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8 FAQs Concerning Baja Real Estate

FAQ #1: What is the better and/or the most popular way for non-Mexican nationals to acquire Baja real estate?

The most popular way is also by far the best way. Non-Mexican nationals prefer to own Baja real estate using the highest form of ownership that is possible for them. They use an instrument called a fideicomiso, or a Mexican bank trust, to do this. 

FAQ #2: What is the first thing I should do before I make an offer on a Baja home or piece of land?

Check to see that the sellers are the legal owners.  The sellers should be able to produce either an escritura publica, or a fideicomiso for the property proving that they are the legitimate owners.

FAQ #3: What is the 99 year lease thing that we have always heard about but never understood?

There is no 99 year lease.  It is a myth.  The only way to control a Baja property for that long is using a fideicomiso, escritura publica, or corporation.  Leases in Baja are always limited to 10 year terms; most of them are renewable, but never to exceed a 10 year term.  Any lease agreement for greater than 10 years is invalid and non-enforceable.

FAQ #4: What is the land lease property situation really like in Baja California?

Land leases are not for everyone, but for some casual visitors to Baja, the fit is just right.  Under a lease, you will never own the land, but rather lease it for 1 to 10 year periods.  You can build whatever kind of home you desire there, and at the end of your term, hope to be able to renew the lease.  Generally, land owners are in favor of renewing their leases, but it’s good to ask before signing a contract.  Depending on the terms you have with the landowner, you may be able to sell your home and transfer the remaining time on your lease to the new buyer.

FAQ #5: What are the different ways to control land in Baja California, Mexico?

Depending on which type of land you are purchasing and your nationality, you can control land using a fideicomiso, escritura publica, corporation, or lease.

You can also use a U.S. based LLC controlled by your IRA to buy Baja real estate.  While this can be a bit complicated to set up, it offers long term security for your retirement investment portfolio.

FAQ #6: Why would I want to use a Mexican corporation to buy Baja real estate?

Investors use Mexican corporations to acquire Baja real estate when they don’t plan on using the property for their own personal enjoyment.  These investors use a Mexican corporation to be able to deduct expenses against their gains.  Also a Mexican Corporation has the advantage that it can hold title to many properties at once, offering great savings over having multiple fideicomisos.

FAQ #7: Many developers are offering to put my unit in their vacation rental pool if I buy from them, saying that the money I earn through their rental program will cover my monthly payments.  Is that true?

Most likely, no.  You might get enough vacation rental revenue to cover your mortgage payments during the high season months, but this will not be true for the whole year.  Some developments are in position to do better as a vacation rental than others, but rarely will this type of program pay for your home.

FAQ #8: Who are all of the non-Mexican nationals who are buying all of this Baja real estate?

Most of the buyers of Baja real estate come from the United States and Canada, but there are many who come from Japan, many European countries, including England, and beyond.

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