Investing in property overseas can be a great way to diversify your assets and not only save you money – but make you money as well.
Real estate in Mexico City is a great investment. You can find property in this amazing city for dirt cheap.
In this article, you’ll find the best ways to invest in real estate as we discuss why you should invest in Mexico City real estate, where you should invest, and how you can invest.
WHY INVEST IN REAL ESTATE IN MEXICO CITY, MEXICO
Why should you invest in real estate in Mexico City, Mexico?
Over the course of this past year, the COVID-19 pandemic has hit many economies hard — Mexico included. You may find it surprising that despite COVID-19, it’s still a great time to buy in Mexico City.
The housing market has continued to be resilient despite the COVID-19 pandemic and a hurt economy. During the first quarter of 2021, housing prices in Mexico rose by around 1.2%.
Mexico’s growing middle class has kept the domestic housing market alive and foreign investors have also been able to continue to take advantage of great real estate deals. Foreigners outside of Mexico can buy property in the country with few limitations on where they can buy.
Mexico City is a rather large city — larger than New York City and Los Angeles. And unlike New York City and Los Angeles, you can find comparatively cheaper investment options and pay fewer taxes.
So indeed, real estate in Mexico City can be acquired at a great price. What our team considers to be dirt cheap real estate is property found in the city center of a capital city that costs $1,000 USD per meter or less.
Real estate in the center of Mexico City can be found at low prices from around $220 USD per square foot. Real estate investments cost around 130 USD per square foot outside of the city center.
LIVING IN MEXICO CITY
Mexico City is the capital of Mexico and the largest city in North America, with a population of over 20,000,000. As such, there are plenty of things to do in this large and vibrant city.
The weather in Mexico City tends to be mild and dry most of the year. Summer in Mexico is the rainy season, starting as early as May and lasting as late as November. This is when there are the most rainstorms and hurricanes. Still, there is lots to do in Mexico City, even on rainy days.
Mexico City is a great place for expats from the US. As one of the United States’ closest neighbors, Mexico will feel more familiar to US persons than many other countries.
While in Mexico City, you can enjoy shopping, amazing restaurants, beautiful architecture, and exciting events. In November, you can experience Dia de Los Muertos – a traditional holiday celebrating the lives of family members and friends who have passed away. This holiday is full of beautiful colors, decorations, and traditions.
WHY INVEST IN MEXICO CITY REAL ESTATE RIGHT NOW
Why should you invest in Mexico City real estate right now?
The housing market in Mexico City has grown in the past year and is predicted to continue to grow throughout this year. Now is a great time to invest in Mexico City real estate in order to get a great deal before prices rise even higher. Investing now can help you to see higher yields and get a greater return on your investment.
By purchasing Mexico City real estate now, you can begin to rent it out sooner and begin to earn income from your property. Every day that you wait is a day you are losing possible income.
It’s also a good time to invest if you are trying to create a Plan B. It’s important to diversify your assets and establish a backup plan just in case things in your home country go awry. Purchasing a home in Mexico City now will help you to be prepared for a future turn of events.
THE BEST NEIGHBORHOODS IN MEXICO CITY
Where are the best areas in which to invest in Mexico City real estate?
Like New York City, Mexico City can be divided up into boroughs. Mexico City is made up of 16 boroughs. Iztapalapa has the largest population of 1,845,486.
Amongst these boroughs are many different neighborhoods. Here are some neighborhoods in Mexico City that are great areas in which to invest and spend your time.
Polanco is an upscale neighborhood in Mexico City. This area has high-end restaurants and shopping. This area of Mexico City is home to exquisite cuisine and expensive fashion. It’s also a great place to enjoy theatre and art.
The residential area of Polanco is home to many of the rich and wealthy — including politicians, entrepreneurs, businessmen, artists, and celebrities. You can find both Spanish Colonial Revival style properties as well as newly built modern architecture.
Condesa and Roma are neighboring areas in Mexico City.
Condesa is a popular area in Mexico City for tourists and expats alike. Roma is located next to Condesa and is one of the oldest neighborhoods in Mexico City.
These areas have great restaurants, shops, and artwork. It’s home to beautiful street art, parks, boutiques, and cafes.
The streets in Condesa and Roma are lined with trees and beautiful brightly colored architecture. In 2019, interest in Roma properties increased by 47%. It continues to be a great place in which to invest and is home to many expats.
Coyoacan is a family-friendly neighborhood with a very low crime rate. It’s one of the oldest neighborhoods in the city. Parts of Coyoacan still have the original cobblestone streets from the 16th century.
Coyoacan is near Zocal, one of the most popular areas of Mexico City for tourists to visit. There’s plenty to do and see, including the Frida Kahlo Museum and Coyotes Fountain.
Sante Fe is a business district in Mexico City. This can be a great option if you are looking to purchase a building to rent out to a business or company — however, be aware of overinvestment into the business properties in Santa Fe.
