'Real Estate News' Category


Mexican Housing Booms Despite US Crisis

Tuesday, January 22nd, 2008

By Theresa Bradley – Associated Press Writers

In her bustling corner real estate brokerage, Ana Laura Pulido is doing her best business in years, enjoying a sort of Mexican immunity from the U.S. housing crash.

“It’s a time of hope,” said Pulido, who has sold hundreds of homes to middle-income families since 1992. “The buyer today is more aware. People buy with more ease, they can plan long-term.”

Long thrashed by swings in the U.S. economy, Mexico now boasts a thriving housing sector whose record growth leads Latin America — a sign of increased economic stability and an outlet for investors looking to escape the U.S. downturn.

Giants including the California Public Employees Retirement System, the largest U.S. public pension fund, are already bankrolling projects in Mexico, where they see “more bang for the buck,” said Clark McKinley, spokesman for CalPERS, which has invested more than $300 million in Mexican real estate funds.

The trend could even slow emigration from Mexico, by generating millions in jobs and personal savings as a fresh supply of loans gives many their first chance to own a house.

President Felipe Calderon has set a national goal of a million new mortgages a year by 2010. On Monday, he unveils a set of measures to ensure growth continues, with plans to boost Mexico’s small resale market and combat the urban sprawl that has begun to carpet valleys with hundreds of thousands of matchbox rowhomes.

Behind the boom are six years of economic growth and stability, and a national shortage of 6 million dwellings. While interest rates are falling, just 6 percent of Mexico’s 25.7 million homes are financed with mortgages — compared to about 67 percent in the U.S. Most Mexicans still inherit their homes, buy them with cash, or build them by hand.

That pent-up mortgage demand in a nation of 108 million means lenders can be choosy, enforcing strict standards that held delinquency rates below 4 percent in third quarter-2007, compared to 5.6 percent in the U.S.

“Mexico is in the early stages of expansion,” said Juan P. De Mollein, managing director for Latin American structured finance at Standard & Poor’s. “There are still plenty of points for evolution because there’s still plenty of demand.”

In the U.S., lenders looking to expand their portfolios granted risky mortgages to borrowers with weak credit, but in Mexico, that “subprime” category doesn’t exist, because lenders don’t need it to grow. Also, few Mexicans flip homes or refinance mortgages, keeping the market more stable.

“Mexico doesn’t have a credit issue. We can still choose our borrowers because demand is so great,” said Mark Zaltzman, chief financial officer at Su Casita, one of Mexico’s largest mortgage lenders.

A recession north of the border could choke U.S. investment in Mexico, curbing job creation, discouraging new homebuyers and stalling housing growth.

But that won’t likely lead to mass layoffs and defaults, said Rafael Amiel, managing director for Latin America at the financial consultancy Global Insight. Mexico simply has too much room to grow, and expanding local markets have insulated it somewhat from U.S. downturns.

Housing demand could swell more as migrants are pushed home by the souring U.S. economy and crackdown on illegal immigration — generating four new jobs for every home raised, said Carlos Gutierrez, Mexico’s housing policy director.

All this represents a major change from 1994, when Mexico devalued the peso, sending inflation and interest rates soaring, forcing homeowners into default and pushing banks to the brink of collapse. Credit was so tight that most Mexicans paid cash upfront or constructed their own homes, often adding one room at a time.

Since then, Mexico has seen a housing recovery built on a mix of government initiatives, private investment and a winning gamble by a new group of entrepreneurs who took a local approach to mortgage lending, using knowledge of family and neighborhood connections to make sure loans got paid.

Rather than build public housing, the government restructured mortgage-lending laws, setting stricter credit guidelines, standardizing appraisals and urging lenders to raise cash on financial markets. It also overhauled Infonavit, a public agency that grants more than half Mexico’s mortgages, funded by a 5 percent payroll tax. Some 20,000 jobs were outsourced as the agency more than doubled new loans to 458,700 in 2007, director Victor Borras said.

And when commercial banks ran for the border, a new kind of lender stepped in, known as “sofoles,” for the Spanish acronym for “limited financial association.”

Taking advantage of Mexico’s tight family ties and government credits, these nonbank mortgage lenders set up neighborhood offices, requiring relatives to co-sign loans and collecting late payments door-to-door, proving profits could be made.

