looking for? A good real estate agent can be a really helpful person to engage with even if you are not quite ready to buy yet. They can answer questions about the lifestyle, the cost of living, the neighborhoods and communities and a lot more.
When we were starting to think about buying our home in Cabo, one of the first things we did was go online and look for the best realtors in Los Cabos. We decided on Engel & Völkers Snell Real Estate and then found an advisor who worked for them.
We started phone conversations about three months before we were even planning to be in Cabo. She answered our questions and ultimately set up multiple tours of homes and condos for us to view over our next few trips. Her advice and counsel were invaluable. I was so impressed that I decided to go work for EVSRE when we moved permanently to Cabo.
My husband and I had lots of questions and I’m sure you do, also. I’ve answered a few of the frequently asked questions below:
Q. Can non-Mexicans own real estate in Mexico?
A. Yes! Ownership of real estate in Mexico is via a Mexican land trust called a fideicomiso (fee-day-coe-me-so). The trust has a term of 50 years and can be renewed in perpetuity to allow for long-term control of the asset or to will the land from generation-to-generation.
Q. What is the history of the Mexican property trust/fideicomiso?
A. With the advent of the North American Free Trade Agreement (NAFTA), the Mexican government recognized that it was crucial to make foreign investment in Mexico safer and easier for non-Mexicans. Because the Mexican Constitution prohibits non-Mexicans from purchasing or owning real estate within 60 miles of the U.S. international border, or within 30 miles of the Mexican coast, an innovative and secure method of holding title was created. This method allows non-Mexicans ownership through a Mexican property trust called a Fideicomiso. This is a trust agreement, much like an estate trust in the U.S., which gives the purchaser all of the rights of ownership.
In order to gain the rights of ownership, the Department of Foreign Affairs in Mexico City issues a permit to the Mexican bank of the purchaser’s choice, allowing the bank to act as purchaser of the property. Essentially, the bank acts as the Trustee for the trust and the purchaser is the Beneficiary of the trust. The trust is not an asset of the bank; the bank simply acts as the Trustee to hold the trust.
Q. What is the function of the trustee bank?
A. Much like living wills or estate trusts in the U.S., the Mexican bank, or Trustee, takes instruction only from the Beneficiary of the trust (the purchaser). The Beneficiary has the right to use, occupy, lease and possess the property, including the right to build on it or otherwise improve it. The Beneficiary may also sell the property by instructing the Trustee to transfer the rights to another qualified purchaser, or bequeath the property to an Inheritor. The initial term of the trust is 50 years. However, the trust can be renewed for additional periods of 50 years indefinitely, providing for long-term control of the asset.
Q. What rights do I hold as a purchaser of Mexican real estate?
A. The purchaser holds the same rights as a property owner in the U.S. or Canada, including the right to enjoy, sell, rent, improve the property, etc. This is not to be confused with a land lease. The property purchased is placed in a trust with the purchaser named as the Beneficiary of the trust — the purchaser is not a lessee. If the property purchased is already held in a trust, the purchaser has the option of assuming that trust, or having the property vested in a new trust.
You can find out more answers to your questions here.
Los Cabos is a wonderful place for not just vacationing but for owning your very own piece of paradise. If I can answer any questions at all, please contact me.