This area is also home to three college campuses. This could be a good opportunity to rent out to college students. The residential area may provide even more opportunities to invest than the business sector.
Sante Fe also has the largest mall in Latin America. The residential area has luxury apartments and was less affected by COVID-19 than many other areas of the city.
Cuauhtemoc is a cultural and historical center in Mexico City. This area has many tourist attractions as well as government offices, shopping, libraries, and museums. The area is rather busy, and is visited by around five million people every day.
In 2020, Conde Nast listed Cuauhtemoc as their favorite neighborhood in Mexico City. Cuauhtemoc is a great area to enjoy restaurants, coffee, and art.
HOW TO INVEST IN MEXICO CITY REAL ESTATE
How do you invest in real estate in Mexico City, Mexico?
HIRING A NOTARY
A notary public is required in order to purchase real estate in Mexico. They will witness and certify the transaction. They can also help with other parts of the process.
Notary publics are in charge of preparing the title transfer documents. They keep track of all the documents that you’ll need to prove your ownership. The notary public will also help to calculate and collect taxes and fees from the sale.
When purchasing real estate in an offshore market, it can be helpful to work with a local lawyer who is familiar with working with foreigners.
STEP ONE: FINDING A PROPERTY
When it comes to buying real estate overseas, we recommend that you work with a local real estate agent or lawyer, rather than purchasing real estate from some website you found online.
If you purchase your real estate from a website, it’s likely that they’ll overcharge you or that the website will be in Spanish. One of the best ways to invest in real estate in Mexico City is to work with a trusted local real estate agent or a team of experts, like the Nomad Capitalist research and real estate team.
Many great investment opportunities won’t be advertised on the internet. Instead, you might find an even better investment opportunity by looking at signs on buildings as you walk down the streets of Mexico City in person.
Once you’ve found the property that you want to invest in, you can make an offer to purchase the property.
STEP TWO: PURCHASING THE PROPERTY
Once your offer has been accepted you’ll need to set a minimum 10% deposit in escrow rather than paying the money directly to the seller. Your real estate agent or lawyer can help you with this.
There are different arrangements for how you can get this set up. One option is to deposit your escrow in your home currency and then transfer it at the current exchange rate. This can ensure that you don’t end up with a lot of pesos you won’t use if the deal falls through.
You’ll want to ask your notary about title insurance. The notary can investigate the property’s title and make sure that the property is clear to be purchased. Title insurance isn’t always required, but it’s a great investment to keep you and your property safe.
STEP THREE: SIGNING PAPERS
Your notary will help you complete all of the necessary paperwork, and will draw up a purchase sales agreement. This, like all official documents in Mexico, is going to be in Spanish. If you would like your own attorney to look over this document, you’ll need to make sure they are able to translate Spanish.
If you are buying property through a corporation or trust, you’ll need to register the purchase with the Ministry of Foreign Affairs.
Once your paperwork has been filed, you can close on the property. You’ll meet with the notary, seller, and your own broker or attorney and get the deed for your new property.
The notary will then register your deed with the land registry office. This will make the property officially yours.
You’ll also need to pay a 2% transfer tax when you purchase the property.
MAINTAINING YOUR MEXICO CITY REAL ESTATE
If you are going to be traveling or living offshore, you’ll need to find a way to maintain your Mexico City real estate while you’re gone. Maintaining your property can be surprisingly cheap.
You’ll need to pay any utility bills and annual property taxes. Property taxes in Mexico are called predial. It’s a lot cheaper than property tax in most of the United States.
You can manage your property yourself or hire a real estate manager.
It’s also relatively cheap to hire a housekeeper to clean up your real estate investment ever so often. Hiring someone overseas tends to be a lot more affordable than hiring within a western country.
CHALLENGES OF BUYING MEXICO CITY REAL ESTATE
It can be challenging to find a property in the first place, especially if you’re just looking online. You may have more success using a local real estate agent or visiting Mexico City in person.
It may also be difficult to find renters for your property. The majority of people in Mexico prefer to own their homes themselves, and a much smaller percentage prefers to rent. However, this doesn’t mean that you won’t be able to find someone to rent out your property if you make a good investment.
Buying real estate in Mexico City can be a bit more challenging if you don’t speak Spanish. Spanish is the official language in Mexico. All official documents are in Spanish. This includes the documents you’ll need to sign to purchase your property.
OBTAINING RESIDENCE AND CITIZENSHIP IN MEXICO
If you are a citizen of the US, Western Europe, or another country that has visa-free access to Mexico, you can spend up to 180 days in Mexico visa-free. If you don’t come from one of these areas, you can get a visa to Mexico for only $15 USD.
To work in Mexico, you’ll need to pay a $155 fee to get a permission to work visa.
You can also apply for permission to work when you apply for temporary residency. There are multiple ways you can qualify for a temporary residency.
You can get temporary residency if you have a work opportunity in Mexico, marry a Mexican citizen, or make a real estate investment or invest in stocks or businesses.
