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I recently spoke with the president of CBI, Joshua Rappaport, about how the industry has been performing and what types of products are available to foreigner looking to buy in Mexico. Joshua is originally from Canada but has been living in Vallarta since 2003. He’s been in the mortgage business since 2006 and has since then has helped many people obtain financing for their new home not just in Puerto Vallarta, but in other popular Mexican tourist destinations as well. Over the years he has worked closely with numerous Mexican banks to develop mortgage options that would work well for his foreign and national clientele.

Joshua introduced to me a new mortgage he is currently offering that has a 0% interest rate. How is that possible?

Well, although the rate may be 0%, there are other charges one will incur. The banks make their return through an upfront origination fee (built into the closing costs), a monthly administration fee, and a slight increase in the monthly payment each month. Some people might consider the monthly administration fee to be an interest rate which Joshua informed me, to works out to be about 3.25% annually, which is still a very good rate for a Mexican mortgage. Please note, that the law in Mexico requires mortgages to have life and property insurances, which are also paid via the monthly payment. The monthly payment consists of principal, insurance, administration and the update. Depending on the amounts, approximately 70-80% of the monthly payment is paid towards principal.

This particular mortgage product comes either with a 10-year term with a 35% down payment, or a 7.5-year term with a 50% down payment.

As an example, for a property purchase price of US$400,000, monthly payments would be US$3,076 of which $2,222 would be going to principal while the remainder would cover life and property taxes and the administration fee. There would also be a monthly payment increase of approximately $4.50-6.00 USD for every $100,000 USD in property value, so in this case, the monthly payments would increase by approximately US$20.00 each month. Although these amounts are presented in U.S. dollars, the loan and payments are actually in pesos.

Along with taking care of all the financing details, CBI also coordinates all aspects of the closing with the notary, appraiser, establishing the trust and escrow account, with total closing costs usually adding up to between 8-10% of the purchase price. However, approximately half of the fees can be financed, so the buyer needs out-of-pocket approximately 4-5% of the value of the property for closing costs.

To qualify for the loan the client needs steady, documentable income (tax returns preferable, although bank statements are a viable alternative for self-employed borrowers), and credit with a minimum 700 score. The time frame for approval is usually about 3-4 weeks once all documents have been submitted. And once approved, it takes about 1-2 months to close.

For more information regarding CBI mortgage products, contact them at (322) 222-1113 or [email protected].

I wrote about Costalegre a few months ago, but recently had to go to Manzanillo to visit family and friends, and so had the opportunity to see how things are progressing along this coastline south of Vallarta. The ride down on highway #200 and through Costalegre is a beautiful drive, but it can also be very slow, especially around El Tuito and again just north of Barra de Navidad. In these locations the road is narrow, very windy and can be quite slow if you get stuck behind large trucks. In between these two points the road is being widened and repaved, still with two lanes but now wide enough for a car to pull over a bit and allow someone to pass. Construction continues on the highway, while also widening some of the bridges, but at the pace they are going, they are going to be working on this road for some time to come.

I have travelled this road numerous times over the past 30 years, and although the highway has improved, there really haven’t been a lot of changes on this coastline. Careyes, Cuizmala and Las Alamandas are still there, but the hotels of Tamarindo and Hotelito Desconocido, are not. El Tucan has been shut down for many years now, but it seems the hotels around the bay of Tenacatita, such as Punta Sirena and Blue Bay Los Angeles Locos, are still quite active.

The hotel at Tamarindo is suppose to become a Four Seasons, although I’m not aware of how far along that project is. And there is supposed to be a new Luis Vuitton hotel (Cheval Blanc), going in near Chamela, but it was difficult to see any sign of activity from the highway.

Work has been going on for some time on building a new airport near Chalacatepec and the new mega-development of Xala, where there is supposed to be a One & Only hotel being developed. On my return I saw a large sign for this airport and project, with a brand new paved road leading off towards the coast. I took it and all was fine for a couple of kilometers. But then the road turned to a gravel and then finally just ended. No airport, no Xala, just a dead end. On the way back I met a rancher on horseback on the side of the road so I stopped and asked him what was going on. He said that the runway was there, (and I can see it on Google Maps), but not paved, and there is no easy access to it. And he wasn’t sure if they even were still working on it.

