Be Sure to check the Classified Ads for many Private Real Estate deals and long-term rentals.

In dealing with real estate purchases, remember that Mexico uses the metric system, not the archaic, U.S.-only, system of feet and inches. Land areas are measured in hectares (10,000 sq. meters). One hectare is approximately 2.47 acres, equivalent to 107,639 sq. ft., or the size of a square piece of land measuring about 328 feet on a side. One square mile is 640 acres in the old measure, 259 hectares in metric. As with all real estate, prices of land right on the beach are very high (allow around 1500 dollars/square meter as of January 2006), while land in the desert is around $20/sq.met.

Non-Mexican citizens should NEVER attempt to buy land without getting a "fideicomiso" (a trust) with a Mexican bank. Foreigners CANNOT own land in their own names within 50 km (31 miles) of the high tide line, or 100 km (62 miles) of the borders with other countries, such as the U.S.A. Land is, instead, purchased and placed into a trust fund with the bank that technically holds the title. The foreign purchaser is the owner of the trust and can direct the bank to manage it on his or her behalf. This process is very safe and secure. Be aware that the bank will charge a fee of around $500 dollars/year for the trust administration. New trusts come up for renewal (more fees) every 50 years. Note that bank trusts are only available for land of less than 2000 square meters area (a plot of land approximately 146.72 feet square) without special dispensation from the federal government. Many people also are advised to hold the land as a Mexican corporation, which does not need a fideicomiso. This is fine for commercial property where you can demonstrate a positive revenue stream to the tax authorities. It is not allowable for private housing that is for your own use. Go the extra mile and get a fideicomiso!

When considering purchase of property in a new development, you should be aware that there are four sets of permits that the developer is required to get from the government before you can be sure that the land is unencumbered and it is safe to purchase. The permits are known as F-1, F-2, F-3 and F-4. Only when the developer has the signed-off F-3 permit can he legally begin to sell. However, you cannot apply for a fideicomiso and you cannot close the sale until the developer has the approved F-4 permit. When you are dealing with the real estate developer or his salesman, it is wise to take a camera with you and get a photo of the approved F-3 or F-4 permit to avoid any misunderstanding before putting down any substantial deposit.

There are also a number of finance companies that are entering the field here that will get you a loan to buy property. Currently rates are in the 8-10% range and you should plan to pay them off as quickly as possible. In some cases, financial institutions in the USA will now lend money for houses in Mexico - however it will probably be dependent on the equity you have in your US real estate.

Be VERY cautious of developers who tell you that you can use your IRA money and convert it into a "self-directed IRA" which manages your Mexican property. There are stringent valuation and accounting procedures that must be employed to satisfy the IRS and if any errors are made, you could face very substantial penalties. These types of IRA deals are pushed mainly in the well-known tourist resorts such as Puerto Vallarta. Real estate investment trusts are set up to own an entire development. You then buy a share in this development - but you do not own a specific house or condominium. You should seek advice from a CPA and a tax attorney before even thinking of this method of investing your retirement savings in Mexico or any other foreign country.

Leases on land that are on Ejido lands ("collective farm land"), or in campos, can be legally written for a maximum term of 10 years. If you buy a house on leased land be aware that you can possibly be evicted if the owner of that land changes. There are many, many, cases on file with the U.S. Consulate in Tijuana of people having problems with Ejido land and leased land. Get a fideicomiso!