TalkBaja.com » Baja Real Estate Advice / Discussion » Before you even think about buying property

After reading a few posts on the various real estate issues that can arise in Baja I am wondering why any foreigner would want to own real estate in Baja?

I'm just curious, not hating.

Originally Posted by bwall

After reading a few posts on the various real estate issues that can arise in Baja I am wondering why any foreigner would want to own real estate in Baja?

I'm just curious, not hating.

It's only a nightmare for the stubborn uninformed. That's not everybody.

IMO & based on my personal experiences.....if you do due diligence in advance, steer clear of Ejido land & only build on land you own rather than leased land, you can minimize the potential for problems down the line. I've personally bought 3 different lots in the La Paz area since 1999, built & subsequently successfully sold the first two properties/homes. As with anywhere, there are right ways & shortcut ways to buy property in Baja. I avoid the shortcut methods like the plague, despite the fact that the Mexican hoops are much more convoluted than what most of us were used to in our countries of origin; following local, state & federal codes, rules & laws to the letter doesn't leave a whole lotta room for anyone to get conned. I can't chalk up my personal experiences to sheer luck....one purchase possibly, but I prefer to believe 3 clean trouble-free purchases are because of due diligence.

Without any knowledge of the specific threads you might be referring to when you say "various real estate issues", I feel I'm kinda spitting in the wind in my response. There's always going to be some shyster looking to take advantage of the uninitiated babe in the woods in any country! And as is typical human nature, of course more horror stories are going to be publicized than are the good new stories!! If you could give specific examples of what "various real estate issues" you're referring to, I'm sure you'd get more topic-specific responses.....you rabble-rouser-you!

There's really only one good reason for buying real estate in Baja, and that's to live there. We bought property (Ejido land) regularized it, got title and EIS built a house and now enjoy living there more-or-less full time. We did follow all the rules - took a few years. We love living in our small town (Loreto) and meeting good new friends. We didn't consider this purchase to be an "investment", I think we own the most ill-liquid property in the Nothern hemisphere, but that's OK as we don't intend to sell it any time soon. I don't really like the people who think they are going to come down here and exploit the beauty of the area for personal profit - and it usually doesn't work out that way either.
We consider it a privilege to be able to live here.

I was mainly referring to other posts in the real estate heading!

For example:

Problems for Americans in Cantamar- Rosarito Beach
Woooosh

Wish i had known someone like Rumana
susanna

The Epic Rosarito Beach Federal Zone case of Tila Ortiz -vs- Alonzo Nava
Woooosh

2012 update on Ensenada/Rosarito land issues.
Woooosh

What is a national land title?
BajaGringo

How did an Irish family come to own most of Rosarito Beach?
Woooosh

Rancho La Costa Azul - Who really owns Rosarito Beach?
Woooosh

I read about Wooosh's problem with the woman who popped up out of nowhere and made a claim to some land. Wooosh built a very nice house on the beach (according to the magazine article he posted) with a Mexican national partner. And, I do believe that Wooosh is nobody's fool. But if it could happen to him .. . . . . Even though the claim was dismissed outright, what a PITA!

Additionally, I read about a year or two ago that SEMPRA Energy built a power station back in the 1990's and now after 20-some years there is a claim on it. YIKES! Perhaps ya'll know more about this and can provide some color?

If those things can happen to sophisticated entities, then that does has a bit of a chilling effect.

I know that land issues in Mexico and Latin America go waaaay back. And land distribution was a central theme in the Mexican Revolution. I believe that the Ejido system resulted from the Revolution?

My question was based more along the lines of 'why do you own in spite of the risks of a later claim occuring'?

There is no one reason why people move to Baja. In my case I had family here and an emotional attachment to the place I surfed 30 years ago. Most of the problems above weren't a problem when buyer were tripping over themselves to buy multiple investment properties here. Most of the 17 stalled condo project failed to have "completion bonds"; but when there is a line of buyers out the door in 2005- who thought they needed one? The biggest challenge is the lack of legal land titles. It's NOT against the law in Mexico to advertise and sell something you don't own, until you take the money (then it's too late for the buyer). The people giving up and heading back north have come to terms with the fact Mexico will likely not improve enough (economically and security wise) in their lifetimes to make staying worthwhile. That's a hard pill to swallow for most who have invested their life and savings here.

