6 advantages of investing in real estate in Mexico
Despite the fact that in the last four years the real estate sector registered a slow growth compared to other economic sectors, from 2018 investments in real estate began to present a favorable change by reversing its behavior showing signs of progressive and stable growth.
According to information from the National Institute of Statistics and Geography (INEGI) and the System of National Accounts of Mexico, the growth of national Gross Domestic Product and real estate services and rentals of real estate and intangible assets, had last year a growth of 2 percent respectively, so it is expected that by 2019 this figure will increase depending on other economic factors such as foreign investment, unemployment rate, and labor productivity.
For many foreign entrepreneurs, investing in real estate in Mexico brings economic and personal benefits that are related to the value of the dollar vs. the value of the Mexican peso, the familiarity of cultures, the financial return involved in investing in real estate and the country's modern and accessible infrastructure in certain areas.
On the other hand, for Mexicans themselves, investing in real estate often involves long procedures in private and government institutions, such as public banks, Infonavit or Fovissste.
It is not always necessary to invest in new properties. Moreover, in 2018 the sale of new properties fell 3.8 percent, while used properties reached a sales percentage of 13.4 percent. A property is more than just an expense, and, depending on your financial organization, it could benefit you in many ways in the medium and long term.
To make these benefits clearer, Vivanuncios, eBay's real estate portal has compiled for you a list of six advantages of investing in real estate in Mexico, and how these advantages will help you grow in various areas of your life.
In 2018 the sale of new properties fell 3.8 percent, while used properties reached a sales percentage of 13.4 percent.
Why invest in real estate in Mexico:
1. Offers security and flexibility in the future
Buying a house, apartment or land is an action that will protect your future and your finances in the event of an economic or personal emergency.
If you are the head of the family, for example, having one or more properties will give you the certainty that, when you need it, you will have a roof over your head, a possible source of extra income and a place where your family can rest without the worry of having to pay a monthly rent.
On the other hand, if you are an entrepreneur, in the future you will benefit from an investment in real estate because they will give you the opportunity to build a network of properties that could serve as collateral for your business, and that, in the end, you will be able to take full advantage of by receiving back part of the investment you made in a short or medium term.
In addition, investing in real estate will give you the flexibility to build more businesses within the same properties and continue to increase your capital and earning capacity. Finally, thinking long term, a property is considered a financial guarantee that you can use when you want to retire.
2. The return on investment rises
When you invest in real estate for commercial purposes, you should know that your property has a return that can be very useful to you. The return on investment is calculated depending on the conditions of purchase, the capital gain and the flow of money that the property obtains after being acquired.
This measure refers specifically to the time it will take you to recoup a percentage of the investment you made and generally gives you the certainty that your purchase was a good decision.
You can calculate this metric yourself by dividing the down payment on the property by the monthly net profit, which can be generated from your commercial use of the property.
A very important factor when investing in real estate in Mexico is the capital gain, that is, the increasing value that the property you bought acquires over time. This is determined depending on different factors such as the area where the property is located, the commercial and pedestrian flow, the prices of nearby properties, the time and quality of the materials, as well as the maintenance and use you give it.
You should keep in mind that the price and value of a property are different concepts. You may have acquired property for a price, however, its value may be different from that originally established and may increase over time.
This increase in the final value of the property will allow you to obtain an increasingly attractive and useful return on investment to take advantage of your other investments.
3. Support the local economy and stability
Buying a home not only benefits you or the financial institution that supported you in acquiring it.
Whether it's a new or used home, properties always need repairs or improvements that can be provided by local businesses or independent individuals who lend their knowledge to make your future home more welcoming and safe.
The real estate industry includes equally all those providers of home services in a local space; from architects, bricklayers, blacksmiths, locksmiths, carpenters; therefore the moment you buy a house, you put to work that gear of services and this stimulates the economy of your city, generating jobs and opportunities that you can also take advantage of in your favor.
Investing in real estate also helps to improve housing areas by creating communities of people who live in the same area and are responsible for the maintenance of spaces and properties. For example, if you invest in a property in addition to your own and decide to rent it, in addition to receiving a monetary benefit, helps others to have a decent home in which to make their lives.
The social fabric is repaired when a group of people, who may be close or distant neighbors, join together to request improvements in their surroundings, stay alert and report cases of insecurity or organize themselves to create commissions that meet the needs of all the inhabitants of the place.
4. The investment options are varied and with different results
Investing in real estate does not necessarily mean just buying a home with a mortgage. The properties you can buy range from houses of all sizes, traditional apartments, apartments in buildings, real estate in housing developments, land for construction, commercial premises, buildings, flats in buildings, among others.
This great variety of investment options allows you to diversify your money and reduce the risk of losses due to frauds and sudden changes in the economy.
Also, each property has its own investment conditions, so you can make payments in different time periods depending on the circumstance of purchase and your economy. For example, through real estate loans, using your savings, paying cash or making deals with financial institutions so that the investment process is tailored to you and how best benefits you.
In terms of results, having a wide variety of real estate investments will allow you to use your properties in creative ways. Whether you rent them, occupy them for your own benefit, use them as commercial premises or don't want to give them an immediate use, all the options that are generated from your decision will be only for your benefit and that of your loved ones.
5. You can invest in the way and with the speed that suits you
Mortgage payments generally last, depending on your salary, savings, points or quoted semesters, between 15 and 30 years.
However, this is not a general rule that everyone who wants to invest in real estate should follow. There are many options for you to adapt your monthly payments to your living conditions and ability to cover the debt.
Government agencies, for example, are responsible for designing and providing support for those who feel they cannot yet invest in real estate for their personal or commercial use.
From personalized installments, variations in down payment rates and adjustments in payment times, to prepayment options that sometimes involve fines or extra charges, but are useful if you have the solvency to complete the debt as quickly as you want.
It is important to have significant savings to give a down payment, to be able to check constant income and organize your finances correctly, are factors that will help you to cover the debt of your investment in real estate without displacing your current economy and without bringing you monetary problems in the future.
6. Keep your money active
There is nothing worse than having money and spending it little by little on pleasures in the short term. If you keep static the income that you receive weekly, monthly or annually, it is a guarantee that you will lose them in situations that seem necessary or urgent and you will lose the opportunity to invest in real estate in a timely manner.
While it is true that the real estate market is going high and the sales of houses and apartments are more common, real estate prices rise in the country to a percentage that is better to take advantage of when it is at its lowest point.
According to the Housing Price Index of 2019, only in the first quarter of this year, the price of properties acquired with a mortgage loan increased by 9 percent compared to last year. This means that, on average, the price of houses in this period amounted to 1 million 71 thousand 235 pesos, and the median price was 617 thousand 755 pesos.
As mentioned above, the goodwill and context in which a property is located make investing in real estate in Mexico an activity that pays back economically and that, as an added value, is part of your personal assets.
Planning is an important key to having stable personal finances. It is better to take advantage of your income in a real estate investment that will bring you many benefits in the future that leave the money under the vulnerable mattress at all times.
Investments in real estate will achieve that you benefit from passive income, that is, those for which you will have to make a minimum effort to obtain and that is also received on a regular basis.
Real estate provides tangible and adaptable benefits that you can use to your advantage in many ways. You can inherit them from your family, remodel and rebuild to maintain profitability and earn the opportunity to continue investing and increasing your assets.