Reducing Uncertainty When Buying a Home In a Foreign Country
When buying a home in Mexico (or in any foreign location for that matter), there are certain things you want to avoid doing.
The uncertainty of purchasing in a foreign country can be simultaneously exciting and intimidating. To help subdue this uncertainty, here are five tips from the Vivo team on how to protect yourself from the common mistakes we’ve seen home buyers make during our 30+ years of combined experience talking with people just like you.
Failing to research the developer and owner of the property
Businesses (including real estate developments) are run, managed, and operated by people. In addition to researching the development company, be sure to research the individuals running the company. Speaking with team members involved in the project will give you a feeling for their character and values.
When buying a home in Mexico, along with clarity on the direction of the development, be sure to get peace of mind by getting to know the people involved to ensure your investment will be in good hands. Check out our About Vivo Resorts page to learn more about developer Cary Mullen.
Not understanding the business model of the development
Find out the financial structure of the development. Is it leverage or cash-based?
Leverage-based developments are financed from creditors and built without cash raised from the sale of property. There is a risk of property sales not meeting expectations and cash-flow not matching the ability to pay creditors. Construction becomes contingent on selling the project, and if sales don’t meet expectations, initial investors may lose their capital or have to wait indefinitely until additional financing is secured.
Cash-based developments raise money for construction from pre-sales of the property. Timelines for commencing construction can be less certain as minimum cash requirements must be met prior to breaking ground. However, once started, cash-based developments are less susceptible to issues caused by market fluctuations or recessions.
Property ownership rules for foreigners are different depending on the country. Unfortunately, there is often as much misinformation circulating on the Internet and the media as there are valuable resources for understanding your options. When buying a home in Mexico, talk to the developer to understand:
- How the transfer of ownership is structured
- What fees are associated with ownership
- And what happens if you decide to sell down the road
Don’t be shy about asking for references from other owners as the developer should have nothing to hide.
Not considering who will manage your property when you are not there
Purchasing a second home is an opportunity to experience your ideal lifestyle but it can become a hassle if you do not consider how your home will be maintained and managed while you are not there. When buying a home in Mexico, don’t let it become your second or third job; explore maintenance and / or management options as part of your research prior to purchasing. At Vivo Resorts for instance, we offer a wel-managed vaction condo rental program, allowing vacationers to book a vacation at Vivo Resorts through the Vivo Vacations website.
Not understanding the annual weather patterns
When you are visiting your vacation home you want to be able to maximize your time by participating in the activities you enjoy. Inconsistent or unpredictable weather during certain times of the year may limit your options.
Naturally, if you love to ski, you are going to want consistent snow during the winter. Alternatively, if you’re looking for a locale with sunshine and warmth you’ll want to find out what the “rainy season” typically looks like, and if hurricanes are a common concern.
Do not get caught in the trap of assuming the weather you experienced during your one holiday in the area is an accurate reflection of the weather over time. Start by researching historical weather patterns and pay attention to what the local meteorologists report. If you are considering buying a home in Mexico in Puerto Escondido Oaxaca, check out this page on the annual average weather in Puerto Escondido.
Failing to meet members of the community
Taking time to meet the people in the community is an often overlooked factor when purchasing in a foreign country. Your neighbors are the people that you will likely see day-to-day and are also the unofficial guardians of your property when you are not around. Would you be comfortable leaving your doors unlocked or personal belongings unattended for a short period of time? Can you imagine yourself in this community building new friendships, lasting relationships and new memories?
No matter how much you research, a little uncertainty is part of the process and adds to the excitement of purchasing property in a foreign country.
Do not get stuck in the infinite cycle of research. Learn from the mistakes of others but remember you are seeking to make a change in your lifestyle and at some point you are going to have to accept some risk then take a leap of faith.
Before buying a home in Mexico, jump on a plane, experience the location for yourself, and commit to making a decision one way or another. To learn more about Vivo Resorts in Puerto Escondido, check out our Stay and Play page.
Want to Know More About Vivo Resorts
Vivo Resorts is a private gated beachfront community on the Pacific Coast of southern Mexico. To learn more about Puerto Escondido in Oaxaca, or about Vivo Resorts, please call us at 1-888-236-2876 (toll-free from the USA or Canada).
Learn more about Vivo Resorts on social media!
For additional tips about buying a second home in Mexico read – 5 Questions to Ask When Buying a Second Home in Mexico