Here's a timely article: people trying to get their money back from being ripped off in Rosarito Beach by a project with no completion bond in 2005: 10News - Some San Diegans file lawsuit over resort development in Mexico - News Story

Originally Posted by bwall

I know that land issues in Mexico and Latin America go waaaay back. And land distribution was a central theme in the Mexican Revolution. I believe that the Ejido system resulted from the Revolution?

My question was based more along the lines of 'why do you own in spite of the risks of a later claim occuring'?

All the land in Mexico is National Land owned by the government. Every parcel of land must be purchased from the Secretaria de Agraria Reforma to have it transferred out of the National Lands and get you the brass ring: your National Land Title. If you don't see that title document in the paper chain for the property you are buying- walk away. That simple.

Originally Posted by ncampion

There's really only one good reason for buying real estate in Baja, and that's to live there. We bought property (Ejido land) regularized it, got title and EIS built a house and now enjoy living there more-or-less full time. We did follow all the rules - took a few years. We love living in our small town (Loreto) and meeting good new friends. We didn't consider this purchase to be an "investment", I think we own the most ill-liquid property in the Nothern hemisphere, but that's OK as we don't intend to sell it any time soon. I don't really like the people who think they are going to come down here and exploit the beauty of the area for personal profit - and it usually doesn't work out that way either.
We consider it a privilege to be able to live here.

Thanks for the feedback.

I have some follow up questions, mainly out of curiosity--I'm not questioning your decision(s).

What advantage does owning offer you specifically over renting?

Do you plan on passing your property on to your heirs? Or do you plan on selling it when that day comes? What is your time horizon? (If you don't mind me asking).

Do you still have a house/residence in your country of origin or have you moved full time to Baja?

Originally Posted by bwall

What advantage does owning offer you specifically over renting?

Other than land being an asset, not having a landlord is another one.
It's not the landlord, with whom one would typically develop a cordial relationship, it's the landlord's heirs that are the unknown and may not be quite so cordial.

Originally Posted by bwall

Thanks for the feedback.

I have some follow up questions, mainly out of curiosity--I'm not questioning your decision(s).

What advantage does owning offer you specifically over renting?

Do you plan on passing your property on to your heirs? Or do you plan on selling it when that day comes? What is your time horizon? (If you don't mind me asking).

Do you still have a house/residence in your country of origin or have you moved full time to Baja?

Happy to answer those questions,

Owning is always my preference if I am going to stay anywhere for a while. No sense making another person's payment for them. Also, this way I can make it anything I want without having a third party involved. I don't worry much about the land issues because we did our homework, jumped through all the hoops and got all the permits. Of course, you never know.......

Yes, we do plan on passing the property on to our kids if we still own it when we die. They (two kids) are the beneficiaries of our fideicomiso and, on the advice of our US estate attorney, we both wrote up Mexican wills listing them as our heirs. Will that all go smoothly when the time comes?? Who knows, but we hope so. We currently plan on living here for the next 5 - 10 years if all goes well, however we're not committed to anything either way. If we get tired of it sooner, we'll leave, if we still love it, we'll stay. Health will be a determining factor, we're both 60 something.

We do keep a house in South. Calif. It is the biggest part of our monthly expense right now, but we like having a home base and we do come up about 3 - 4 times a year for a month or so at at time. It would get old staying with kids, friends etc. When/if the real estate market picks up here, we will probably downsize.

Remember the saying, "never invest more in Mexico than you can afford to lose".

Originally Posted by Woooosh

All the land in Mexico is National Land owned by the government. Every parcel of land must be purchased from the Secretaria de Agraria Reforma to have it transferred out of the National Lands and get you the brass ring: your National Land Title. If you don't see that title document in the paper chain for the property you are buying- walk away. That simple.

Thanks for the info. I guess when you know that it doesn't seem as intimidating.

With the National Land Title do you own it into perpetuity? Or do restrictions appear over time?

