The rush to a Mexican retirement is on
More and more Americans are moving to Mexico for the sun, the fun, and for less money.
April 12, 2005: 4:18 PM EDT
By Les Christie, CNN/Money staff
writer
NEW YORK (CNN/Money) - Most Americans know about the flood of Mexican immigrants into the United States, but many may not realize that there's a growing movement in the opposite direction.
The Dallas Morning News recently reported that as many as a million U.S. citizens now live in Mexico, up fivefold from just 10 years ago.
As recently as 1999, the American population of San Carlos in Sonora was perhaps 35, according to Phyllis Lilischkies, a real estate broker there. Now, the expatriate population is between 3,000 and 5,000 -- and soaring.
The bulk of this migration consists of retirees, drawn to Mexico by its culture, its climate, and, perhaps above all, its costs.
Many of the popular American expatriate enclaves are in regions boasting great weather. Lisa Larkin, a retired attorney and real estate expert who spends part of the year in Mexico, says the climate helps make life there "just a little bit sweeter."
Phyllis Lilischkies, who moved to San Carlos on the Sea of Cortez from Colorado, says, "The weather here is beautiful every day. I have the mountains behind me, I live in the desert, and I can walk out to the ocean."
Marsha Manoff and her husband Howard vacationed in Oaxaca 12 years ago where they fell in love with the area. Marsha, a private chef in Santa Fe found the complex cuisine of Oaxaca very appealing. Plus, "There's a large arts community here, and the indigenous arts and crafts are spectacular." The couple bought a home four years ago.
Bruce Greenberg, a real estate appraiser with an office in Cabo San Lucas, says Mexican cities provide a "taste of Europe." The architecture of Guadalajara, for example, evokes Spain. And Mexico has a strong tradition of ballet and music, opera, and native archeology.
Yet much of the scene is familiar for homesick Americans; there's Wal-Mart, Sam's Club, American style supermarkets and shopping malls, and, of course, excellent baseball.
Savings sources
Bruce Greenberg has appraised property all over Mexico for the past 10 years. He says that in San Carlos -- an easy four-hour drive from Phoenix and Tucson and one of the more expensive Mexican communities -- the average house sells for between $300,000 and $500,000.
"For that you get a three-bedroom, three-bath, 2,000 square foot house with a sea view and a swimming pool," says Greenberg. That's perhaps a third the price of comparable, sea-side real estate in Southern California.
Lisa Larkin points out that, however, that "American enclaves will be more expensive than living in a Mexican neighborhood." Some areas are quite comparable to her home base in Tucson in price.
But even when the initial cost is no saving, annual costs are low. "Insurance is much lower and taxes are minimal," says Greenberg. Real estate taxes run as little as .015 percent of market value. That means the tax on a $200,000 house may come to only about $30 a year.
Remodeling, routine maintenance, and putting on home additions are cheaper in Mexico, where labor costs are low. Retirees are often able to hire service people to do cleaning, gardening, and other work. In some parts of the country, a maid can be hired for as little as $10 a day or less.
Some caveats before you buy
Relocating south is not always problem free.
"Owning a home here has its usual share of difficulties," says Marsha Manoff. "Workers don't show up, the roof starts leaking, the electric company tells you that you have 15 days to move the meter to the road (at your own expense) or they will cut off service."
Americans may worry that health service facilities won't be up to snuff, but Greenberg says there are a half dozen or so excellent hospital centers in the country, many located near expatraite communities.
While many Americans still retreat to their home country for treatment of serious illnesses, others appreciate the slower pace and personal service that Mexican health-care professionals offer.
Medicare and most private insurance plans end at the border, but Mexican health insurance is available at a modest price, about $300 annually.
The process of buying property requires due diligence and common sense. There are areas -- of Chiapas, for example -- where civil unrest has had an impact on American landowners. And there are a few differences in the buying process.
Foreigners, for example, may not own land near the seashore or the borders. They have to obtain renewable 50-year rights through a trust called a fideicomiso. Banks charge annual fees of $200 to $1,000 to administer these trusts.
Larkin maintains an advisory on her Web site for those considering Mexican property. Among her advice:
Be sure to have a title search done. "A notary public handles closings, and is supposed to do a title search," she says. "But if he's wrong, there's no recourse."
Watch out for financing provided by the seller or developer. This arrangement often does not involve an exchange of title -- until the property is completely paid off.
Don't give a deposit directly to a seller or agent. Instead, establish an escrow account.
Anyone ready to buy should find a good real estate attorney to avoid expensive mistakes.
You should also immerse yourself in the Mexican experience before you make the move. Rent a house for a few months to see if you like it well enough to spend your retirement there.
For the best places to retire in the United States, click here.