Progress on the airport seems to be like many of of the supposed projects taking place along Costalegre; whatever progress there is, it is slow going, and information regarding it is even harder to come by. Seems not a lot has changed over the past 30 years. Maybe that’s exactly the way many prefer it to remand, unspoiled, on this amazingly picturesque coastline.

For more than 25 years International Living has been ranking and rating the best places in the world to retire, creating their well-read and followed Annual Global Retirement Index. And for the past 14 years, Mexico has continually ranked in the top 10, with five first place finishes. For 2017 it was #1 again, narrowly beating out Panama and Costa Rica.

The criteria followed are: ease of buying & renting, cost of living, ease of obtaining residency, entertainment opportunities, healthcare, infrastructure, and climate. Out of a possible 100, Mexico ranked 90.9.

International Living states that, “questioning and assessment ultimately leaves us with a definitive list of the best retirement havens from around the world. All of which share the values that you can expect from an International Living approved retirement destination, while also maintaining aspects that make them stand out as individuals, meaning our index has a place to suit every taste.”

Those familiar with Mexico have known for years that it’s a wonderful place to live and retire, but it’s nice to hear it from an organization that puts its reputation on the line for being an authority as to what are the best retirement countries in the world. “Mexico has always offered arguably the easiest transition to expat life around: Low-cost, conveniently close, friendly locals and plenty of expats—Mexico offers an appealing balance of exotic foreign culture and familiar First-World lifestyle.” 

IL reports that even through crime and insecurity have been issues, it tends to be in certain areas of the country, and not the areas that are most popular with retirees. It is a big country, so what takes place in what area should be construed to take place in the whole country.

IL explains, “there’s a reason over 1 million Americans call Mexico home. The cost of living is great—expats report living well for as little as $1,200 a month—and has gotten even better with the weakening of the peso against the dollar in recent years. Your dollars now buy nearly 50% more pesos than they did just a few short years ago.”

The strong U.S. dollar has been a boon for Americans, although not as much for Canadians. And where in the past pesos prices would be quickly increased to follow the dollar, this has not occurred so that there are really some great bargains when it comes to restaurants, shopping and grocery purchases.

“The cost of living in Mexico allows me to live a fun life on my Social Security check,” says San Francisco-native Jack Bramy. Living half a block from the beach in Puerto Vallarta, Jack’s not scrimping. “There are great restaurants and tons of cool bars on the malecón (promenade). My rent is $575 a month for a two-bedroom apartment with a great modern bathroom and nice kitchen.”

IL concludes, “Mexico isn’t perfect—no place is. But its flaws pale when weighed against the vividness of life here.”

There is growing concern in Mexico as to what may happen if president-elect Donald Trump stands firm with his pre-election promise to deport millions of Mexicans from the United States. It would involve a substantial number of people returning to Mexico looking for jobs, in an country whose economy is already being challenged at numerous fronts.

It was recently stated, however, in the Real Estate Institute’s 2017 annual Emerging Real Estate Trendsreport, that one of their primary concerns for next year in the U.S. will be labor scarcity. And one of the reasons given for the shortage is because of the deportation of hundreds of thousands of Mexican immigrants by the Obama administration.

The report states that, “We do not have to wait to feel the effects on real estate. Our interviewees are telling us that they feel the pinch right now, and they expect it will get tighter over time. A multifamily housing specialist says, ‘Labor availability and shortage will continue to have a significant impact on the market.’”

“The shortage ranges from laborers to more skilled labor. This is pushing up the development time on projects and is cutting into returns. The shortage of labor has slowed the number of units being delivered to markets and may have helped prevent overbuilding in 2016. Executives for a firm intermediating offshore wealth into the U.S. real estate market note that they see ‘five-to-seven-month construction delays due to labor shortages, while costs are inflating.’ “

The causes of the labor shortage are many, but it is suggested in the report that the “clampdown on Mexican immigration alone reduced the labor pool by several hundred thousand construction workers.”

Mexicans make up a good proportion of the workers in the construction industry. So if the industry is reporting a shortage of skilled workers, and Trump intends to deport millions of Mexicans (many who work in construction), then who is going to help build the $500 million in infrastructure projects that Trump has also promised, when the unemployment rate is already at historic lows?

