Investments
The other latest HOT TICKET investment area is that of DISTRESS SALES and Under Market Opportunities, RIGHT HERE in Los Cabos and La Paz counties! Also, check for properties in Cerritos and Todos Santos under market. These areas are currently, and in the future, will be experiencing a high rate of growth. With the pesos to dollar exchange, it is also a good time to build!
There are numerous opportunities here in Baja California Sur for all levels of investment. Until the end of 2007, Baja California experienced a huge wave of passive and active investments unprecedented in the past by foreign investors. Now in 2008 and 2009, the economic crunch in the United States has indeed slowed sales in Los Cabos and La Paz counties. Over the past year the overall market, from random sampling studies done by this office, has been overall a stable market as far as prices, with actually a 0.12% price increase rate. Although sales have been slow, Sellers were holding fast to their price levels. Now, during the past few months, a small percentage of Sellers have reduced prices, some quite drastically. Our website, under PROPERTIES, lists under two categories current investment opportunities with below market values: Under Market Opportunities and Drastically Reduced.
In general, reductions in prices have been as a direct result of the current economic crisis in the US. It appears that the reductions are spurred by foreign owners who need immediate liquidity or who have gotten themselves in trouble in the US. A small percentage of the substantive reductions are Mexican owners, with varying reasons for a price reduction such as family illness or relocating back to the mainland to continue their employment in firms currently on-hold in Baja.
What can you expect for prices in Baja and in particular Los Cabos and La Paz counties?
Certainly, no one has a crystal ball that can give you exact dates and figures . Wouldnt that be nice! But, the overall consensus of experts in the field predicts, at this time, that the economic crisis in the US will bottom out sometime between mid- to late 2010. In addition, it may take some time for consumer confidence to rise along with the liquidity of funds and the stabilization of the US market to see brisk business again. The consensus also predicts a price adjustment overall in this market as well, from the standpoint of stagnant sales and market willingness to invest in foreign soil at prices now considerably higher than some parts of the United States. Overall, we will probably see an adjustment or 10-20% (20% in some market areas) less than current levels, BUT we will not see a crash, as was experienced in the US. Some of these adjustments are natural adjustments to reflect the supply and demand laws of the market.
Another reason why our market is stable, despite blanket US State Department Warnings: is that Los Cabos and La Paz Counties are still one of the safest places to visit and live in the world. Unlike the border towns and some hot spots in Mexico, our crime level is almost non-existent on a per capita basis. It is still safe to walk the streets, off-road, travel, but of course, using caution that comes from common sense, still a safe and beautiful place to live and work. (Would you walk the streets in the wee hours of the night, drunk, with money and jewels dripping from your pockets in any city in the world? Dont forget your brains at the border! Common sense still has value here too. The US newsmakers pick up these rare stories and make them into international incidences really! If you want that bicycle, dont leave it unlocked and unattended in your front yard .common sense always prevails, no matter where you are! )
Conclusion
In conclusion, price reductions of 30, 40 and 50% are still rare and excellent opportunities for an investor to enter the Los Cabos market at prices of 2004, 2005 and 2006, RIGHT NOW. See our website for current under market and distress sale properties. Ask us for market comps.
Why havent prices in Los Cabos crashed like that found in parts of the US?
As with the assumption by foreigners that Mexican real estate laws are the same as back home, another HUGE misconception regularly made by foreigners is that Mexicos economy and real estate markets are the same, as well. Nothing could be further from the truth. Although portions of Mexicos economy are completely dependant on US consumption, and the strength of the dollar, overall, Mexico has a much different economic system.
The first noticeable difference is that of mortgages. Mexico is not a mortgage based economy. A mortgage available to the general public is a fairly new concept, and in fact, is still extremely difficult to obtain. In addition, Mexican home loan interest rates are substantially higher than any mortgage found in the US. If you think a full-doc loan in the US is difficult, try getting a Mexican peso loan! What is that line in the classic Betty Davis movie? Hold on to your seats its going to be a bumpy ride! For the most part, 90% of Mexicans buy property in cash, or short term loans paid directly to the Seller who does not render title until the property is paid off, and those are not often offered. Cash is not king in the Mexican real estate market, it is the norm.