Originally Posted by Woooosh

Most of the 17 stalled condo project failed to have "completion bonds"; but when there is a line of buyers out the door in 2005- who thought they needed one? The biggest challenge is the lack of legal land titles. It's NOT against the law in Mexico to advertise and sell something you don't own, until you take the money (then it's too late for the buyer). The people giving up and heading back north have come to terms with the fact Mexico will likely not improve enough (economically and security wise) in their lifetimes to make staying worthwhile. That's a hard pill to swallow for most who have invested their life and savings here.
Story[/url]

Yeh, I guess I've heard more about the uncompleted condo projects. I do know that that scam happens alot in the USA--particularly Florida. General Contractors are paid in full by the home buyer, but the subcontractors are not paid. The subs then file mechanics' liens on the house. The missing document is a Certificate of Residence. To get this the GC must turn in documents signed by the subs that they have been paid in full--or something like that.

A few years back I met a condo seller from the USA who was offering owner financing on a beautiful condo in Las Olas or Calafia (???). The place was beautiful, but I distinctly remember thinking that this guy was living his own personal nightmare--heavily invested and no way out.

Originally Posted by ncampion

Remember the saying, "never invest more in Mexico than you can afford to lose".

Ohhh...yeah. That's easy to say over a Twelve Pak, but when it happens, the dispossesed are the first to cry like babies. I never noticed that cavalier attitude being demonstrated out at Punta Banda during the expropriation.
I even knew people over at Rio Hardy who lost their shacks and hovels, and they took it pretty hard.
It takes an unusual frame of mind for anyone to turn the other cheek after being screwed out of their hard earned project....junk or otherwise, but, it's a fun thought.

Originally Posted by DENNIS

Other than land being an asset, not having a landlord is another one.
It's not the landlord, with whom one would typically develop a cordial relationship, it's the landlord's heirs that are the unknown and may not be quite so cordial.

Land is an asset--until it isn't. If you cannot find a buyer for your real estate then you have a problem, not an asset. If you die and your estate cannot find a buyer then your estate has a problem, not an asset. If you sell it at a loss you have a depreciating asset, similiar to a motor vehicle.

There is no shortage of land in Baja. As best I can tell, there is also no shortage of very nice rentals. I would expect the landlord to be ameniable as long as the rent is paid--why would he/she be otherwise?

Originally Posted by DENNIS

Ohhh...yeah. That's easy to say over a Twelve Pak, but when it happens, the dispossesed are the first to cry like babies. I never noticed that cavalier attitude being demonstrated out at Punta Banda during the expropriation.
I even knew people over at Rio Hardy who lost their shacks and hovels, and they took it pretty hard.
It takes an unusual frame of mind for anyone to turn the other cheek after being screwed out of their hard earned project....junk or otherwise, but, it's a fun thought.

Losing money is not unique to Baja. A few years ago I invested $200K in a registered investment promoted by a well recognized investment company (which will remain anonymous ). It was a certified Ponzi scheme and even after suing the Bank trustee, we'll be lucky to recover 20 cents on the dollar. got a nice tax loss however. Never assume an investment is secure. Never put all your eggs in one basket.

Originally Posted by bwall

I would expect the landlord to be ameniable as long as the rent is paid--why would he/she be otherwise?

Ummmmm....... Not necessarily so. Lots of stories about that also.

Originally Posted by bwall

There is no shortage of land in Baja. As best I can tell, there is also no shortage of very nice rentals. I would expect the landlord to be ameniable as long as the rent is paid--why would he/she be otherwise?

Since you have it all figuered out, why are you asking?

It is a renters market. Some Rosarito Beach Realtors have switched gears from selling real estate to renting. One niche market was on-line poker players who presumably can access accounts from Mexico. One Realtor was actually pursuing them.

Lot's of people bailed out of Baja. The expats who couldn't sell their homes eventually decided to put them up for rent. The glut of rental homes then drove rental prices down to what you see today. There is no market for selling a house. The $400 rents for Rosarito Beach became attractive to lower income Americans getting priced out of San Diego. Deportees just getting out of US jails settled here with their families. That brought street drug sales to once-quiet neighborhoods and more property crime as the number of customers grew. Bienvenidos.

After you move in, your good Mexican neighbors will talk to you after a few years of watching what you do and who you talk to from between the blinds; the deportee pushers will be your best buddy today.