Why and How to Invest in Mexican Real Estate – Interview with Monica Dallas and Ian Gengos

Enjoy this enlightening interview where Monica Dallas from Berkshire Hathaway HomeServices California Properties sits down with Ian Gengos of Berkshire Hathaway HomeServices Baja Real Estate. In this engaging conversation, Monica delves into the intricacies of investing in Mexican real estate by tapping into Ian’s extensive experience in the field. Ian, who has been a pivotal figure in the Los Cabos real estate scene for nearly two decades, shares his insights on the evolving landscape of property investment in Mexico. He discusses the diverse range of opportunities across the Baja Peninsula, from commercial to residential properties. Ian’s team has witnessed and contributed to the region’s growth with offices strategically located in San Jose del Cabo, Loreto, and La Paz.

The discussion pivots to why Mexico, specifically the Cabo area, has transformed from a beloved vacation spot to a global destination for retirement and investment. Ian highlights the shift towards commercial investment and how this change shapes Cabo into a commercial hub for Latin America, offering a new spectrum of investment opportunities. Monica and Ian also explore the allure of traditional residential properties, emphasizing the unique culture, favorable weather, and lifestyle associated with the Sea of Cortez area. They touch upon the economic strengths of Mexico, including its recent achievement as the top export partner with the US in 2023, and what this means for business and investment prospects along the coast and border areas.

Watch the interview: Why and How to Invest in Mexican Real Estate – Interview with Monica Dallas and Ian Gengos

A significant part of the interview is dedicated to demystifying the process for Americans interested in owning property in Mexico. Ian explains the concept of a fideicomiso (trust) and its importance in purchasing within the restricted zone, making the investment process transparent and approachable. This interview is a treasure trove of information for anyone considering investing in Mexican real estate. It’s not just about showcasing properties; it’s about understanding the ‘why’ and ‘how’ behind making a significant investment in this dynamic country. Enjoy the interview and gain valuable insights into Mexican real estate investment!

Interview with Monica Dallas and Ian Gengos about investing in Mexican Real Estate

Monica Dallas: Hi, everyone. I am here with Ian Gengos. Ian is the broker in charge of the San Jose del Cabo office for Berkshire Hathaway HomeServices Baja Real Estate. Can you please tell us how long you have been here in Mexico?

Ian Gengos: Yeah, I’ve been here now for almost 20 years, all of my time in Los Cabos, which is the area that refers to both San Jose del Cabo and Cabo San Lucas. Our office is in San Jose, in the art district, but we service the entire peninsula with clients who want to buy and sell commercial and residential properties. We have an office in Loretto on the Sea of Cortez, about a six-hour drive from our principal office. Then we have another one in La Paz, only two hours from our principal office in Cabo. And La Paz is the state capital. So we’ve seen some interesting growth over the last few years, and that’s why we opened in these other areas. We’re finding that the clients we’ve worked with for years have started branching out. They’ve had one purchase, maybe multiple purchases and sales in our area, and are looking for other opportunities as those markets differ slightly from the traditional market here in Cabo.

Monica Dallas: Nice to hear, and I am. Congratulations on the way that you have been growing your business.

Ian Gengos: Thank you.

Monica Dallas: One of the things that I would love to ask you is why you think that is a good option to invest here in Mexico.

Ian Gengos: Yeah, there’s a few different answers to that question depending on, I suppose, who’s asking and why they’re interested in international investment. Cabo has been a popular vacation destination for many Americans for many years. But through Covid and as we’ve evolved from a vacation primary community to more of a second primary residence community for many people, we’ve hit the world stage as a global destination for retirement, vacation investment, and all of the above. So we’ve seen things shift slightly and even started to see more commercial investment. This community is transitioning to more of a commercial center, a commercial hub for Latin America, which brings an entirely different landscape of opportunity for potential buyers.

Monica Dallas: Nice. It’s interesting. Before, you used to hear only about investing in retirement homes or something like that.

Ian Gengos: Very interesting time. And whether it’s somebody looking for a place to get away and more of a traditional residential property, then clearly the culture, the weather, the location on the Sia Cortez. This lifestyle comes with that; that’s a big draw. And the peso is now strengthening internationally as a currency as well. So, for American buyers looking to get something while their dollar is still strong, this is a very good time for them to look at investing in Mexico. When you look at them from more of an industrial perspective, Mexico, this last year in 2023, surpassed China as the number one export partner with the US. So what that means for the economy, what that means for the opportunity along the border, along the coastline, for businesses, for people that want to make sure that the amenities are where they want to spend their time, to support their lifestyle, all of that is falling into place nicely. Lots of stuff going on that’s pretty interesting.