To get temporary residency through real estate, you need to invest in a property worth 40,000 days of Mexico City’s minimum wage (around $233,473.)
Another option is to invest $123,330 into real estate and $86,000 into shares of Mexican corporations. You’ll need to keep the paperwork for your business and employ at least 3 people.
Temporary residence lasts one year but can be renewed for up to four years. There isn’t a minimum requirement for the amount of time you have to spend in Mexico to keep your temporary residence.
You can apply for permanent residence without ever having had temporary residence if you are related to a permanent resident of Mexico, have a pension/retirement and can provide monthly income, are seeking political asylum, have a Mexican parent, have a sibling who is a citizen of Mexico, or give birth to a Mexican citizen.
You can also apply for permanent residence after spending four consecutive years in Mexico under a temporary residency. If you marry a Mexican citizen, the time is shortened to two years of temporary residency.
Mexico allows dual citizenship, however, they don’t allow you to have more than two citizenships.
It’s relatively easy to get your Mexican citizenship once you’ve already received a permanent residency. To become a naturalized citizen of Mexico, you need to have been a resident of Mexico for at least five years. This includes your years of both temporary and permanent residency.
BUYING MEXICO CITY REAL ESTATE — FAQS
CAN FOREIGNERS BUY PROPERTY IN MEXICO CITY?
Yes. Foreigners can buy property in Mexico City real estate. There are few restrictions for foreigners who want to buy property in Mexico. Foreigners are not permitted to buy property within 31 miles of a coastline or 62 miles of a border unless they purchase the property through a trust through a Mexican bank.
IS MEXICO CITY REAL ESTATE CHEAP?
What our team considers to be dirt cheap real estate is real estate in the city center of a capital city costing $1,000 USD per meter or less. Property in Mexico City can be found for around $220 per square foot in the center of the city and less in other areas.
WHAT ARE THE ADDITIONAL FEES WHEN BUYING PROPERTY IN MEXICO CITY?
When you purchase property in Mexico, you’ll be required to pay a 2% acquisition fee. You’ll also need to pay a registration fee, attorney fee, and title insurance.
DO I NEED A LAWYER WHEN BUYING PROPERTY?
Hiring a trusted lawyer can be a great option when purchasing a property anywhere overseas. When investing in Mexico City real estate, you’ll want to work with a lawyer who is familiar with Mexican laws and speaks Spanish.
IS BUYING PROPERTY IN MEXICO CITY A GOOD INVESTMENT?
Buying property in Mexico City can be a great investment. The city is a large and beautiful place with plenty of residents and tourists all year round.
Investing in property in Mexico City is cheaper than investing in Western countries like the US. Not only can you find better deals when purchasing real estate, but you will also pay less property tax and rental income tax.
HOW MUCH OF A DEPOSIT IS REQUIRED WHEN BUYING MEXICO CITY REAL ESTATE?
An initial deposit for purchasing property in Mexico is going to be around 5% to 10%, though 10% to 20% is more common.
IS MEXICO CITY A GOOD PLACE TO INVEST IN PROPERTY?
Mexico City is a great place to invest in property. It’s a beautiful city to live in or a great place to own a rental. You can rent out to one of the over 20 million people in the city or even use your Mexico City real estate as an Airbnb for tourists.
IS IT A GOOD TIME TO BUY PROPERTY IN MEXICO CITY?
If you’re considering buying property in Mexico City, now is a good time. Real estate experts predict that housing prices are going to keep rising throughout the year.
When it comes to any type of investment, it can benefit you to get in early so that you can get a better return on your investment.
DO EXPATS PAY TAXES IN MEXICO?
Residents of Mexico will be subject to pay taxes in Mexico. Income taxes in Mexico for residents are taxed on a scale from 1.92% to 35%.
If you have a residential investment in Mexico, you’ll be subject to pay property taxes there. If you are renting out the property, the rental income generated will be subject to income tax.
Mexico will also charge you a capital gains tax when you sell your property if your property has increased in value.
IS THERE PROPERTY TAX IN MEXICO?
In Mexico, you’ll pay a 2% acquisition tax when you purchase your property. There is also an annual property tax called a predial.
Property tax in Mexico is relatively low, and you can get a 20% discount if you pay your taxes early. You can also pay your property tax in installments throughout the year.
IS THERE A WEALTH TAX IN MEXICO?
Mexico does not have a wealth tax.
MEXICO CITY REAL ESTATE: A GREAT INVESTMENT
Mexico City is a great place both to invest in real estate and spend your time. While every Nomad Capitalist plan is going to look different, Mexico City is definitely a place you’ll want to consider including in your offshore plan.
Real estate in Mexico City tends to have a beautiful architectural design. You’ll also be able to benefit from low taxes on your property and rental income.
The real estate market in Mexico City has been able to continue to grow despite the challenges of COVID-19 and economic loss. The resilience of this market makes it a very promising investment opportunity now and in the future.
If you want to know more about investing in Mexico City real estate and think our team can help, you can apply to work with our team of experts here.