cookj5
Oct 26, 2011, 1:50 PM
Post #3 of 9
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Re: [twelveoaks] need advice on renting short term in Ajijic
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You'll no doubt hear this from others as well as me: rent for longer than 3 months if you are seriously thinking of buying. The usual suggestion is 1 year and I would suggest possibly 2 years. Why? The housing market down here is very different than anything you are used to north-of-the-border.
1) There is no mortgage system that you would recognize. Maybe, just maybe, you can find an owner where you can plunk down 50% up front and the balance over 5 years. The vast majority of the time, people pay the full amount, up front. Question: can you afford to tie up $150k - 300k of your net worth for an unlimited period of time?
2) There are no disclosure laws here. Cracked foundation? Termites? Plumbing or electrical problems? If you don't find it through a thorough inspection before you signed on the dotted line, tough luck!
3) There are no zoning laws here. That closed shop next door you barely noticed with your starry eyes may be a carpentry shop or iron works, with shrieking machinery that runs all day. The empty lot next door may be sold to someone who puts up a loud night club.
4) Prices, although they are beginning to show some signs of moderating, are still ridiculously high. This is especially true because you can now find many places in the US cheaper than comparable places here, and with a 1st world infrastructure backing them up. Why so high? Many current owners bought high, paid full price, and now want to sell. Maybe they pumped tons of money in to refurbish the place to their best fantasy. They don't want to take a loss. Many just can't get it through their heads that a house is not worth what you paid for it, or what you spent fixing it up, or what your ego wants it to be worth. It is only worth what someone else will pay for it. And the market is flat on its back, currently.
5) If you ever want to sell, make sure to pack a lunch. It may be a long wait. This goes back to point #1. I have seen houses in my neighborhood and elsewhere currently on sale that have been on sale for the full 4.5 years I have lived here. There are literally hundreds of houses on the market and hundreds of others that will suddenly join them at the first sign the market is improving. If you buy, and for some reason want or need to sell, your house will be competing with all those.
6) Are you really, really sure you want to live here indefinitely? Once you plunk down your cash, you are pretty much anchored to that spot. Maybe you picked the wrong house, maybe the wrong neighborhood, maybe Lake Chapala or even Mexico turns out not to be your cup of tea. Maybe financial issues, or family issues back home, or health issues cause you to decide you must return to the home country. What are you going to do with a house in Mexico you can't sell?
All that said, some people buy houses after a few weeks or even a few days here and say they are happy. Good for them! But anyone who doesn't take the issues I raise above and consider them very carefully is taking a foolish risk with their financial future. Live here long enough so that you know the sheep from the goats and what your real options and risks are before you make any big decisions about buying.
Just my opinion, others may differ.
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