Monica Dallas: I can see that you are an expert. It’s a pleasure.

Ian Gengos: Well, I mean, an expert is generous. Thank you. I like to think that I have answers to questions that our clients are asking before they think to ask them. Right. Anybody can say, yes, this is a beautiful house. Look at the view; look how comfortable this is. What a great amenity set. But we can help people figure out how to do it. But the challenge is giving them some of the supporting rationale or the reasons to do it. The why. Right. You look at the strength of this economy, it’s twelve 13th in the world. The labor force is young, where you see a lot of other countries aging out. The manufacturing, the oil and gas, renewable resources, the supply chain, the food supply chain, all of those things really position Mexico as. And this is important for people that want to spend more than just a few weeks a year here. This is important to understand as a rationale or reason to put an significant investment into a foreign country. What is there beyond the views, the culture, the lifestyle, the weather, which is all great, that is going to make somebody feel comfortable investing a fairly significant portion of their wealth on foreign soil.

Monica Dallas: Yes, I agree. I am originally from Mexico City, and when I go to Mexico City, it’s interesting how much it has changed the amount of foreigners that are coming to Mexico to invest. It has changed interestingly in the last year.

Ian Gengos: Yeah. And look, we’re more of a global community now than ever. And it’s not unusual for us to get interest from Spain and Portugal. And it’s reciprocated. Many of our Mexican clientele we help sell property for are buying in Madrid, Barcelona, or the southern coast. And what’s great about our network with Berkshire is we have offices in these places. When we can work together internationally to collectively support our client’s interests, it’s also comforting for them to know that working with me is an extension of you, or working with our colleagues in Spain is an extension of me. And at the end of the day, that single motivating factor for all of us is to ensure that our client’s best interests are served and that we take care of them.

Monica Dallas: Exactly. I think that is an important point because when we think about a global brand, that is the benefit you are taking care of as a family. And we share the same values.

Ian Gengos: Yeah. It’s comforting to know that you can trust the people who are, in some cases, very far away and know that they have your interests first and foremost as their focus.

Monica Dallas: Yeah. I completely agree. Another thing that I would love to hear from you is when people want to own something in Mexico; if you are from the USA and you want to own something here, what is the process, and how do you get there?

Ian Gengos: Yes, we figured out the why. Now it’s the how. It’s pretty straightforward. What most people don’t realize is that as a foreigner, as an American, you can own a real estate fee simply in Mexico. It’s not a land lease or anything like that that people have been led to believe or misunderstand to be the case. That said, there is a specific strip called the restricted zone in the country of Mexico, where if a foreigner wants to purchase within that zone, and that zone is 50 miles from the border or 30 miles from the coastline, then there’s an extra step. And that’s in place because the Mexican constitution prohibits foreign investment in strategic areas so that they can protect their sovereignty. So that there’s never a situation like Guantanamo Bay in Cuba where some foreign interest sets up a military base or anything like that. So in the 70s, what the government did is they established this mechanism called a fideicomiso, which is essentially a living trust, okay? And when a buyer likes an area, of course, within the coastline parameters, with view or close to the border, they establish a trust through a trustee bank. So we establish that trust and then the executor of that trust can buy, can sell, can build, can tear down, most importantly, can will that in perpetuity, indefinitely. It’s a 50 year trust. 50 year trust. And it’s renewable every 50 years. Costs about $1,500 to set up, about $500 a year to maintain it. That’s it. It takes a little longer in the closing process because of the dissolution of one trust and the establishing of a second one. If we’re buying the home from an existing owner, that’s a foreigner. A little less time if we’re buying it from a Mexican developer or a Mexican family or business. But, yeah, that’s essentially the process in a nutshell. It’s pretty straightforward, a few extra steps. But that’s why it’s so important when you’re looking at investing in a foreign market, to work with a professional in the area that can guide you through the steps.

Monica Dallas: I know that you say it’s too much to say that you are an expert, but I think that talking to you and before this interview, we talked for a little bit longer, and I feel pretty confident.

Monica Dallas: Thank you, Ian.

We want to thank Monica Dallas from Berkshire Hathaway HomeServices California Properties for her time doing this interview, and we invite you to follow her on Instagram. If you want to know more about investing in the Mexican real estate market, we are here to help you. If you are looking at Los Cabos, we invite you to download our Cabo Home Buyer’s Guide.

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