La Riviera Buyer's Guide
The following article outlines the most common misconceptions about moving to Mexico and investing in real estate in Mexico, a go-to guide for you and everyone looking to own a small piece of paradise on the shores of the Mexican Pacific.
Puerto Vallarta and Riviera Nayarit have always been popular destinations among American and Canadian retirees looking for a more peaceful place to relocate and enjoy a relaxed, laidback lifestyle. Even when there are countless stories of success, Puerto Vallarta and Riviera Nayarit’s popularity and unquestionable reputation are sometimes overshadowed by myths involving the answer to the questions: Can foreigners own real estate in Mexico? And, Is Mexico a safe place to live and invest?
Although there is a lot of confusion about the matter, it is, in fact, possible for foreigners to own real estate in Puerto Vallarta and Riviera Nayarit through a “Fideicomiso” (or a Real Estate Trust). Puerto Vallarta and Riviera Nayarit are located along the Restricted Zone (which spans 50 kilometers along the coasts of Mexico and 100 kilometeRs across the borders) and is an area where foreigners are not allowed to directly own real estate (as stated in article 27 of the Mexican Constitution).
A “Fideicomiso” is an instrument that allows the foreign buyer to own real estate in the Restricted Zone through a bank institution. Basically a legal document in which the buyer becomes the beneficiary of the “Fideicomiso” and the bank lends its name, acting in the buyers best interest.
The institution holds no responsibility on the property and it does not become an asset on the bank’s books either. The bank can’t sell, depreciate or receive any benefits from the property. The foreign buyer or beneficiary has full control of the property, has the right to occupy it, enjoy it, lease it, improve it, add beneficiaries to the trust, sell it, and anything that can be done with Mexican real estate.
The “Fideicomiso” provides the foreign buyer with all the benefits of direct ownership and can be established for a 50-year period; that can be renewed for another 50 years. There are a few costs involved and can vary from one institution to the other, but usually consist of an initial fee and a yearly payment.
The Notary plays a more significant role in the buying process in Mexico than in any other country. He is in charge of reviewing all the documentation, making sure everything is in order, and certifying the real estate transaction, plus the Notario is the only one with the legal power to transfer the property title from the seller to you in the buying process. Besides, in Mexico, it is mandatory that all the real estate purchases are registered in the Property Public Registry and that is the responsibility of the Notario, as well as calculating and determining the taxes that must be paid for the transaction.
You might be familiar with the term Escrow, as it is a well-known concept in the United States and Canada. The concept of escrow has been adopted in Puerto Vallarta and Riviera Nayarit to add an extra level of security to the real estate transaction, and to the point that there are various professional escrow providers in the area.
Escrows in Mexico work the same way as in the United States and Canada, and in real estate, it is a financial arrangement in which both the buyer and the seller agree to incorporate a “third party” (the escrow agent or provider) into the purchase-sale process to temporarily and securely hold the funds until the transaction is formalized by the Notary. Basically, a middleman ensures that the buyer and seller do what they have agreed to do.
Agents at LaRiviera Group are very professional and knowledgeable about the real estate process in Mexico, plus they have access to the information and tools –including the local MLS’s– and are constantly training about new real estate reforms.
A real estate agent will charge the seller a fee for his/her services (usually a commission based on the final sales price) so it is best to use it, as you will have his/her assistance every step of the way.
There is no license for real estate professionals in Mexico so be sure the real estate agent you decide to work with is affiliated with AMPI (the National Association of Real Estate Professionals). David Moreno is an active AMPI associate and has completed the EC0110.01 certification granted by CONOCER (the National Council for Standardization and Certification of Professional Skills) as well as other courses over his more than 10 years of experience in the Mexican Real Estate Market.
AMPI is a private organization in charge of regulating the real estate activity in Mexico. Its members adhere to a code of ethics and are required to undergo frequent training and certifications. AMPI is the equivalent of the NAR in the US.
Real Estate in Puerto Vallarta and Riviera Nayarit is so varied and so are the prices, which can be advantageous for buyers and investors. Whether you are looking for a vacation property with beach access to spend the holidays with your family or an ocean view condominium to generate rental revenue, Puerto Vallarta and Riviera Nayarit offer a myriad of options to make it easy to find what you are looking for and at the price point that fits your budget.
Throughout Bahía de Banderas you can find real estate options that suit almost every budget, for example, on the north end of the Bay and Riviera Nayarit, you can find exclusive beachfront estates for sale with prices ranging from 1.5 million US dollars to 7 million US dollars. Whereas in downtown Puerto Vallarta there is a great variety of new modern condominiums for sale with prices ranging from 125,000 US dollars to 500,000 US dollars.
In other areas of Puerto Vallarta and Riviera Nayarit, you can also find golf fairway villas for sale at fair prices, as well as luxury marina view condos or homes for sale.
There is a recent trend among real estate developers and local real estate agencies in which their inventories are marketed at prices fixed in Canadian dollars or Mexican pesos.
For commercial purposes, prices are usually set in US dollars but it is important to note that when formalizing the transaction before a Notary, the prices are legally agreed upon in pesos.