The second largest difference in our economic systems is the fact that not only is the Mexican budget balanced, but it has a huge capital surplus. With the United States facing a several trillion dollar deficit, Mexicos budget sits pretty in comparison.
In short, if you owe nothing on your property, you do not have the same level of desperation for a sale or to reduce your price or your monthly expenses as you would if you had a mortgage, and the necessity for huge price crashes are therefore less likely.
Why buy in Los Cabos as opposed to a foreclosed property in the US?
Almost daily, I here clients tell me they can currently purchase a foreclosed property in their community in the US or Canada for the same or less than a similar property in Los Cabos. I do not doubt that is true and have studied enough US real estate sources to verify their statements.
So, why put your money in Mexico as opposed to the US?
Well, it is not for everyone. That is true. And a distinction between a short term gain, long term investment. There is also a distinction between a vacation home and a retirement home, as well. These need to be clear in the buyers mind.
Although, we all expect Los Cabos and La Paz properties values to rise again after the current US situation becomes stabilized, it is doubtful the enormous fast, short term gains will be realized similar to those of the past ten years, in the near future. Appreciation is expected to be upward, but most probably at a slower pace. For this reason, and in this current economic climate, a fast windfall is not likely, except in the area of purchasing a distressed or under market property with a sufficient current large market reduction. Properties with 20, 30% or more current reductions will realize a positive investment value immediately and weather any overall market price adjustment well. Some properties may also be suitable for sustained income from rentals, as well.
Overall, a long term investment purchase is a smart move. This is especially true for retirement homes and retirement living. The cost of living in the United States, as opposed to Mexico, even Los Cabos, which is the second most expensive place in Mexico to live, remains a fraction of that of the United States. AND most economic analysts expect the cost of living in the United States to increase dramatically over the next two years.
In the areas of food, gasoline, medical care, insurance. property taxes, etc. there is no comparison between the costs currently in the United States and Mexico. As the baby boomers face retirement, and possible fixed incomes or the possibility of non-existence of the Social Security program to aid in their later years, cost of living is a crucial part of survival for retirees and baby boomers with impending retirement. As an example here are some comparisons (prices may vary between companies and values):
(Based on a home value of $160,000 US, 2001 Ford Expedition, Current Age 55, no seismic or flood coverage in US, seismic, flood and hurricane included in Mexico)
| United States | Mexico |
| Home Insurance Yearly Calif., Suburban $1200 | $800 US /yr |
| Car Insurance Value: $13,000 US Suburban Calif. $ 985 | $660 US/yr |
| Major Medical Age 55 Calif. $ 4380/yr | $1400 US/yr |
| Tomatoes per lb. (Food Prices Vary per season) $4.00/lb | $ 0.50/lb |
| Medium Shrimp $10.00/lb | $3.37 /lb |
| Hamburger Meat Lean 83% $3.99/lb | $2.26/lb |
| Wheat Sandwich Bread $3.99/ea | $1.20-2.00/ea |
| Avocados $1.00 each | $1.22/lb (4-6/lb) |
| Lettuce $ 1.50/head | $0.50 per head |
| Cereal / Lucky charms or fruit loops type / big box $4.50/each | $2.84/each |
| Hot Dogs 8/pack $3.00/each | $1.90/each |
| Oranges $3.00/ 1-lb | $3.00/5-lb bag |
| Apples $3.00/lb | $0.87/lb |
| Chicken per lb. whole $2.99/lb | $ 1.43/lb |
| Bananas $3.00/lb | $ 0.59/lb |
| Lunch Meat Turkey Breast or Roast Beef $5.00/lb | $ 3.53/lb |
| Eggs per dozen $3.99/doz | $1.50/doz |
| T-Bone Steak per lb. $ 5.00/lb | $3.53/lb |
| Average Private Doctor Visit $200 | $30 |
| Average cost of Antibiotic Ampicilin $30.00 | $10.00 |
| Water bill, modest/elite neighborhood $42.00/mo | $5.78/mo-$25/mo |
| Minimum wage labor (Los Cabos pays more) $64/day | min $15/day* Cabo Market |
| Average House gas bill $92/mo | $40/mo |
Areas where Mexico is more expensive than the some areas of the US include electricity costs, specialty and imported products, wine, alcohol.
