August 30, 2025 • 29 mins
In this follow-up episode of Echando Raíces, we uncover the additional essential pillars for investing smartly and securely in real estate in Playa del Carmen or anywhere in the world for that matter: legal certainty, legal security, and financial transparency. Whether you’re a seasoned investor or exploring your first property purchase in Mexico, this episode is packed with expert advice on verifying property titles, understanding the fideicomiso system for foreigners (trust), navigating transaction timelines, identifying hidden costs, and debunking the myth of “guaranteed ROI.” Join us as we equip you with a practical investor toolkit to avoid costly mistakes and make confident decisions in one of Mexico’s hottest real estate markets.
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Episode Transcript
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(00:00):
Welcome to the Deep Dive.
We're the show where we dig intostacks of insights, articles,
real world stories, and um,basically untack it all to give
you clear, actionable knowledgeon topics that really matter.
And today, we are plungingheadfirst into the, well, the
pretty alluring world of realestate investment.
Specifically, we're looking atone of the most vibrant spots
(00:21):
out there right now, gel,Carmen, Mexico.
I mean, you probably picture itright, the dream.
Turquoise water, white sand,tourists everywhere, and that,
you know, that promise of yourproperty going up in value,
making you money, owning a pieceof paradise that's maybe an
escape and an income stream.
But, uh, here's where the dreamgets real and where our deep
dive mission kind of kicks in.
How do you navigate thisexciting, but let's be honest,
(00:42):
really competitive market tomake sure your investment is
actually.
Good.
How do you avoid the pitfalls,the costly mistakes that well
could turn that dream sour?
Exactly, and that's what we'rehere to unpack today.
This deep dives are reallydesigned to arm you the
listener, with the essentialknowledge you need to make
properly informed decisions inthe Mexican market.
We're gonna break down theabsolute must haves,
(01:03):
understanding legal certaintythat's about the property
itself.
Then ensuring legal securitythrough the whole buying process
and crucially demanding fullfinancial transparency from
everyone involved.
We've gathered insights from,uh, seasoned real estate pros,
people who are actually in thismarket day in, day out.
So this isn't just theory, it'spractical stuff you can actually
(01:24):
use drawn straight from theirexperience.
Think of it as your roadmap forinvesting safely in playa.
Okay, great.
So let's dive in, starting withwhat has to be the absolute
first step for any investor?
Anywhere really, but maybeespecially in a hot market like
Playa, establishing the, uh,legal certainty of your
investment.
We hear terms like title deeds,but what does legal certainty
(01:45):
really mean down there?
Right.
Legal certainty.
Um, at its heart, it's all aboutthe property itself.
It's fundamental legal standing.
It means checking like beyondany doubt that the property has
all the essential legalpaperwork lined up.
Yeah, we're talking thefoundational stuff, the public
deeds.
These are the official notarizeddocuments that prove who owns
(02:05):
it.
And critically, these Ds have tobe properly registered in the
Public Registry of Property andcommerce.
Okay.
The public registry, yeah.
Think of it as the officialgovernment record keeper.
It's where every property isformally listed.
Who owns it now, pasttransactions.
It's whole legal history.
It's backed by the government,by an institution that's
paramount.
(02:26):
It's your solid proof ofownership and a huge piece of
that legal certainty.
Something that sounds reallyimportant is making sure the
property is free of liens.
Can you break that down?
What does that mean for aninvestor and why is it so
non-negotiable?
Oh, absolutely.
Non-negotiable.
Yeah.
Free of lands means the propertyis completely clear.
No legal claims, no debts, norestrictions hanging over it.
(02:47):
That would stop you from buyingit, selling it, or, you know,
using it.
This could be anything from anunpaid mortgage, uh, a seizure
order from a creditor, maybe anongoing legal fight over
boundaries or.
Inheritance.
Hmm.
If a property has liens, it'slike, well, it's like buying a
car with a massive, hiddenengine problem.
You can't really own it freely.
(03:08):
Right.
You're stuck.
Exactly.
You can't easily sell it.
Maybe you can't even rent it outproperly without major
headaches.
The good news though, is that inMexico, checking this is fairly
straightforward.
Oh really?
Yeah.
The public registry issuessomething called a certificate
of no liens.
A certificate of libertad degravamen.
It's an official paper statingclearly if there are any claims
(03:30):
against the property, any decentlawyer or advisor will make this
check.
Numer Uno, skipping it.
That's just asking for trouble.
Okay, so check for liens first.
Beyond that, what other specificdocuments should a buyer
absolutely insist on seeing tofeel confident about that legal
certainty.
Good question.
You need a whole checklist,really.
And they need to be complete upto date.
(03:50):
And consistent things like, uh,certificates, these aren't just
admin details.
They legally confirm theproperty's exact size
boundaries.
It's official ID number withmunicipality.
You need to know precisely whatyou're buying dimension wise to
avoid disputes later.
Like someone building over theline or something happens more
than you'd think if it's notchecked.
(04:11):
Then property tax records, theole pre Dallas proof that all
taxes are paid up.
You don't wanna inherit theseller's unpaid tax bill.
Definitely not.
Uh, land use permit.
Suso zulo super important,especially if you plan to build
or modify, it dictates exactlywhat the zoning allows on that
land.
You wanna build a condo towerbetter make sure it's not zoned
for just single family homes,right?
(04:32):
Crucial construct licenses perMesos deconstruction.
Correct.
If it's new or recentlyrenovated, you need proof.
It was all done legally withpermits.
Un permitted work can meanfines, demolition orders, big
problems.
Yeah.
And if it's a condo.
The condominium regime regimento condominium.
This lays out all the rules,rights, obligations for everyone
in the building, common areas,maintenance, how decisions get
(04:55):
made.
You need to know what you'resigning up for community wise.
Okay, so that's quite a list.
Are these generally easy to gethold of?
They should be.
These documents are usuallypublicly accessible or at least
verifiable through officialchannels.
A transparent seller or a goodadvisor should provide them
pretty readily if they hesitateor can't produce them.
That's not just inconvenient.
It's a major red flag.
(05:17):
Could mean serious underlyingissues.
This whole process sounds likewhat we often call due
diligence, right?
Doing your homework.
But in a market like Playa delCarmen, so dynamic, so
attractive, great location, tonsof tourists, seems easy to get
in.
Why does this homework becomelike extra critical there?
Oh, that's the million dollarquestion, isn't it?
And yeah, due diligence isexactly it, but imply it's not
(05:39):
just a box ticking exercise,it's your absolute shield
because all those positives,amazing location, tourists
lining up seemingly easy entryfor investors.
They mean nothing if theproperty itself isn't legally or
fiscally secure.
As one expert put it, so well,what good is it if all those
factors are positive?
If that place doesn't offer youlegal certainty?
(06:00):
Makes sense.
If the property has legalissues, unresolved disputes,
hidden debts, permit problems.
Your investment is basicallyworthless.
You could waste years and afortune trying to fix things
that should have been caught upfront.
And while this applieseverywhere in Mexico, the sheer
speed of development in Playamakes it even more vital.
New projects pop up constantly.
Many are great, but the pacescan sometimes hide problems.
(06:22):
Legal certainty is the absolutebackbone.
It ensures the property you pouryour money into is genuinely
indisputably yours.
No challenges, no one trying totake it away.
It's the difference between asolid asset and a potential
nightmare.
Okay, crystal clear.
