Wednesday, June 6, 2007

INTERESTED IN MEXICAN REAL ESTATE? PART 2

Yesterday, I showed you one of the ways of getting into Mexican real estate market with as little as $25,000 of investment money. Today, I'm going to tell you about a more advanced method that will only work in larger cities, such as Guadalajara, Mexico City, Monterray...

If your budget allows it, a very profitable way of investing in Mexican real estate is to buy remates bancarios, which are similar to REOs, or real estate owned (by the bank) in the United States. These are houses in the medium to high price range, which can be bought with a significant discount, but unlike REOs, they don’t come with a clear title.

Because of the laws favoring the homeowner, it may take years for the bank to get the house back from an owner who stopped paying his mortgage. In other words, despite lack of payment, the homeowner cannot be easily evicted and the banks leave this task to the new buyer. If you decide to get into this market, you have to be prepared to pay the previous owner several thousands of dollars for his cooperation, or in the case of tenants, wait until their lease expires.

Also, be advised to do thorough research before buying any remate bancario, and enlist the help of both a real estate lawyer and a local real estate agent. However complicated this may sound, keep in mind that the reward justifies all the effort, as the net profit on a $200,000 house could be as high as $30,000-$40,000 realized within a six months period.