INTERESTED IN MEXICAN REAL ESTATE?

If you dream about becoming an international investor but think that you’d need at least $200,000 to start, you will be pleasantly surprised with what the real estate market in Mexico has to offer. It is still possible to find undervalued properties in need of some TLC in less affluent parts of Guadalajara and Zapopan, and unlike in the United States, the blue collar areas of these cities are perfectly safe and very attractive to the buyers.

Even with the home loan market growing, and mortgages readily available and heavily advertised by the banks, there is still a lot of misunderstanding and mistrust among the lower and middle class, and therefore the majority of the purchase and sale transactions are exclusively cash deals. This is why the houses within the $20,000-$30,000 price range are extremely popular and are usually sold within days through newspaper ads and the word of mouth.

The small, two bedroom townhouses often need electrical updates, paint, flooring and a few kitchen cabinets, but if the materials are bought in local stores, they are much less expensive than in the States. Plus, the labor cost is minimal, which should not be surprising taking into consideration that the minimum wage in Mexico oscillates around $5 a day.

After the repairs, there are two basic exit strategies: sell the house for a profit of about $5,000 or rent it for about $250 a month unfurnished or $300 furnished. With so many out-of-town and international students, there is high demand for furnished bedrooms and apartments. It is customary to ask for a deposit in the amount of two month’s rent if the prospective tenant does not have a non-related cosigner but ultimately the decision is yours. The tenants usually take a good care of the apartment but you want to protect yourself by making sure that all the lease paperwork is filled out properly, signed, and notarized in a rare case that you do need to take them to the court.

Tomorrow, I will show you how you can profit in the Mexican real estate market if you can afford a bigger initial investment.