Now, a big question we alwaysget, especially from listeners
in the US and Canada, is aboutforeigners owning property.
Mexico has these rules aboutrestricted zones, sounds kind of
(06:45):
scary.
Can you unpack what these zonesare and how they actually work
for foreign buyers?
Sure.
It does sound a bit intimidatinginitially.
So Mexico has what are calledrestricted zones, basically
areas within 50 kilometers,that's about 31 miles inlands
from any coastline, and alsoareas within a hundred
kilometers, about 62 miles fromany international border.
(07:07):
The idea behind this law, whichgoes way back to the 1917
Constitution, was about nationalsovereignty, keeping these
strategically important coastaland border areas, primarily in
Mexican hands.
Right?
So it sounds like a flat outban, like, Nope, foreigners
can't buy beachfront property.
Well, that's where the nuancecomes in.
It's better described as arestriction, not a total
prohibition, and that's a reallykey difference that often causes
(07:29):
needless worry.
Unlike some countries whereforeigners genuinely cannot own
land or where the structures arereally shaky, Mexico created a
very secure, very establishedlegal way around this.
It doesn't break the law.
It works within it.
It lets foreigners buy safely inthese zones while still
respecting the original intentof the law, protecting national
(07:50):
interests.
Okay, so there is a way.
What, what is this secure legalvehicle then?
How do foreigners confidentlybuy in places like Playa?
It's called a fideicomiso.
Basically a bank trust.
It's a legal setup, specificallycreated for foreigners to
acquire property rights in theserestricted zones.
And the key thing here, the partthat adds a really strong layer
(08:11):
of security, is that thesetrusts are always managed by a
financial institution, usually aMexican bank.
A bank, so the bank holds thetitle.
Does that mean it's not reallymine?
I know some folks, especiallyAmericans, maybe get nervous
about the word trust with realestate, they worry they don't
truly own it.
That is the most commonmisconception and it's crucial
to clear up.
Let's be absolutely clear, eventhough the bank acts as the
(08:33):
trustee and technically holdsthe legal title.
You, the foreign buyer, are thebeneficiary of that trust.
And as the beneficiary, youpossess all the rights to the
property, all the rights, likewhat?
Everything.
You have the absolute undisputedright to use the property, live
in it, rent it out, sell itwhenever you want, modify it,
build on it, following zoningrules of course.
(08:55):
And crucially, you can pass iton to your heirs.
It functions exactly like directownership.
For all practical purposes, itis a hundred percent your
property.
The bank can't touch it for itsown debts.
Nothing can be done to take itaway from you as long as you
follow the trust terms, whichare pretty standard.
The bank is essentially anadministrator making sure it
complies with Mexican law andadding that institutional
(09:15):
oversight.
It actually makes it more securein many ways.
So just to be super clear,despite the bank's role, I can
sell it, rent it, manage it,leave it in my will.
Basically treat it as my own.
Precisely.
Yeah.
It's a very robust, very commonand very secure system that's
been working well for decades.
And honestly, when you stack theMexican fi de comso up against
how things work in other popularinvestment spots, Mexico often
(09:38):
comes out looking really strongin terms of legal certainty for
foreigners.
Oh, interesting.
Like compared to where.
How does it compare to buyingin, say, parts of Asia or maybe
closer like the DominicanRepublic?
Yeah, it's a really revealingcomparison.
Take some places in Asia, maybelike Dubai.
Often what you're buying isn'tfreehold ownership forever.
It might be a really long lease,like 50 or 99 years or
(10:00):
assignment of rights.
The government or some otherentity might still hold the
ultimate underlying ownership.
So it's more like a very, verylong term rental.
Not quite the same as owning itoutright, even via a trust.
Okay, so it's finite.
Exactly.
Then look at somewhere like theDominican Republic.
Yeah.
The process there can seemincredibly easy.
Sometimes you hear stories ofbuying with just a passport.
(10:21):
Which sounds great, right?
Super simple.
Yeah, sounds convenient, butthat ease can actually be a
warning sign.
Sometimes it means there isn'tthat deep, strong institutional
framework protecting you during,and especially after the
purchase, you might be moreexposed to title problems,
boundary disputes, maybe evenfraud down the line.
There isn't that built in layerof protection from a neutral,
(10:43):
regulated entity like a bank,ensuring everything is clean and
stays clean.
So the fitia comiso with thebank involved actually offers
more security than thoseseemingly easier systems.
That extra step is actually abenefit.
Absolutely.
That's the key takeaway.
When things seem too easy ininternational real estate, you
should probably ask why.
(11:03):
The Fiko miso involves an extraadministrative step, yes, and
usually a small annual fee tothe bank, but that step buys you
an enormous amount of legalcertainty and peace of mind.
It's a formal, regulated processthat protects your investment in
a way that less structuredsystems just don't.
It's an investment in securitythat makes a lot of sense.
The old, if it sounds too goodto be true.
(11:24):
Okay, so we've covered legalcertainty, making sure the
property itself is sound.
Now let's shift focus to theprocess of buying it.
This brings us to the secondpillar, legal security.
How is this different from legalcertainty, and why does an
investor need to understand thedifference?
Great question, because they dosound similar and people often
mix'em up.
So legal certainty, like wesaid, is about the properties
(11:45):
inherent legal health, cleantitle, no leins, proper permits.
It's about the asset itself.
Legal security, on the otherhand, is about the journey of
acquiring that asset.
It covers the entire transactionprocess, making sure every
single step from your initialoffer right through to signing
the final deed and getting itregistered is legally sound
transparent and protects you thebuyer.
(12:07):
It's about making sure theprocess itself is secure, no
surprises during or after thetransfer.
Got it.
Asset versus process.
So focusing on the process, whatare the key checks, the crucial
due diligence steps for ensuringlegal security during the
transaction.
For the process itself, you needto focus on a few key areas.
First developer vetting, but goway beyond the fancy website or
(12:27):
brochure.
You need to really check out thedeveloper.
Do they have a solid trackrecord?
Are all the permits for theentire project actually
approved?
And in order, before you signanything, check their company
registration tax.
Id look for any history of majorlegal issues or serious delays
on past projects.
A good developer will sharethis, so digging into their
history, absolutely second.
Rigorous contract review.
(12:48):
I can't stress this enough.
Every single legal document, theinitial promise to purchase
agreement, the final deed, anyaddendums must be reviewed
carefully by an experienced realestate lawyer who works for you,
not the seller or developer.
Don't cheap out on this.
These contracts defineeverything, your rights,
payments, penalties.
You need to understand everysingle word.
Independent legal advice is key.
(13:10):
Crucial.
Third, think about escrow andpayment security.
How are your payments beinghandled, especially if it's
pre-construction?
Ideally, use a third partyescrow service.
This protects your money untilcertain construction milestones
are actually met.
Understand the payment scheduleperfectly.
When is money due?
What happens if they're late?
Right?
Protecting your payments.
(13:30):
And finally, overalltransparency.
You're looking for openness fromeveryone.
Honestly, many developers imply,I get this, they know that
informed buyers become happyinvestors and happy investors
talk.
They refer people.
It builds goodwill.
Anyone who seems cagey, resistssharing documents or avoids
clear answers, that's a hugewarning sign during the
transaction process.
(13:51):
That seems like a solidchecklist for keeping the buying
process secure.
What about timelines?
How long does this whole processusually take?
Let's say for a Mexican buyer,no mortgage involved.
Okay.
