“All men’s gains are the fruit of venturing.”’ Herodotus
In 2011, Mexicans, both US and Mexican-born, purchased $5.74 billion dollar of US real estate. This represents 7% of properties sold to international buyers and makes Mexico the third largest investor behind Canada and China.
Why? Some of the reasons for Mexican investment are expansion of companies, such as Grupo Bimbo buying Sara Lee Bakeries. A Mexican automotive parts manufacturer owns a facility in Tennessee which employs more than 1,000 American workers.
Mexicans have also been attracted to factors which have influenced other foreign nationals: the plunge in property prices, and the weakness of the US dollar.
Relocation to the USA of Mexican investors and business people requires visas:
1. E-I and E-2 visas are available to citizens of countries who have trade treaties with the USA. These trade and investor visas allow entry to Mexicans involved in transnational trade. They made reside in the US with their families up to 5 years at a time. Both visas can be renewed indefinitely as long as the investment or trade continues.
2. The EB-5 visa, also an investor visa, encourages foreign nationals to make a significant investment in USA job creation in return for a green card for themselves and their families. Mexican investors can apply for this visa with a minimum of a $500,000usd investment in a “Regional Center Program” without having to start or run a business themselves.
3. The TNB visa is available through the provisions of NAFTA, which allows Mexicans in designated professions to work and live with their families in the USA. This visa can be renewed every three years.
What type of real estate are Mexicans buying in the USA?
1. Residential properties: Purchases in Arizona and Texas include upscale homes in gated communities which have the level of security these buyers experience in their Mexican homes. Nogales, Arizona as well as San Antonio, Houston, Dallas and recently, Austin, Texas are experiencing sales to Mexican nationals.
2. Income properties are attracting groups of Mexican investors for depreciated prices of apartment complexes in Dade County, Phoenix and Tucson. Luxury condominium projects in cities like McAllen, Texas also are seeing buyers.
3. Commercial investments include small retail, franchises and restaurants to nationals who have sold similar businesses in Mexico. Mexican high-tech firms are buying offices space for their operations and leasing.
4. Industrial properties: Manufacturers are building multimillion dollar plants in the Rio Grande to expand operations into the USA market.
For the most part, buyers from Mexico do not need financing. Sales tend to be cash since borrowing is still not common in the culture. If the purchase is large, they may need a loan, but they will put down at least a 30% down payment. Low leverage in business transactions is more the cultural norm (and good business, I think).
Information for this report has been provided by the Global division of the National Association of Realtors of the USA®, through the auspices of the CIPS® membership of Certified International Property Specialist.
This article is based upon legal opinions, current practices and my personal experiences. I recommend that each potential buyer or seller of real estate conduct his own due diligence and review.
Harriet Cochran Murray, Director of Cochran Real Estate, is a seasoned Real Estate professional both here in Puerto Vallarta, Mexico and in the United States. Harriet has served in many capacities as a board member for the local Real Estate Association AMPI (AMPI is the national association of real estate professionals). She is also a member of FIABCI, NAR in the United States and a proud member of CIPS (Certified International Property Specialist), a designation of NAR. Harriet’s expertise and experience in the Real Estate and especially in the Mexican market makes her Viewpoint blog articles both informational and intriguing. Harriet is a Buyer’s Agent who specializes in getting the best deal on the right property for her clients. Click HERE to view Cochran Real Estate Listings.