Financing and Owning Property in Cabo San Lucas Mexico
Financing in Cabo San Lucas
Developer Financing
Pre-construction is a great option because there is a huge demand for new homes in an area like Los Cabos and lots of land available. At OwninCabo, we truly like this concept. Developer financing typically includes an interest rate of between 5% and 10%, a down payment requirement of 50%, and a three to five year term.
Cross Border Lenders
There are businesses in Cabo that will provide 15, 20, and 25 year loans with 30-50% Down Payments, although the interest rates there will be significantly higher than in the United States, averaging 7–10%. Global Mortgage is a notable example here in Cabo San Lucas. The interest rate will be fixed; there won’t be any balloon payments or other additional costs.
Seller Financing
Seller financing accounts for a small portion of the market, but it is not a bad option to have. Seller financing typically lasts three to ten years and requires a 30% to 50% down payment.
Mexican Bank Financing
There are a few reasons why this is a bad decision, including the fact that you lack credit in this country and the high interest rates, which range from 10 to 12 percent. The good thing about it is generally citizens that do it can put as little as 10% down payments. Most people merely undertake cross-border lending because it makes more sense.
Home Equity Line of Credit (HELOC)
A person who has a nearly paid-off home in the US may decide to borrow money against the equity they have built up there and utilize the proceeds to buy a property here in Cabo.
Self Directed IRA
If you wish to hold real estate in your IRA, you must have a self-directed IRA. You cannot live there with your family; any real estate you buy must only be for investment purposes. For real estate acquisitions made through an IRA, typically cash is needed, and the IRA is responsible for paying all related expenses.
Owning Property in Cabo
There is a lot of inaccurate information out there, but the short answer is that you do have the same rights to own property in Mexico as a citizen, including the ability to buy, sell, rent, and hold it. A Fideicomiso or Trust is the most popular tool for accomplishing this. The trust you might already have in the United States or Canada is fairly similar to this one.
In fact, many wealthy Mexican families keep their assets in a fideicomiso so that ownership can be easily transferred to their children or another designated beneficiary in the event of their passing. Another alternative is to incorporate a Mexican corporation to hold title to the property, but this is far less common.
Mexican law prohibits US citizens from owning property within 100 kilometers of Mexico’s international borders. Both Americans and people of other nations are affected by this. Owning land or property 50 kilometers or fewer from the natural ocean line is forbidden by the same statute. The Gulf of Mexico is enclosed by these oceanic boundaries. A Licensed Realtor in Los Cabos can assist you in comprehending the specifics of how to take title on your Mexico property as they may apply to your unique situation.
In Cabo San Lucas and the nearby areas, a wide range of properties are for sale. There are luxurious condos, beachfront residences, and estates with ocean views. These are only a few examples of various properties.