For a national buyer payingcash, it can actually be pretty
quick.
Often around two to three weeks,give or take.
That includes getting all thenecessary documents like that
certificate of no lines from theregistry, which might take five
(14:12):
to seven business days itself.
Then lawyers review the notarydrafts, the deed, everyone
signs, and it gets submitted forregistration relatively fast.
Okay, two to three weeks.
What if that same buyer is usinga mortgage?
Then you're probably looking atcloser to a month, maybe a
little more.
Even if the mortgage ispre-approved, the bank has its
own final checks, propertyvaluation requirements, legal
(14:34):
review of the mortgage contract.
Yeah.
And then the actual funddisbursement.
Each bank has its own rhythm, soit adds that extra layer in
time.
Makes sense.
And for our foreign buyersneeding the Fedia Comiso in
those restricted zones.
Right.
For foreigners using Fit Comiso,you should typically budget for
about one to one and a halfmonths.
Sometimes it can stretch a bitlonger depending on how busy the
(14:56):
Ministry of Foreign Affairs is.
That extra time is mostly forgetting the official permit from
the ministry.
They have to authorize theforeigner's participation in the
trust for that specificproperty.
It's a required federal approvalstep.
Okay.
So definitely longer forforeigners.
What happens if during any ofthese checks, something isn't
quite right with the paperwork,like an old permit is missing or
(15:18):
something, does the whole dealjust collapse?
Not necessarily, and this iswhere Mexico system can be quite
flexible, which is, you know,both good and potentially
frustrating.
Hmm.
Minor issues pop up.
Say an old tax wasn't paid or apermit needs updating, it often
can be fixed.
Mm-hmm.
The seller might need to go sortit out at the municipal office,
pay the tax, get the update,but, and this is the key thing,
(15:39):
it will slow things downsometimes significantly.
Well, it's good that things canoften be corrected.
It really highlights why thatthorough, upfront due diligence
by your team is so vital.
Unexpected delays can mess upyour plans.
Maybe cost you rental income ifyou miss the start of high
season or cause logisticalheadaches if you've planned to
move.
So proactive checks to save timeand stress, even if the system
(16:02):
allows for fixes later, right?
Avoiding delays is alwaysbetter.
Now, speaking of costs and thefinancial side.
You mentioned buyers need tolook beyond the sticker price.
You said something like, there'snothing worse than thinking it
costs x and finding out it's y.
This brings us to our thirdpillar, financial transparency
and digging into those, uh,sometimes hidden costs.
Yeah.
What else does a buyerabsolutely need to budget for?
(16:24):
Yes.
This is so critical forrealistic budgeting beyond the
property price itself.
You have to factor in buyersclosing costs.
These are significant and coverthe formalization of the sale.
They generally include noterfees for the notary public.
Remember, they do a lot morehere than just witness
signatures.
There are legal pros ensuringlegality, handling taxes,
(16:46):
registering the deed, their feescover that whole service.
Okay?
Public registry fees, the costto actually get your ownership
officially recorded.
Essential step appraisals.
You'll need a formal valuation,often required by banks, but
also good for you to confirmmarket value.
Mm-hmm.
Then there's a transfer tax inPresto, the acquisition, uh, in
web list or ISA, this is a statetax, and then cantata RU reply
(17:11):
is, it's a noticeable percentageof the value.
Right.
And for foreign buyers, if youtake mezo fees, there's an
initial setup cost for thetrust, plus an ongoing annual
fee to the bank from managingit.
So adding all that up, what kindof percentage are we talking
about?
Typically you should budget foraround 6% to 7% of the
property's value for all theseclosing costs combined.
It can sometimes nin a bithigher depending on the state
(17:32):
and the property's price, butthat six 7% is a good ballpark
figure to have in mind rightfrom the start.
It's a real cost, not justpocket change, six to 7% on top.
Okay.
Now, beyond those directpurchase costs.
What about taxes later on, likeincome tax, especially if
someone plans to resell.
You mentioned the buyer mightincur tax, which sounded a bit
(17:54):
counterintuitive.
Ah, yes.
Let's clarify that.
It can be confusing.
The main tax on profit fromselling property is capital
gains tax, called ISR and STOsoreta.
Generally this tax is paid bythe seller on the profit they
make.
If you buy low and sell highyears later, you as the seller
owe tax on that game.
Okay, so it's the seller's taxprimarily.
Yes.
(18:14):
However, knowing about is R iscrucial for the buyer when
planning their exit strategy andcalculating their potential net
return down the road.
You need to factor in thatfuture tax liability when
estimating how much profityou'll actually walk away with.
There are some exemptionspossible for ISR if the property
is your primary residence andyou meet certain conditions like
(18:35):
living there for a specificperiod.
But these rules are complex,require specific proof, so
definitely something to discusswith a Mexican tax expert for
your situation.
It impacts your overallinvestment calculation, even if
you don't pay it at the momentof buying.
Okay, that makes more sense.
It impacts your future netprofit as a seller.
What about actually paying forthe property?
You mentioned anti-moneylaundering laws.
(18:56):
Can you really not just pay incash if you have it right.
That's a really important point.
And a firm, no.
Mexico has strict anti-moneylaundering laws Ley Anti Lavado.
These put serious limits onusing cash for real estate.
The current limit is around800,000 pesos.
Which is roughly, uh, dependingon the exchange rate, somewhere
around 45,000 to$50,000.
USD give or take, anything abovethat amount cannot be paid in
(19:20):
cash for a property purchase.
Wow.
Okay.
So how do you pay the rest?
You have to use the bankingsystem.
Usually international wiretransfers for foreign buyers.
This isn't just a rule.
It adds transparency, but youneed to plan for it.
Wire transfers have fees,exchange rates fluctuate.
They can take a few days toclear, and your bank will likely
(19:40):
ask for documentation on wherethe funds came from.
These are the practicalfinancial details your advisor
should be explaining upfront.
Definitely need to plan thosepayments.
Okay.
Another ongoing cost, notexactly hidden, but maybe
underestimated, especially inplaya maintenance fees or HOA
fees.
Yeah, that's a really goodpoint.
To flag HOA fees quote us Detoimply Del Carmen and the Riviera
(20:03):
may tend to be higher than inmany other Mexican cities.
The main reason.
Amenities.
Plain and simple.
Most developments there arebuilt for the tourism market, so
they come loaded with features,multiple pools, fancy gyms, big
common areas, rooftop lounges,maybe beach clubs, 24/7,
security concierge, all theresort style stuff.
Exactly, and all that stuffcosts money to run and maintain
(20:26):
properly.
Staffing, cleaning, repairs,electricity for common areas.
You're not just paying for yourunit's upkeep, you're paying
your share of maintaining a miniresort.
A well run, HOA is vital.
Okay.
Lots of costs to track.
This leads perfectly intosomething that always makes
investors wary or maybe shouldthe promise of guaranteed.
ROI, you see ads boasting, 13%guaranteed return.
(20:49):
What's the real store behindthose claims imply, right?
Yeah.
Guaranteed.
ROI.
That phrase should set up alarmbells immediately.
Huge red flag.
Why?
Because return on investment inreal estate, especially in a
tourist destination, simplycannot be guaranteed.
There are far too manyvariables.
Like what?
Oh, global economy shifts,changes in travel patterns.
One year new competition popsup.
You can estimate potentialreturns based on past
(21:11):
performance.
Sure.