Trump is in the real estate development business, so surely he must realize how many construction workers are Mexican and that the industry is already suffering from a shortage of workers, not a glut.

He may need to rethink his deportation plan if he wants to move forward with improving America’s infrastructure, as it may be difficult to fulfill one promise that will certainly jeopardize is ability to fulfill another.

A recent article in the New York Times entitled As Markets Waver, the Rich Park Money in Luxury Homes, suggests that there is an increasing interest by affluent Americans for a second (vacation) home, and for many that may mean outside of the United States. Mexico has traditionally been a favorite destination for both Americans and Canadians, because of its close locality to major city and markets, and for many other good reasons as well.

NYT staff writer Kerry Hannon states that, “While owning residential real estate is typically part of a diversified investment portfolio, what is different in the last year or two is the role the uncertain economy is playing in making purchasing decisions. Many high-net-worth investors are plunking cash in a second or third high-end residence as a safety net, stemming from concern about a wide range of economic and political factors. These include the possibility of rising interest rates in the United States, China’s slowdown, low oil prices, conflicts in the Middle East and the reality that equities have been lethargic and bonds have floundered in a bear market. People with money are keen to diversify it beyond the U.S. stock market in particular. A vacation or second or third home in a sunny Shangri-La is an increasingly appealing option. It’s a hard asset that doubles as a lifestyle enhancement and that cushions the buyer from any shocks U.S. markets may be in for.”

U.S. stock markets are at all-time highs, so many may be seeing this as an opportunity to take out some of their gains and further diversify their portfolio, while also obtaining they can use and enjoy with their families.

Hannon continues, “While most ultra-high-net-worth individuals opt for a second or third home in the country where they reside, an increasing number of people with net assets of more than $30 million are buying homes in other countries, according to a 2015 report by Wealth-X and Sotheby’s International Realty. International homes account for 16 percent of non-primary ultra-high-net-worth residences, compared with 11 percent in 2010. The middle-market buyers are spending $250,000 to $500,000 on single properties, but high-net-worth individuals are spending $1 million or more in many markets…”

These are market price ranges where Puerto Vallarta and Riviera Nayarit currently show significant value. The $250,000 – $350,000 price range has the most activity in recent years, and the current inventory offers plenty of options with city, golf, marina, hillside or beach locations. For the over $1 million market Punta Mita and the north shore of Banderas Bay has recently seen a significant upturn in activity and realtors and agents, from the leads they are receiving, are predicting that it will certainly continue into the upcoming high season.

Punta Mita, located near Puerto Vallarta on the most northerly point of Banderas Bay, received a very big boost this week from Forbes, with a lengthy article by luxury experience writer Jim Dobson. The article, entitled, The Future of Punta Mita, the Secret Retreat for the World’s Top Tech Billionaires, portrays the luxury resort destination as a favorite of many in the tech industry, with several executives from companies such as Apple, Yahoo, Amazon and Qualcom, as being homeowners within the development. The article also emphasises the substantial investments of Bill Gates, through his company Cascade Investment Group, which owns the Punta Mita Four Seasons hotel and recently purchased a second hotel development site within the development that may end up being a second Four Season hotel, though geared more for adults rather than families.

Punta Mita does seem to have the interest of tech executives, as it is a only a direct, three-hour-plus flight from San Francisco bay area to Vallarta, and then a just a short drive to the most northerly point of the bay. As the managing director of Punta Mita Andrés Rossetto says, “Some homeowners who own tech companies in the Bay Area have joked that it is often quicker and easier to get to Punta Mita than driving to Lake Tahoe for weekend getaways with the family.”

Punta Mita has, for more than five years now, hosted the Mita Tech Talks, a two-day conference (scheduled for February) that unites people from Silicon Valley and Mexico to discuss tech industry initiatives and forge relationships. The conference has proven to be instrumental in building recognition for Punta Mita with the U.S. tech communities, especially around San Francisco.

And from recent conversations with a few real estate agents in Punta Mita, interest of tech executives has increased in recent months, with even the recent Trump win seeming to play in favor for further interest in the resort for serious real estate buyers.