1. Fideicomiso: The Key to Coastal Ownership

One of the most important things to know when buying property as a foreigner in Mexico is the Fideicomiso. This is a bank trust that allows non-Mexican citizens to purchase property within the restricted zones, which include areas close to coastlines and borders (such as Cabo San Lucas).

What is a Fideicomiso?
A Fideicomiso is a 50-year renewable trust that allows a foreigner to hold property while enjoying full ownership rights. Although the bank technically holds the title, you (as the beneficiary) can sell, rent, transfer, or will the property as you wish.

The Fideicomiso provides security and peace of mind for foreign buyers who want to own coastal properties in Mexico, such as beachfront villas or oceanview condos.

Learn more about Fideicomiso.

2. Restricted Zones and Property Ownership

Mexico’s Restricted Zone refers to areas located within 100 kilometers of a national border or 50 kilometers from the coastline. While this might seem like a limitation, the Fideicomiso allows foreign buyers to bypass these restrictions and legally own property in these sought-after areas.

For example, properties in Cabo San Lucas, located along Mexico’s stunning coastline, fall within the restricted zone. However, through the Fideicomiso, foreigners can confidently purchase real estate in this area and enjoy full ownership rights.

3. Legal Framework for Buying Property as a Foreigner in Mexico

Mexico’s legal system provides strong protections for property buyers, but it’s crucial to work with experienced professionals throughout the process. Here are a few key players you’ll want to involve:

A Qualified Real Estate Agent
Your agent will help you navigate the market, identify properties, and negotiate terms. Choose someone with experience in Mexico’s legal framework for foreign buyers, contact us.

A Mexican Notary Public
A Notary Public in Mexico is responsible for reviewing and authenticating all real estate transactions. They will ensure the property title is clear, verify documents, and make sure taxes and fees are paid correctly.

Legal Counsel
It’s also wise to hire a local attorney who understands property law for foreigners. They can help ensure you understand the terms of the Fideicomiso and guide you through the legal requirements.

4. Property Types and Investment Opportunities for Foreigners

When it comes to buying property as a foreigner in Mexico, you have access to a wide range of property types, including beachfront condos, luxury villas, and investment properties. Depending on your goals—whether it’s a vacation home, a rental property, or a permanent residence—Mexico has options that fit every budget and need.

Popular areas like Cabo San Lucas and San José del Cabo offer lucrative opportunities for property appreciation, particularly in neighborhoods like Pedregal and the San José Corridor.

Explore real estate listings in Cabo.

5. Property Taxes and Costs in Mexico

When purchasing property in Mexico, foreign buyers should consider the following costs:

Property Taxes
Mexico’s property taxes, known as Predial, are relatively low compared to the U.S. or Canada. These taxes are based on the property’s appraised value and are due annually.

Closing Costs
Closing costs, which typically range from 5-7% of the purchase price, include notary fees, registration fees, and the costs of the Fideicomiso.

It’s important to work with a local real estate agent and legal advisor to understand all the fees involved.

6. Financing Options for Foreign Buyers

While many foreign buyers opt to purchase properties in Mexico with cash, financing options are available. Some Mexican banks and international lenders offer mortgages to foreign buyers, though interest rates may vary. Additionally, some developers offer financing plans directly to buyers.

It’s essential to explore your financing options early in the process and consult a financial advisor to find the solution that best suits your needs.

7. Tips for Buying Property as a Foreigner in Mexico

Do Your Research
Take time to familiarize yourself with the area you’re considering, and work with trusted professionals who understand Mexico’s real estate laws.

Verify Property Titles
Before making any commitments, ensure the property has a clear title, and there are no outstanding debts or liens.

Understand the Fideicomiso
Make sure you understand the terms and conditions of the Fideicomiso, and consult legal experts if needed.

Use Trusted Professionals
Partner with qualified real estate agents, notaries, and legal advisors to ensure a smooth and transparent transaction.

Conclusion: Making the Dream of Buying Property in Mexico a Reality

Buying property as a foreigner in Mexico can be an exciting and rewarding experience. By understanding the legal framework, working with local professionals, and familiarizing yourself with the market, you can confidently invest in a piece of paradise. Whether it’s a beachfront villa or a charming condo, Mexico’s real estate market has much to offer.

Experience a smooth and stress-free home buying experience with us at Cabo4Sale Real Estate. You can reach us by calling any of the following numbers:

Local Mexico number: 624.172.0069/70

Toll-free from US and Canada: 1.888.738.8882

Cell: 808-280-2118

You can also send an email here to learn more about your San José del Cabo real estate options.

Yes, both local and international banks offer financing options for property purchases in Cabo. However, interest rates and terms differ significantly, so it’s beneficial to shop around and consult with financial advisors.

Mexican banks, as well as some American and Canadian banks with branches in Mexico, provide mortgage products geared towards foreign buyers. Additionally, some developments offer internal financing where properties can be bought directly from developers with flexible payment plans. 

Currently, the Cabo real estate market is experiencing strong demand, with prices steadily increasing due to the influx of international buyers. Properties near the beach are the most sought after.

In the second quarter of 2024, Cabo witnessed its third-highest dollar volume quarter, highlighting market vigor. Despite a slight decrease in the number of units sold, the market saw a 10% increase in dollar volume, demonstrating a robust appetite for high-value properties.

Luxury properties, especially those priced above $1 million USD, contributed significantly to overall sales. Sales in the $2 million to $5 million range represented 34.5% of the market’s dollar volume, confirming that Cabo continues to appeal to affluent buyers seeking premium investments.

Notably, the average house price jumped by 33.9%, while the median price increased by 81.7% from Q1 2024. As high-dollar volume sales dominate, investors consider these properties long-term assets. Explore current listings in Cabo.