But a guarantee for the future,no way anyone promising that is
likely either misinformed orfrankly misleading you.
So how do they offer theseguarantees, say for the first
year?
Well, nine times outta 10.
If a developer guarantees aspecific ROI for the first year
or two, they're usually payingthat percentage out of their own
funds.
It's essentially a marketingcost for them, or it's built
(21:33):
into a higher purchase price.
You paid initially.
So it's not actually profit fromthe property's rental income,
often, not, especially in thatfirst year.
They're basically giving you atemporary subsidy or a delayed
discount to make the deal lookincredibly safe and attractive.
It makes the numbers look greatupfront to secure the sale and
the catch.
The catch is what happens whenthat guaranteed period ends.
(21:57):
The actual return generated bythe property from rentals might
be much lower.
Maybe 5%, maybe less, dependingon management occupancy, market
conditions.
So the buyer feels misledbecause the ongoing performance
doesn't match the initialpromise.
It creates unrealisticexpectations and a lot of
disappointment later on.
So if guaranteed is a warningsign, what should investors look
(22:20):
for to gauge potentialprofitability instead of a
guarantee?
Look for a proven track record.
Ask the developer for actualverifiable rental income data
from comparable units in theirexisting operational projects.
Not projections for the new one,but real history from buildings
that have been running for say,three, five, maybe 10 years.
Real data from similar olderprojects.
(22:41):
Exactly.
Even then, it's still justhistorical data.
An estimate of potential, not apromise for the future.
Market conditions change, but itgives you a much more realistic
picture than a guarantee pull athin air.
So the advice for you, thelistener, is crystal clear.
If you hear guaranteed ROI perkup your ears.
Open your eyes wide.
Read all the fine print, asktough questions.
(23:02):
Where does this guarantee comefrom?
Is it based on real rentalhistory or is it a developer
subsidy?
And know that authorities arestarting to pay more attention
to these claims because they canbe very deceptive.
Okay, so we've talked legalcertainty for the property,
legal security for the process,and financial transparency for
the costs.
We're armed with a lot ofknowledge.
(23:22):
Now let's get practical.
Let's see.
Investors' toolkit for actuallyspotting a good deal and just as
importantly, a trustworthydeveloper or advisor in this
market, right?
The toolkit, the number onetool, maybe surprisingly, is
simple.
Curiosity combined with thewillingness to demand
information.
As one expert said, there's noexcuse for a buyer not to be
(23:44):
informed.
You just can't passively acceptwhat's in the ad coming ad.
You know, great condo.
This price, five minutes to thebeach need to dig deeper, way
deeper, demand a fully itemizedquote showing all the costs we
talked about.
Don't just look at the headlineprice, push for the details.
And it's more than just asking,isn't it?
It's a different mindset.
Buying property isn't likebuying a fancy watch on impulse.
Exactly.
(24:04):
It's a major complex investment.
You wouldn't buy intricatemachinery without checking
specs, maintenance history,running costs, right?
Yeah.
Real estate demands that samelevel of methodical research.
Be proactive.
Be thorough.
So what are some concrete,actionable steps investors
should take to vet a deal andprotect themselves in Playa?
Okay.
Beyond getting all the legal andfinancial docs we've covered,
here's some must dos one.
(24:25):
Read the contracts.
Yeah, thoroughly like sit down,no distractions.
Read every single word of thepromise to purchase the final
deed.
Get a certified translation ifneeded.
Mark anything unclear.
Ask questions.
Get answers from yourindependent lawyer.
Don't sign if you have anydoubts.
No skimming.
Absolutely not.
Two, vet the developer's trackrecord.
Really vet it.
(24:45):
Go beyond online reviews, whichcan be skewed.
Look at their actual resume.
How many years in business here?
How many projects completed inthis area?
What's their track record ondelivering on time?
Ask about past projects.
Were there major delays, legalissues?
Try to gauge their financialstability.
Okay.
Focus on their real history.
Yes.
And three, this is huge.
Visit their past projects.
(25:07):
Especially their oldest ones.
Don't just look at the shiny newmodel unit.
Go see a building they finishedfive, 10 years ago.
How is it held up?
Does the construction qualitylook good?
Is it well maintained?
Are the amenities still nice?
See how things age Exactly.
And if possible, talk to peoplewho live there, owners in their
previous buildings.
Ask them honestly about theirexperience.
Build quality HOA management.
(25:29):
Rental results if they rentedout that firsthand feedback is
gold.
It tells you way more than anysales pitch.
That makes so much sense.
I heard a great story about adeveloper who actually insisted
on taking potential buyers tosee their oldest project.
First, their logic was, you needto see the lasting quality of
our old work to reallyappreciate and trust the new
(25:50):
shows.
Incredible confidence.
That's a fantastic sign.
A developer proud of theirhistory, willing to show you the
older stuff.
Warts and all that speaksvolumes about their commitment
to quality and their long-termperspective.
Huge green flag, definitely.
Okay, last crucial piece.
Choosing the right advisor orbroker, this feels like it could
make or break the wholeexperience, especially in a
(26:11):
foreign market.
What really separates agenuinely good advisor from just
a sales person pushing for acommission, this is probably the
most critical relationshipyou'll form.
A truly good advisor is firstand foremost, proactive and
transparent.
They won't just answer yourquestions.
They will tell you things youdidn't even know to ask.
Like what?
They'll volunteer informationabout all the potential costs,
(26:33):
closing costs, property taxes,potential capital gains tax down
the road, Fetty, Comiso fees,realistic, HOA fees, property
management costs.
If you plan to rent everything,even if it makes the total
investment look higherinitially, why would they do
that?
Because their goal isn't just aquick sale, they want you to be
fully informed, avoid nastysurprises, and be genuinely
(26:55):
happy with your purchase longterm that leads to trust,
referrals and a sustainablebusiness for them.
The advisor to be aware of isthe one who only highlights the
low price.
Glosses over the details, maybeconveniently forgets to mention
certain ongoing costs just toget the deal signed.
That's unprofessional.
Leads to frustrated clientslater.
(27:15):
Kills their reputation.
A responsible broker protectstheir clients and themselves by
working with reputabledevelopers and ensuring total
clarity.
It's about building trust versusjust chasing the next
commission.
The good ones are in it for thelong haul.
The others often burn out fast.
That's a really clear and vitaldistinction.
So wrapping this all up, itsounds like Playa del Carmen
(27:35):
definitely offers excitingpotential for real estate
investors.
It can be very profitable, butit's also a serious competitive
market.
Being rigorous about legalcertainty, legal security in the
process, and demanding financialtransparency isn't just about
protecting yourself, right?
It also strengthens the wholemarket.
It rewards the serious,reputable developers and
advisors.
When buyers are informed,curious, and yes, demanding,
(27:58):
they become empowered.
They can calculate risks better,anticipate challenges, and
ultimately make smarter moresuccessful long-term
investments.
And that's really the goal togive you our listener, the tools
you need to navigate thesewaters and reduce the inherent
risks involved in anyinvestment, how you use those
tools.
Well, that's up to you.
(28:18):
Absolutely.
So thinking about everythingwe've covered today, the
property's legal health, thesecurity of the buying process,
all the financial details,vetting developers and advisor.
Here's a final thought to leaveyou with.
Which one of those elements willyou prioritize most as you move
forward in your own investmentjourney?
And maybe more importantly,what's one new question you'll
make sure to ask your advisornext time you look at a property
(28:41):
based on what you heard today?