Puerto Vallarta and Riviera Nayarit boast a great selection of real estate, from beachfront homes to mountainside villas and condominiums, and even golf fairway estates and river view homes and condos; there is pretty much something for everyone and for every desired lifestyle as well.
If you already have something in mind, you’ll for sure find it here, though it is advised to contact a local real estate agent to get their insight and to help you sort out the options.
Demand is always a constant in the Puerto Vallarta and Riviera Nayarit real estate market and for that reason, prices are always on the rise.
Even though the Mexican economy has not had its best moment, the Sociedad Hipotecaria Federal reported a 4.78% increase in house prices during the second quarter of 2019.
Traditionally beachfront properties have seen the strongest growth but appreciation works in favor of other types of properties as well.
In the same way that there are financing options available for Mexican nationals to assist them in acquiring a property, in Puerto Vallarta and Riviera Nayarit there are various professional mortgage brokers that have a long history of providing services for foreigners, and who work hand in hand with local realtors in benefit of buyers to accomplish their investment goals.
So if you as a foreigner are interested in investing in real estate in Puerto Vallarta and Riviera Nayarit, but you find it advantageous to do it through finance, there are alternatives available for you.
Mortgages and financing in Mexico work different as in the US or Canada, for instance:
There are many differences and similarities in this process when compared to your home country, so it is recommended to visit a mortgage broker in the Puerto Vallarta and Riviera Nayarit areas.
Before you decide to buy or invest in a property in Puerto Vallarta or Riviera Nayarit, consider that additional expenses are part of the real estate transaction and cannot be avoided. These are commonly called closing costs. Closing costs vary from one transaction to the other but are usually about 5 – 7% of the total purchase price.
The most common closing costs involve:
On top of this, you need to consider the cost of the Fideicomiso.
The Notario and your real estate agent can give you an estimate.
You’ve found the property you like, and your partner is excited about that new beachfront condo in Puerto Vallarta; now what?
The next thing to do is to present the seller with a proposal which is usually done in the form of an Offer to Purchase agreement. Your real estate agent will be in charge of writing the document for you and presenting it to the buyer.
This agreement should outline important details regarding the transaction, including but not limited to:
The offer to purchase agreement is a legal document even when not signed before a notary, and can include as many details or conditions you as a buyer consider important, as a professional property inspection for example.
Work with your real estate agent to determine what should be included in your offer to purchase agreement, it may vary depending on your situation.
Despite being a developing country, in Mexico, you can find first-class health services. Puerto Vallarta and Riviera Nayarit offer a wide variety of highly trained specialists; most are fluent in English and other languages, and top-of-the-line facilities that can be easily compared to those in the United States and Canada.
In the Puerto Vallarta and Riviera Nayarit area, there are at least 6 major hospitals, with a long history of offering high-quality care and services, and other specialized clinics (in hemodialysis, longevity, weight control, and plastic surgery, to name a few).
Puerto Vallarta and Riviera Nayarit do not fall behind when compared to other cosmopolitan destinations worldwide, offering all the services and amenities that a temporary or permanent resident could desire, and a little more!
Access to the most beautiful beaches, world-class amenities such as luxurious beach clubs and spas, fancy restaurants featuring one of the most wide-ranging offers of cuisine types and styles, shopping centers, supermarkets, cultural and recreational activities, and sports (such as golf and surf) are only a few of the highlights.
Puerto Vallarta and Riviera Nayarit’s residents and visitors benefit from direct flight connectivity to the major US and Canadian cities such as Los Angeles, Huston, Calgary, and Montreal.
Your hometown may be just a short 3 to 5-hour flight from Puerto Vallarta and Riviera Nayarit and, due to the demand, there is a high frequency of flights to these and other US and Canadian destinations, making it easy to travel back in case of an emergency or simply a quick family visit.
Although is not common in Mexico, a good piece of advice would be to get title insurance for your home purchase in Puerto Vallarta and Riviera Nayarit. Why? To protect your investment on the property and more so because this type of insurance will protect you from past occurrences, meaning liens, errors in the public records, encumbrances, among others.
Two real estate multiple listing services are available in the Puerto Vallarta and Riviera Nayarit area: MLS Vallarta and Flex MLS, providing a complete database of all the properties that are available for sale. It is good practice to visit their websites and get a general idea of what the market offers; as well you can find resources, articles, and reference information about the area.
The information in both MLS Systems is public, but it is advised to hire an experienced real estate agent, as they have access to more detailed tools and comparative market analysis, as well as the knowledge and expertise to guide you through a successful transaction.
You may find it unnecessary, especially with all the technological tools available in our modern world, where you can virtually tour any property for sale from the comfort of your home or have immersive experiences with the help of virtual reality, but the truth is there are many aspects you may miss if you do not conduct a proper home inspection.
A home inspector will examine the condition of a property and hand a report over to you with the findings. The content of that report will give you some insights and help you make a more informed decision regarding the purchase.
Living and owning real estate in Puerto Vallarta and Riviera Nayarit is a privilege you can enjoy. Still have questions about how you can own real estate in Puerto Vallarta and Riviera Nayarit, Mexico? Contact David Moreno at KW Luxury, he is ready to help you with all you need to know before you commit to a life in the Mexican Pacific.
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