A Complete Guide for Canadians Buying Property in Mexico

For Canadians who want to buy a real estate property in Mexico, now is the perfect time to do so. There are many advantages to investing in property in Mexico, and you'd see that these benefits outweigh the risks. Of course, there are also things you'd need to consider and look into before diving head first into it, and you'd learn about them all here, so read along. This article will provide you with all the basic information you need when it comes to purchasing a property in Mexico.

Why Purchase a Property in Mexico?

Mexico is a great place for Canadians to invest in real estate because it presents a low financial risk, thanks to the country's thriving tourism industry and its flourishing economy. That means the value of your property will increase steadily. And as long as you get a property in an area flocked by tourists, its earning potential is great.

Another attractive thing about Mexico is the dollar-to-peso exchange rate. This exchange rate is quite high, with 1 Canadian dollar being equal to 14 Mexican pesos. That means your money is worth more in Mexico than it is in Canada, and you can buy a property here for a fraction of the cost of buying a property in Canada. 

Property tax in Mexico is also low, so a property comes with a lower tax burden for you. 

Can Canadians Buy Property in Mexico Easily?

The Mexican constitution has made it easy for Canadians to buy land and property in the country. There are no more legal restrictions, just a few hoops you would need to jump through. But with a competent and reliable real estate agent working with you, it won't be too difficult to go through the process.

It's also important to know about Mexico's fideicomiso, which is a system that foreigners can set up in order to have indirect ownership of a restricted piece of land through a trustee. The trustee is considered the legal owner of the land, but the beneficiary of this trust maintains the right to lease, sell, or pass it to someone else.

The fedeicomiso has its advantages, especially as Canadians and other ex-pats who own land in Mexico would want to pass this asset to their heirs without the need for a Mexican will. Yet this system rests on trust and credibility, and many foreign investors may be wary of taking this kind of risk.

Factors to Consider When Buying a Property in Mexico

When you buy a property in Mexico, you will have to consider the following factors:

• The cost of property. Make sure you are looking into properties you can afford. And make sure that these properties are priced reasonably.
• The location of the property. Make sure you are buying a property in a relatively safe area. You may also want to get a property in a location with a nice ex-pat community or with a booming tourist industry. Other things worth considering are access to healthcare and health facilities, transportation systems, and access to modern amenities.
• The condition of the property. Inspect the property and make sure it is in good condition. Hire an independent surveyor to do the inspection for you.
• The legal status of the property. Make sure that the property has been legally registered in Mexico.

How Can I Purchase a Property In Mexico?

The steps in purchasing property in Mexico as a Canadian are pretty straightforward.

1. Pick a real estate agent.
It is always a wise idea to work and consult with a reliable and certified local real estate agent from the very start. Discuss your plans with them and tell them what you want and what your requirements are. You'd also want to understand the process of acquiring a property in Mexico.

2. Find the right property.
The right property means the property in the right location, with the right price tag. For a Canadian, the right location to invest a property in is somewhere with a thriving ex-pat community or somewhere with lots of tourists. If you intend to use your property as a vacation home, you'd want to be in a place where you could meet and interact with other Canadians. And if you want to use your property as a rental property, tourists would be the perfect market for it. The right price tag means that the property is well within your budget.

3. Make an offer.
Once you have found the right property and have mutually agreed on a price with the seller, make a formal offer. This is usually done through a “promissory agreement” (contrato de promesa), drawn up by your attorney.

4. Prepare a sales contract.
Your real estate agent or your solicitor can help you draw up a sales contract documenting the terms and conditions of the sale and purchase of the property. Sales contracts and other documents or paperwork involved in purchasing a property in Mexico will be written in Spanish. Experienced realtors will customarily provide you with an English reference copy. However, it is the Spanish ones that are the legally binding versions. So if you want to be doubly sure, you can ask a friend who speaks Spanish to take a look at the documents for you.

5. Pay your deposit.
You will be required to make a down payment for the property. This is typically around 5 to 10 percent of the sale price.

Or you can set aside 10% to 20% of the purchase price as earnest money in escrow. A third party will hold this in escrow. Whatever you do, do not give this amount to the seller. The escrow agent will release the money to the seller if all terms of the sales contract are met.

6. Set up your fideicomiso if needed.
If you are purchasing land or property within a restricted zone, you will need to set up a fideicomiso, or, if the seller is a foreigner, have the previous fideicomiso transferred to your name. Remember that the fideicomiso instructions are good for 50 years. So if you are transferring an existing one to your name, check how much longer it is valid for and renew when needed.

7. Get permission to complete the deal.
Your notary will help you complete your purchase. But first, you will need permission to do so and sign an agreement that says you will be bound by Mexican law in any real estate transactions.

8. Complete valuation and due diligence.
The property you're purchasing will be valued for tax purposes. Any further due diligence checks and surveys should be carried out at this point. Your notary is usually the one who will arrange all of these requirements.

9. Sign the escritura and settle outstanding costs.
The escritura will become your title to the property as soon as you have finalized your purchase and settled all outstanding costs and final taxes. Visit your notary to sign this escritura. The registration process for your property will start once you have made the final payment.

10. Your ownership of the property will be registered within three months of closing.
Your legal rights to the property you've purchased will be registered within three months of closing the deal.

Why Mexico?

Its booming tourism remains one of the most important sectors of the Mexican economy with over 38.3 million foreigners visiting the area (INEGI, 2023). Cancun and the Riviera Maya are one of the highest-concentrated areas for tourists, opening up an amazing opportunity to buy an investment property in Mexico.

The Fastest Growing Cities in the World

Playa del Carmen and Tulum have been growing exponentially over the past few years, attracting interest from the media and, in return, helping Mexico real estate become one of the most interesting investments available worldwide.

Real Estate Products for All Markets and Budgets

The interest in the Riviera Maya has been such that real estate projects have been developed to suit all types of investors and homeowners. The market expands from properties for millennials to baby boomers, offering from single-family homes to luxury beachfront apartments, and everything in between.

Put your money to work

Investing in the Riviera Maya is perhaps the smartest way to put your money to work. Its location, lifestyle, and growing economy have made it a hub for foreigners looking to rent vacation, short-term and long-term. Moreover, the concept of vacation rentals has been booming over recent years, and vacationers are looking for a more home-like experience in exchange for the all-inclusive resorts.

STATISTICS

Traffic in Cancun International Airport

The Riviera Maya continues to grow in popularity and as a result, inbound tourism (national and international) had an historic spike. Putting into perspective: in 2023 alone, 30 million inbound passengers were registered. That is 6.6 million more than pre-pandemic rates (2019). Showing a compound annual growth rate (CAGR) of 6.4% even after a global sanitary emergency. Placing Cancun International airport on the top 10 busiest terminals according to the Airports Council International (ACI).

Moreover, a newly launched international Terminal 4 at the airport has also opened up numerous new routes and flights ensuring a higher rate of tourism entering the region.

Hotel occupancy

Over the last four years the general occupancy in the Riviera Maya has fluctuated due to the sanitary restrictions imposed in many countries. However, Mexican borders remained open to tourism and in a matter of 3 years, the Riviera Maya climbed out of an economic trough in the most spectacular manner. Reaching close to 76% of occupancy in 2023, it regained little under 10% from pre-pandemic figures.

Tourist influx in the Riviera Maya

For investors looking to make a bang on their buck from vacation rentals, stats such as this one are great news. Cancun and the Riviera Maya have a high percentage of foreign tourists, which spikes their possibilities of renting out their vacation homes not only during peak seasons, but year-round.