That's a great question.
Ponder, we'll definitely bediving deeper into related real
estate topics and futureepisodes, looking at projects in
different.
Stages, like pre-sale andconstruction, plus the
practicalities of ongoingmaintenance and administration.
So keep listening, keeplearning, and keep empowering
yourself as an investor.
Welcome to the Deep Dive.
We're the show where we dig intostacks of insights, articles,
real world stories, and um,basically untack it all to give
you clear, actionable knowledgeon topics that really matter.
And today, we are plungingheadfirst into the, well, the
pretty alluring world of realestate investment.
Specifically, we're looking atone of the most vibrant spots
(00:21):
out there right now, gel,Carmen, Mexico.
I mean, you probably picture itright, the dream.
Turquoise water, white sand,tourists everywhere, and that,
you know, that promise of yourproperty going up in value,
making you money, owning a pieceof paradise that's maybe an
escape and an income stream.
But, uh, here's where the dreamgets real and where our deep
dive mission kind of kicks in.
How do you navigate thisexciting, but let's be honest,
(00:42):
really competitive market tomake sure your investment is
actually.
Good.
How do you avoid the pitfalls,the costly mistakes that well
could turn that dream sour?
Exactly, and that's what we'rehere to unpack today.
This deep dives are reallydesigned to arm you the
listener, with the essentialknowledge you need to make
properly informed decisions inthe Mexican market.
We're gonna break down theabsolute must haves,
(01:03):
understanding legal certaintythat's about the property
itself.
Then ensuring legal securitythrough the whole buying process
and crucially demanding fullfinancial transparency from
everyone involved.
We've gathered insights from,uh, seasoned real estate pros,
people who are actually in thismarket day in, day out.
So this isn't just theory, it'spractical stuff you can actually
(01:24):
use drawn straight from theirexperience.
Think of it as your roadmap forinvesting safely in playa.
Okay, great.
So let's dive in, starting withwhat has to be the absolute
first step for any investor?
Anywhere really, but maybeespecially in a hot market like
Playa, establishing the, uh,legal certainty of your
investment.
We hear terms like title deeds,but what does legal certainty
(01:45):
really mean down there?
Right.
Legal certainty.
Um, at its heart, it's all aboutthe property itself.
It's fundamental legal standing.
It means checking like beyondany doubt that the property has
all the essential legalpaperwork lined up.
Yeah, we're talking thefoundational stuff, the public
deeds.
These are the official notarizeddocuments that prove who owns
(02:05):
it.
And critically, these Ds have tobe properly registered in the
Public Registry of Property andcommerce.
Okay.
The public registry, yeah.
Think of it as the officialgovernment record keeper.
It's where every property isformally listed.
Who owns it now, pasttransactions.
It's whole legal history.
It's backed by the government,by an institution that's
paramount.
(02:26):
It's your solid proof ofownership and a huge piece of
that legal certainty.
Something that sounds reallyimportant is making sure the
property is free of liens.
Can you break that down?
What does that mean for aninvestor and why is it so
non-negotiable?
Oh, absolutely.
Non-negotiable.
Yeah.
Free of lands means the propertyis completely clear.
No legal claims, no debts, norestrictions hanging over it.
(02:47):
That would stop you from buyingit, selling it, or, you know,
using it.
This could be anything from anunpaid mortgage, uh, a seizure
order from a creditor, maybe anongoing legal fight over
boundaries or.
Inheritance.
Hmm.
If a property has liens, it'slike, well, it's like buying a
car with a massive, hiddenengine problem.
You can't really own it freely.
(03:08):
Right.
You're stuck.
Exactly.
You can't easily sell it.
Maybe you can't even rent it outproperly without major
headaches.
The good news though, is that inMexico, checking this is fairly
straightforward.
Oh really?
Yeah.
The public registry issuessomething called a certificate
of no liens.
A certificate of libertad degravamen.
It's an official paper statingclearly if there are any claims
(03:30):
against the property, any decentlawyer or advisor will make this
check.
Numer Uno, skipping it.
That's just asking for trouble.
Okay, so check for liens first.
Beyond that, what other specificdocuments should a buyer
absolutely insist on seeing tofeel confident about that legal
certainty.
Good question.
You need a whole checklist,really.
And they need to be complete upto date.
(03:50):
And consistent things like, uh,certificates, these aren't just
admin details.
They legally confirm theproperty's exact size
boundaries.
It's official ID number withmunicipality.
You need to know precisely whatyou're buying dimension wise to
avoid disputes later.
Like someone building over theline or something happens more
than you'd think if it's notchecked.
(04:11):
Then property tax records, theole pre Dallas proof that all
taxes are paid up.
You don't wanna inherit theseller's unpaid tax bill.
Definitely not.
Uh, land use permit.
Suso zulo super important,especially if you plan to build
or modify, it dictates exactlywhat the zoning allows on that
land.
You wanna build a condo towerbetter make sure it's not zoned
for just single family homes,right?
(04:32):
Crucial construct licenses perMesos deconstruction.
Correct.
If it's new or recentlyrenovated, you need proof.
It was all done legally withpermits.
Un permitted work can meanfines, demolition orders, big
problems.
Yeah.
And if it's a condo.
The condominium regime regimento condominium.
This lays out all the rules,rights, obligations for everyone
in the building, common areas,maintenance, how decisions get
(04:55):
made.
You need to know what you'resigning up for community wise.
Okay, so that's quite a list.
Are these generally easy to gethold of?
They should be.
These documents are usuallypublicly accessible or at least
verifiable through officialchannels.
A transparent seller or a goodadvisor should provide them
pretty readily if they hesitateor can't produce them.
That's not just inconvenient.
It's a major red flag.
(05:17):
Could mean serious underlyingissues.
This whole process sounds likewhat we often call due
diligence, right?
Doing your homework.
But in a market like Playa delCarmen, so dynamic, so
attractive, great location, tonsof tourists, seems easy to get
in.
Why does this homework becomelike extra critical there?
Oh, that's the million dollarquestion, isn't it?
And yeah, due diligence isexactly it, but imply it's not
(05:39):
just a box ticking exercise,it's your absolute shield
because all those positives,amazing location, tourists
lining up seemingly easy entryfor investors.
They mean nothing if theproperty itself isn't legally or
fiscally secure.
As one expert put it, so well,what good is it if all those
factors are positive?
If that place doesn't offer youlegal certainty?
(06:00):
Makes sense.
If the property has legalissues, unresolved disputes,
hidden debts, permit problems.
Your investment is basicallyworthless.
You could waste years and afortune trying to fix things
that should have been caught upfront.
And while this applieseverywhere in Mexico, the sheer
speed of development in Playamakes it even more vital.
New projects pop up constantly.
Many are great, but the pacescan sometimes hide problems.
(06:22):
Legal certainty is the absolutebackbone.
It ensures the property you pouryour money into is genuinely
indisputably yours.
No challenges, no one trying totake it away.
It's the difference between asolid asset and a potential
nightmare.
Okay, crystal clear.
Now, a big question we alwaysget, especially from listeners
in the US and Canada, is aboutforeigners owning property.
Mexico has these rules aboutrestricted zones, sounds kind of
(06:45):
scary.
Can you unpack what these zonesare and how they actually work
for foreign buyers?
Sure.
It does sound a bit intimidatinginitially.
