Mexico is one of the most promising markets for overseas property investment.
It’s home to several well-known cities that, due to their favorable reputations, continually attract tourists, retirees, and digital nomads. This ensures that you will have little to no trouble when it comes to renting or selling your property.
Mexico places some restrictions on foreign property buyers that prospective investors should know about. You’ll need a fideicomiso (a Mexican bank trust) to buy real estate within 64 miles of an international border or within 32 miles of the coastline, an area known as the restricted zone. As the owner, you are the beneficiary of the trust.
Take advantage of the current strength of the U.S. dollar against the Mexican peso in these markets, which will provide you with excellent lifestyle and cash flow potential.
Where You Should Buy Property In Mexico
‘‘The Night of the Iguana’’ put Puerto Vallarta on the map back in the 1960s. Puerto Vallarta became synonymous with sun, beaches, excellent dining, and natural beauty.
Cities as recognizable as Puerto Vallarta hold advantages for property investors. Their public image is a main reason why anyone visits and invests in them in the first place. If you invest and decide to sell, it will be significantly easier to do so in a reputable area like Puerto Vallarta.
Visiting Puerto Vallarta is easy, with at least 20 nonstop routes from cities all over the United States and 15 nonstop routes from Canada.
Puerto Vallarta has many attractive neighborhoods that offer different characters and lifestyles and cater to the wants and needs of a broad group of people.
Investors keep choosing this branded city thanks to its high occupancy rates, excellent quality of construction, active rental market, vibrant lifestyle, and vast tourism infrastructure.
Mazatlán offers one of the best beachfront lifestyles that Mexico has to offer.
Visitors (your renters) flock to Mazatlán to enjoy its recently refurbished historic center. They are attracted by its delectable cuisine, charming plazas, live music, theater, and striking architecture.
Mazatlán also stands out for having one of the longest boardwalks in Mexico. This city is far from new; it is one of the country’s established beach resorts on the Pacific coast. However, it has frequently been overlooked by investors and second homebuyers.
But Mazatlán has experienced a property boom in the last couple of years, and its popularity is rising.
Despite the rise in property prices, homes here are still selling for less than what you could find in comparable Mexican cities. It’s cheaper than Playa del Carmen and Puerto Vallarta and offers similar lifestyle and property options.
Mazatlán is a predominantly Mexican destination, more so than Puerto Vallarta. This city is home to many expats, and English is commonly spoken. However, most visitors are from other parts of Mexico.
Another attractive factor for investors and visitors is the diversity of living options in Mazatlán. You can buy at the marina or in its bustling commercial area called the Golden Zone. You have options on a peaceful beach away from the hustle and bustle or a busy but well-kept beach. Golf and boating communities and quiet inland neighborhoods are also popular choices. You can find something for everyone.
Inventory in this city is tight, but opportunities are still available with room for investment growth.
Durango offers sunny and mild weather, an affordable cost of living, a clean and safe environment, and outstanding property opportunities.
This vibrant and modern city, set against a mountain backdrop, features a colonial center with stunning architecture reminiscent of Europe. Downtown Durango underwent restoration, and visitors can enjoy an area filled with trendy cafés, shops, bars, clubs, food carts, and live music.
In 2013, the Mexican government completed a 140-mile highway from Mazatlán to Durango, cutting the journey time between the two cities from eight hours to just over three. This turned Durango into an active domestic tourism market for locals trying to escape the coastal heat, as Durango has mild and sunny weather year-round. The highway goes all the way to McAllen, Texas.
The property market in Durango gets mostly Mexican buyers, and even though prices have been steadily rising over the last five years, this has helped to keep prices affordable.
I suggest that investors buy into colonial properties suitable for short-term rentals, as close to the town square as possible.
A healthy short-term rental market already exists in Durango, so you will have no issues keeping occupation rates up.
This city offers less of an active English-speaking expat community than Puerto Vallarta and Mazatlán, so if you plan on using the property, this is something to keep in mind. You will be in a more authentic Mexican environment, and it is a personal favorite for full-time living for several property investors I trust.
Durango has inexpensive properties, big-city amenities, and four mild seasons, and it’s a great lifestyle buy where you could also operate a successful rental property.
Where You Should Not Buy Property In Mexico
Tulum is one of Mexico’s iconic beach cities. Nowadays, this is considered a mostly luxury beach city, and its property prices reflect that. Although the tourism market is active in Tulum, your return on investment won’t be as high as in the Mexican cities mentioned above because of the hefty price you’ll pay to get into this market.
Investors can find great value properties elsewhere on the Yucatán Peninsula for much less.
Tulum also has a reputation for being a party destination, attracting a predominantly young and chaotic crowd. This will inevitably lead to a higher chance of property damage and noise issues, which can impact your property’s desirability.
Plus, despite higher property prices, the area falls short in amenities compared to other Mexican destinations.
Baja California boasts beautiful coastlines and proximity to the U.S. border, but it also has notable drawbacks that could impact your investment potential.
In some areas of Baja California, rapid development has led to an oversupply of residential properties that have saturated the market and can make a property harder to rent.
This market is also heavily influenced by the fluctuating demand from American buyers. Markets like Puerto Vallarta and Mazatlán benefit from a healthy demand from locals and foreigners and offer better long-term stability.
Baja California’s infrastructure and amenities are not on par with comparable investment markets in the country.
Baja California is Mexico’s driest state, with limited aquifers, so the region deals with a dwindling water supply. Freshwater shortages are common because of unsustainable groundwater extraction, poor water management practices, and climate change. This ongoing issue will impact the rentability of your unit and can give you a hard time if you want to sell.
Until next time,
Kathleen Peddicord
Founding Publisher, Overseas Opportunity Letter