Once your home is paid for, your monthly expenses in Mexico are a fraction of those in Southern California. This makes a big difference to a retired person on a fixed or limited income! Investing for the future makes sense in Mexico.
Added security to your investment:
Mexico now has enjoyed stable, long-term elected government terms, the benefits and guarantees from the NAFTA pacts, added to and guaranteed by the Mexican construction in the areas of the fideicomiso system for foreign purchases and your rights as a foreigner. Foreign visitors and migrants are constitutionally guaranteed the same rights as Mexican nationals, except to participate in the political arena, which is reserved for Mexican citizens only. If you are interested in receiving a copy of the Mexican Constitution, please write us at This e-mail address is being protected from spambots. You need JavaScript enabled to view it .
Prologue:
Whether you are interested in passive rental income, buying property for future appreciation value, want to develop, are looking for investment or retirement opportunities or want to become part of a consortium of investors developing here. We can assist.
As Los Cabos becomes more crowded and the prices increase, new areas of Baja California Sur are ripe for development and investment, as well. East Cape properties, the Pacific Corridor between Los Cabos and Todos Santos (and north) have opportunities. Although we have the lowest published beachfront prices on the Pacific, areas north of Todos Santos are the newest locations for savvy investors, as well as retirees seeking a quieter, more traditional Mexican lifestyle.
Most of these new investment areas are within 1 hour of an airport.
Commercial flights and private craft can fly into these smaller airports from an international airport or directly from the US/Canada. Truly, this new frontier is available to everyone for an hour or less in driving time, while still maintaining the charm and unspoiled beauty of the true Baja!
Commercial Opportunities:
Cabo San Lucas and San Jose del Cabo, as well as, the rest of the Los Cabos area are growing in leaps and bounds! Major retailers have come to our community and have opened multiple retail locations. Wal-Mart, Office Depot, Coppell and Leys ( major Mexican department store) have all built one or more box-store here. Other retailers such as Starbucks, Costco, Mega CCC, Soriana, Home Depot and CCC have already established a strong market share with the grocery/sundry trade. Our mall, built in 2001, has a strong and solid rental pool, without any major reductions from their first tenants! A new mall north on Highway 19 is under construction currently.
But in addition to these major market retailers, there is not only room for, but also a great need for more diverse market and service opportunities. Just about any trade, retailer or service profession is needed and welcomed. From printers to book stores, from food to textiles, from entertainment and family oriented franchises, franchise businesses, every facet of commercial growth is needed. Warehouses, industrial parks and rent based workshops are a needed commodity. Whether you plan to live in Cabo or wish to take advantage of unique investment opportunities, there are commercial properties and ventures available.
Cabo is no longer just a series of dusty fishing villages!
We have world class golf courses, every major hotel chain, 250,000 permanent inhabitants (and growing) and the largest middle class population outside of Mexico City.
In addition, with about 75 persons move into Cabo every day, the need for housing and apartments is also growing. Hotels are expanding and being built to keep up with the growing tourist trade, and no just the foreign tourists! Mexicans from all over Mexico, travel to and move to Los Cabos as well. In addition, we have over 18,000 American and Canadian full time inhabitants.
If you are interested in purchasing a business, land to build for your business, opening a factory, purchasing farm land, purchasing rental income property either a single unit or an entire complex, or investing in some choice development projects; CONTACT US. We have teams of professionals we can recommend and can assist you in your development as well as your real estate needs.
| < Prev | Next > |
|---|