So Mexico has what are calledrestricted zones, basically
areas within 50 kilometers,that's about 31 miles inlands
from any coastline, and alsoareas within a hundred
kilometers, about 62 miles fromany international border.
(07:07):
The idea behind this law, whichgoes way back to the 1917
Constitution, was about nationalsovereignty, keeping these
strategically important coastaland border areas, primarily in
Mexican hands.
Right?
So it sounds like a flat outban, like, Nope, foreigners
can't buy beachfront property.
Well, that's where the nuancecomes in.
It's better described as arestriction, not a total
prohibition, and that's a reallykey difference that often causes
(07:29):
needless worry.
Unlike some countries whereforeigners genuinely cannot own
land or where the structures arereally shaky, Mexico created a
very secure, very establishedlegal way around this.
It doesn't break the law.
It works within it.
It lets foreigners buy safely inthese zones while still
respecting the original intentof the law, protecting national
(07:50):
interests.
Okay, so there is a way.
What, what is this secure legalvehicle then?
How do foreigners confidentlybuy in places like Playa?
It's called a fideicomiso.
Basically a bank trust.
It's a legal setup, specificallycreated for foreigners to
acquire property rights in theserestricted zones.
And the key thing here, the partthat adds a really strong layer
(08:11):
of security, is that thesetrusts are always managed by a
financial institution, usually aMexican bank.
A bank, so the bank holds thetitle.
Does that mean it's not reallymine?
I know some folks, especiallyAmericans, maybe get nervous
about the word trust with realestate, they worry they don't
truly own it.
That is the most commonmisconception and it's crucial
to clear up.
Let's be absolutely clear, eventhough the bank acts as the
(08:33):
trustee and technically holdsthe legal title.
You, the foreign buyer, are thebeneficiary of that trust.
And as the beneficiary, youpossess all the rights to the
property, all the rights, likewhat?
Everything.
You have the absolute undisputedright to use the property, live
in it, rent it out, sell itwhenever you want, modify it,
build on it, following zoningrules of course.
(08:55):
And crucially, you can pass iton to your heirs.
It functions exactly like directownership.
For all practical purposes, itis a hundred percent your
property.
The bank can't touch it for itsown debts.
Nothing can be done to take itaway from you as long as you
follow the trust terms, whichare pretty standard.
The bank is essentially anadministrator making sure it
complies with Mexican law andadding that institutional
(09:15):
oversight.
It actually makes it more securein many ways.
So just to be super clear,despite the bank's role, I can
sell it, rent it, manage it,leave it in my will.
Basically treat it as my own.
Precisely.
Yeah.
It's a very robust, very commonand very secure system that's
been working well for decades.
And honestly, when you stack theMexican fi de comso up against
how things work in other popularinvestment spots, Mexico often
(09:38):
comes out looking really strongin terms of legal certainty for
foreigners.
Oh, interesting.
Like compared to where.
How does it compare to buyingin, say, parts of Asia or maybe
closer like the DominicanRepublic?
Yeah, it's a really revealingcomparison.
Take some places in Asia, maybelike Dubai.
Often what you're buying isn'tfreehold ownership forever.
It might be a really long lease,like 50 or 99 years or
(10:00):
assignment of rights.
The government or some otherentity might still hold the
ultimate underlying ownership.
So it's more like a very, verylong term rental.
Not quite the same as owning itoutright, even via a trust.
Okay, so it's finite.
Exactly.
Then look at somewhere like theDominican Republic.
Yeah.
The process there can seemincredibly easy.
Sometimes you hear stories ofbuying with just a passport.
(10:21):
Which sounds great, right?
Super simple.
Yeah, sounds convenient, butthat ease can actually be a
warning sign.
Sometimes it means there isn'tthat deep, strong institutional
framework protecting you during,and especially after the
purchase, you might be moreexposed to title problems,
boundary disputes, maybe evenfraud down the line.
There isn't that built in layerof protection from a neutral,
(10:43):
regulated entity like a bank,ensuring everything is clean and
stays clean.
So the fitia comiso with thebank involved actually offers
more security than thoseseemingly easier systems.
That extra step is actually abenefit.
Absolutely.
That's the key takeaway.
When things seem too easy ininternational real estate, you
should probably ask why.
(11:03):
The Fiko miso involves an extraadministrative step, yes, and
usually a small annual fee tothe bank, but that step buys you
an enormous amount of legalcertainty and peace of mind.
It's a formal, regulated processthat protects your investment in
a way that less structuredsystems just don't.
It's an investment in securitythat makes a lot of sense.
The old, if it sounds too goodto be true.
(11:24):
Okay, so we've covered legalcertainty, making sure the
property itself is sound.
Now let's shift focus to theprocess of buying it.
This brings us to the secondpillar, legal security.
How is this different from legalcertainty, and why does an
investor need to understand thedifference?
Great question, because they dosound similar and people often
mix'em up.
So legal certainty, like wesaid, is about the properties
(11:45):
inherent legal health, cleantitle, no leins, proper permits.
It's about the asset itself.
Legal security, on the otherhand, is about the journey of
acquiring that asset.
It covers the entire transactionprocess, making sure every
single step from your initialoffer right through to signing
the final deed and getting itregistered is legally sound
transparent and protects you thebuyer.
(12:07):
It's about making sure theprocess itself is secure, no
surprises during or after thetransfer.
Got it.
Asset versus process.
So focusing on the process, whatare the key checks, the crucial
due diligence steps for ensuringlegal security during the
transaction.
For the process itself, you needto focus on a few key areas.
First developer vetting, but goway beyond the fancy website or
(12:27):
brochure.
You need to really check out thedeveloper.
Do they have a solid trackrecord?
Are all the permits for theentire project actually
approved?
And in order, before you signanything, check their company
registration tax.
Id look for any history of majorlegal issues or serious delays
on past projects.
A good developer will sharethis, so digging into their
history, absolutely second.
Rigorous contract review.
(12:48):
I can't stress this enough.
Every single legal document, theinitial promise to purchase
agreement, the final deed, anyaddendums must be reviewed
carefully by an experienced realestate lawyer who works for you,
not the seller or developer.
Don't cheap out on this.
These contracts defineeverything, your rights,
payments, penalties.
You need to understand everysingle word.
Independent legal advice is key.
(13:10):
Crucial.
Third, think about escrow andpayment security.
How are your payments beinghandled, especially if it's
pre-construction?
Ideally, use a third partyescrow service.
This protects your money untilcertain construction milestones
are actually met.
Understand the payment scheduleperfectly.
When is money due?
What happens if they're late?
Right?
Protecting your payments.
(13:30):
And finally, overalltransparency.
You're looking for openness fromeveryone.
Honestly, many developers imply,I get this, they know that
informed buyers become happyinvestors and happy investors
talk.
They refer people.
It builds goodwill.
Anyone who seems cagey, resistssharing documents or avoids
clear answers, that's a hugewarning sign during the
transaction process.
(13:51):
That seems like a solidchecklist for keeping the buying
process secure.
What about timelines?
How long does this whole processusually take?
Let's say for a Mexican buyer,no mortgage involved.
Okay.
For a national buyer payingcash, it can actually be pretty
quick.
Often around two to three weeks,give or take.
That includes getting all thenecessary documents like that
certificate of no lines from theregistry, which might take five
(14:12):
to seven business days itself.
Then lawyers review the notarydrafts, the deed, everyone
signs, and it gets submitted forregistration relatively fast.
Okay, two to three weeks.
What if that same buyer is usinga mortgage?
Then you're probably looking atcloser to a month, maybe a
little more.
Even if the mortgage ispre-approved, the bank has its
own final checks, propertyvaluation requirements, legal
(14:34):
review of the mortgage contract.
Yeah.
And then the actual funddisbursement.
Each bank has its own rhythm, soit adds that extra layer in
time.
Makes sense.
And for our foreign buyersneeding the Fedia Comiso in
those restricted zones.
Right.
For foreigners using Fit Comiso,you should typically budget for
about one to one and a halfmonths.
Sometimes it can stretch a bitlonger depending on how busy the
(14:56):
Ministry of Foreign Affairs is.
That extra time is mostly forgetting the official permit from
the ministry.
They have to authorize theforeigner's participation in the
trust for that specificproperty.
It's a required federal approvalstep.
Okay.
So definitely longer forforeigners.
What happens if during any ofthese checks, something isn't
quite right with the paperwork,like an old permit is missing or
(15:18):
something, does the whole dealjust collapse?
Not necessarily, and this iswhere Mexico system can be quite
flexible, which is, you know,both good and potentially
frustrating.
Hmm.
Minor issues pop up.
Say an old tax wasn't paid or apermit needs updating, it often
can be fixed.
Mm-hmm.
The seller might need to go sortit out at the municipal office,
pay the tax, get the update,but, and this is the key thing,
(15:39):
it will slow things downsometimes significantly.
Well, it's good that things canoften be corrected.
It really highlights why thatthorough, upfront due diligence
by your team is so vital.
Unexpected delays can mess upyour plans.
Maybe cost you rental income ifyou miss the start of high
season or cause logisticalheadaches if you've planned to
move.
So proactive checks to save timeand stress, even if the system
(16:02):
allows for fixes later, right?
Avoiding delays is alwaysbetter.
Now, speaking of costs and thefinancial side.
You mentioned buyers need tolook beyond the sticker price.
You said something like, there'snothing worse than thinking it
costs x and finding out it's y.
This brings us to our thirdpillar, financial transparency
and digging into those, uh,sometimes hidden costs.
Yeah.
What else does a buyerabsolutely need to budget for?
(16:24):
Yes.
This is so critical forrealistic budgeting beyond the
property price itself.
You have to factor in buyersclosing costs.
These are significant and coverthe formalization of the sale.
They generally include noterfees for the notary public.
Remember, they do a lot morehere than just witness
signatures.
There are legal pros ensuringlegality, handling taxes,
(16:46):
registering the deed, their feescover that whole service.
Okay?
Public registry fees, the costto actually get your ownership
officially recorded.
Essential step appraisals.
You'll need a formal valuation,often required by banks, but
also good for you to confirmmarket value.
Mm-hmm.
Then there's a transfer tax inPresto, the acquisition, uh, in
web list or ISA, this is a statetax, and then cantata RU reply
(17:11):
is, it's a noticeable percentageof the value.
Right.
And for foreign buyers, if youtake mezo fees, there's an
initial setup cost for thetrust, plus an ongoing annual
fee to the bank from managingit.
So adding all that up, what kindof percentage are we talking
about?
Typically you should budget foraround 6% to 7% of the
property's value for all theseclosing costs combined.
It can sometimes nin a bithigher depending on the state
(17:32):
and the property's price, butthat six 7% is a good ballpark
figure to have in mind rightfrom the start.
It's a real cost, not justpocket change, six to 7% on top.
Okay.
Now, beyond those directpurchase costs.
What about taxes later on, likeincome tax, especially if
someone plans to resell.
You mentioned the buyer mightincur tax, which sounded a bit
(17:54):
counterintuitive.
Ah, yes.
Let's clarify that.
It can be confusing.
The main tax on profit fromselling property is capital
gains tax, called ISR and STOsoreta.
Generally this tax is paid bythe seller on the profit they
make.
If you buy low and sell highyears later, you as the seller
owe tax on that game.
Okay, so it's the seller's taxprimarily.
Yes.
(18:14):
However, knowing about is R iscrucial for the buyer when
planning their exit strategy andcalculating their potential net
return down the road.
You need to factor in thatfuture tax liability when
estimating how much profityou'll actually walk away with.
There are some exemptionspossible for ISR if the property
is your primary residence andyou meet certain conditions like
(18:35):
living there for a specificperiod.
But these rules are complex,require specific proof, so
definitely something to discusswith a Mexican tax expert for
your situation.
It impacts your overallinvestment calculation, even if
you don't pay it at the momentof buying.
Okay, that makes more sense.
It impacts your future netprofit as a seller.
What about actually paying forthe property?
You mentioned anti-moneylaundering laws.
(18:56):
Can you really not just pay incash if you have it right.
That's a really important point.
And a firm, no.
Mexico has strict anti-moneylaundering laws Ley Anti Lavado.
These put serious limits onusing cash for real estate.
The current limit is around800,000 pesos.
Which is roughly, uh, dependingon the exchange rate, somewhere
around 45,000 to$50,000.
USD give or take, anything abovethat amount cannot be paid in
(19:20):
cash for a property purchase.
Wow.
Okay.
So how do you pay the rest?
You have to use the bankingsystem.
Usually international wiretransfers for foreign buyers.
This isn't just a rule.
It adds transparency, but youneed to plan for it.
Wire transfers have fees,exchange rates fluctuate.
They can take a few days toclear, and your bank will likely
(19:40):
ask for documentation on wherethe funds came from.
These are the practicalfinancial details your advisor
should be explaining upfront.
Definitely need to plan thosepayments.
Okay.
Another ongoing cost, notexactly hidden, but maybe
underestimated, especially inplaya maintenance fees or HOA
fees.
Yeah, that's a really goodpoint.
To flag HOA fees quote us Detoimply Del Carmen and the Riviera
(20:03):
may tend to be higher than inmany other Mexican cities.
The main reason.
Amenities.
Plain and simple.
Most developments there arebuilt for the tourism market, so
they come loaded with features,multiple pools, fancy gyms, big
common areas, rooftop lounges,maybe beach clubs, 24/7,
security concierge, all theresort style stuff.
Exactly, and all that stuffcosts money to run and maintain
(20:26):
properly.
Staffing, cleaning, repairs,electricity for common areas.
You're not just paying for yourunit's upkeep, you're paying
your share of maintaining a miniresort.
A well run, HOA is vital.
Okay.
Lots of costs to track.
This leads perfectly intosomething that always makes
investors wary or maybe shouldthe promise of guaranteed.
ROI, you see ads boasting, 13%guaranteed return.
(20:49):
What's the real store behindthose claims imply, right?
Yeah.
Guaranteed.
ROI.
That phrase should set up alarmbells immediately.
Huge red flag.
Why?
Because return on investment inreal estate, especially in a
tourist destination, simplycannot be guaranteed.
There are far too manyvariables.
Like what?
Oh, global economy shifts,changes in travel patterns.
One year new competition popsup.
You can estimate potentialreturns based on past
(21:11):
performance.
Sure.
But a guarantee for the future,no way anyone promising that is
likely either misinformed orfrankly misleading you.
So how do they offer theseguarantees, say for the first
year?
Well, nine times outta 10.
If a developer guarantees aspecific ROI for the first year
or two, they're usually payingthat percentage out of their own
funds.
It's essentially a marketingcost for them, or it's built
(21:33):
into a higher purchase price.
You paid initially.
So it's not actually profit fromthe property's rental income,
often, not, especially in thatfirst year.
They're basically giving you atemporary subsidy or a delayed
discount to make the deal lookincredibly safe and attractive.
It makes the numbers look greatupfront to secure the sale and
the catch.
The catch is what happens whenthat guaranteed period ends.
(21:57):
The actual return generated bythe property from rentals might
be much lower.
Maybe 5%, maybe less, dependingon management occupancy, market
conditions.
So the buyer feels misledbecause the ongoing performance
doesn't match the initialpromise.
It creates unrealisticexpectations and a lot of
disappointment later on.
So if guaranteed is a warningsign, what should investors look
(22:20):
for to gauge potentialprofitability instead of a
guarantee?
Look for a proven track record.
Ask the developer for actualverifiable rental income data
from comparable units in theirexisting operational projects.
Not projections for the new one,but real history from buildings
that have been running for say,three, five, maybe 10 years.
Real data from similar olderprojects.
(22:41):
Exactly.
Even then, it's still justhistorical data.
An estimate of potential, not apromise for the future.
Market conditions change, but itgives you a much more realistic
picture than a guarantee pull athin air.
So the advice for you, thelistener, is crystal clear.
If you hear guaranteed ROI perkup your ears.
Open your eyes wide.
Read all the fine print, asktough questions.
(23:02):
Where does this guarantee comefrom?
Is it based on real rentalhistory or is it a developer
subsidy?
And know that authorities arestarting to pay more attention
to these claims because they canbe very deceptive.
Okay, so we've talked legalcertainty for the property,
legal security for the process,and financial transparency for
the costs.
We're armed with a lot ofknowledge.
(23:22):
Now let's get practical.
Let's see.
Investors' toolkit for actuallyspotting a good deal and just as
importantly, a trustworthydeveloper or advisor in this
market, right?
The toolkit, the number onetool, maybe surprisingly, is
simple.
Curiosity combined with thewillingness to demand
information.
As one expert said, there's noexcuse for a buyer not to be
(23:44):
informed.
You just can't passively acceptwhat's in the ad coming ad.
You know, great condo.
This price, five minutes to thebeach need to dig deeper, way
deeper, demand a fully itemizedquote showing all the costs we
talked about.
Don't just look at the headlineprice, push for the details.
And it's more than just asking,isn't it?
It's a different mindset.
Buying property isn't likebuying a fancy watch on impulse.
Exactly.
(24:04):
It's a major complex investment.
You wouldn't buy intricatemachinery without checking
specs, maintenance history,running costs, right?
Yeah.
Real estate demands that samelevel of methodical research.
Be proactive.
Be thorough.
So what are some concrete,actionable steps investors
should take to vet a deal andprotect themselves in Playa?
Okay.
Beyond getting all the legal andfinancial docs we've covered,
here's some must dos one.
(24:25):
Read the contracts.
Yeah, thoroughly like sit down,no distractions.
Read every single word of thepromise to purchase the final
deed.
Get a certified translation ifneeded.
Mark anything unclear.
Ask questions.
Get answers from yourindependent lawyer.
Don't sign if you have anydoubts.
No skimming.
Absolutely not.
Two, vet the developer's trackrecord.
Really vet it.
(24:45):
Go beyond online reviews, whichcan be skewed.
Look at their actual resume.
How many years in business here?
How many projects completed inthis area?
What's their track record ondelivering on time?
Ask about past projects.
Were there major delays, legalissues?
Try to gauge their financialstability.
Okay.
Focus on their real history.
Yes.
And three, this is huge.
Visit their past projects.
(25:07):
Especially their oldest ones.
Don't just look at the shiny newmodel unit.
Go see a building they finishedfive, 10 years ago.
How is it held up?
Does the construction qualitylook good?
Is it well maintained?
Are the amenities still nice?
See how things age Exactly.
And if possible, talk to peoplewho live there, owners in their
previous buildings.
Ask them honestly about theirexperience.
Build quality HOA management.
(25:29):
Rental results if they rentedout that firsthand feedback is
gold.
It tells you way more than anysales pitch.
That makes so much sense.
I heard a great story about adeveloper who actually insisted
on taking potential buyers tosee their oldest project.
First, their logic was, you needto see the lasting quality of
our old work to reallyappreciate and trust the new
(25:50):
shows.
Incredible confidence.
That's a fantastic sign.
A developer proud of theirhistory, willing to show you the
older stuff.
Warts and all that speaksvolumes about their commitment
to quality and their long-termperspective.
Huge green flag, definitely.
Okay, last crucial piece.
Choosing the right advisor orbroker, this feels like it could
make or break the wholeexperience, especially in a
(26:11):
foreign market.
What really separates agenuinely good advisor from just
a sales person pushing for acommission, this is probably the
most critical relationshipyou'll form.
A truly good advisor is firstand foremost, proactive and
transparent.
They won't just answer yourquestions.
They will tell you things youdidn't even know to ask.
Like what?
They'll volunteer informationabout all the potential costs,
(26:33):
closing costs, property taxes,potential capital gains tax down
the road, Fetty, Comiso fees,realistic, HOA fees, property
management costs.
If you plan to rent everything,even if it makes the total
investment look higherinitially, why would they do
that?
Because their goal isn't just aquick sale, they want you to be
fully informed, avoid nastysurprises, and be genuinely
(26:55):
happy with your purchase longterm that leads to trust,
referrals and a sustainablebusiness for them.
The advisor to be aware of isthe one who only highlights the
low price.
Glosses over the details, maybeconveniently forgets to mention
certain ongoing costs just toget the deal signed.
That's unprofessional.
Leads to frustrated clientslater.
(27:15):
Kills their reputation.
A responsible broker protectstheir clients and themselves by
working with reputabledevelopers and ensuring total
clarity.
It's about building trust versusjust chasing the next
commission.
The good ones are in it for thelong haul.
The others often burn out fast.
That's a really clear and vitaldistinction.
So wrapping this all up, itsounds like Playa del Carmen
(27:35):
definitely offers excitingpotential for real estate
investors.
It can be very profitable, butit's also a serious competitive
market.
Being rigorous about legalcertainty, legal security in the
process, and demanding financialtransparency isn't just about
protecting yourself, right?
It also strengthens the wholemarket.
It rewards the serious,reputable developers and
advisors.
When buyers are informed,curious, and yes, demanding,
(27:58):
they become empowered.
They can calculate risks better,anticipate challenges, and
ultimately make smarter moresuccessful long-term
investments.
And that's really the goal togive you our listener, the tools
you need to navigate thesewaters and reduce the inherent
risks involved in anyinvestment, how you use those
tools.
Well, that's up to you.
(28:18):
Absolutely.
So thinking about everythingwe've covered today, the
property's legal health, thesecurity of the buying process,
all the financial details,vetting developers and advisor.
Here's a final thought to leaveyou with.
Which one of those elements willyou prioritize most as you move
forward in your own investmentjourney?
And maybe more importantly,what's one new question you'll
make sure to ask your advisornext time you look at a property
(28:41):
based on what you heard today?
That's a great question.
Ponder, we'll definitely bediving deeper into related real
estate topics and futureepisodes, looking at projects in
different.
Stages, like pre-sale andconstruction, plus the
practicalities of ongoingmaintenance and administration.
So keep listening, keeplearning, and keep empowering
yourself as an investor.
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