Banks have since returned, and blossoming competition drove average 15-year mortgage rates to 12.5 percent in November — a deal in Mexico, where rates topped 65 percent in 1995. Construction is booming too, as just 30 percent of new homes were self-built by their owners last year, down from 50 percent in 2004, Gutierrez said.

While big banks target higher-income borrowers, sofoles are pioneering mortgages for street vendors and taxi drivers, who work in the huge informal economy without documented salary or credit histories. Sofoles study spending habits to establish their income, offering trial payment periods to prove borrowers can afford payments on entry-level homes that range from $17,000 to $37,000.

Another huge potential market is the estimated 11 million Mexicans in the U.S., who can now buy “cross-border” mortgages to pay off homes in Mexico, increasing their control over the earnings they send relatives and cutting the time they need to work in the U.S. to build a future back home.

Even as home lending soars, overall debt remains low, making a Mexican credit bubble unlikely. Major mortgage insurers, including U.S.-based AIG United Guaranty and Genworth Financial, now back Mexican loans, slashing risk and making it easier for lenders to bundle and sell debt to investors as mortgage-backed securities — raising capital to grant yet more loans.

Nearly $5.8 billion of these securities have been sold since 2003, offering investors an alternative to tumbling U.S. markets and giving Mexico’s nascent pension funds, which have relied on lower-yielding government bonds, a place to store assets long-term.

Mexico’s housing sector is still full of risks, including land ownership disputes, infrastructure delays and limited access to water. The emphasis on private building has concentrated developments in wealthier states, while masses of poorer people still live on dirt floors.

Even so, millions of first-time homebuyers now have an asset to leave their children, or to use as collateral to finance future spending, fueling growth.

“I always had in my head that the only thing you can give your kids as inheritance is an education and a house,” said Antonia Correa. The 37-year-old receptionist paid $7,200 down on a three-bedroom stucco townhouse in a sprawling new development in Cuautitlan, outside Mexico City.

“You could be short on things,” she said. “But a roof is the best. It’s your world, your home.”

Real Estate – Land Development in Mexico

Monday, January 14th, 2008

Purchasing real estate in Mexico doesn’t have to be an adventure into the unknown.

Real Estate in Mexico is one of the hottest investment opportunities in the world. With Oceanfront land as low as one dollar a square meter, developers and investors from all parts of the globe are buying land up and down the coasts of Mexico.

The best real estate purchases in Mexico are no longer in the heavily developed areas such as Cancun, Acapulco, and Puerto Vallarta. Oceanfront land in the developing areas such as Puerto Penasco (Rocky Point) in San Carlos,  Bahia Concepcion in Baja California, and Costa Alegre in Jalisco just outside of Puerto Vallarta is now the best real estate investment opportunity in Mexico.

With both the Mexican government and land developers pouring billions of dollars into the tourism infrastructure on the west coast of Mexico, Oceanfront land value in Mexico has seen a steady rise in prices. Whether its investors simply holding land and watching the properties increase in value, or developers joining the ongoing boom in Resorts, golf courses, Condos the investment opportunities in Mexico real estate are endless.

Interested in an investment opportunity? We can help. We at Investment Mexico strive to search out great real estate investment opportunities for our clients. All land that we offer is guaranteed to have clean titles and is ready to sell. Let us know what you are looking for and we will find the best investment opportunity to match your requirements. Purchasing real estate in Mexico doesn’t have to be an adventure into the unknown.

By:Jack Krohn

http://www.articledashboard.com

Expert advice is available at www.realtyexecsmexico.com

MEXICO’S REAL ESTATE INVESTORS PROFIT

Tuesday, December 11th, 2007

Real Estate Investors have thrived in Puerto Peñasco, (Rocky Point) for many years. This important aspect was seemingly overlooked in recent articles published in the Arizona Republic. An informed, unbiased representation of the real estate community in Rocky Point should mention that the vast majority of investors, literally tens of thousands of satisfied people have had much happier stories to tell than those found in North Beach. One could walk for miles along Sandy Beach, Playa Encanto, Las Conchas or most other communities around Rocky Point on any weekend and hear glamorous reports from people not represented in recent articles. Living in Rocky Point is such a pleasure; we are so often reminded of our blessings as we greet the return clients and happy homeowners. There have been some challenges and obstacles, which certainly can happen anywhere.

NORTH BEACH IS AN UNUSUAL SITUATIONThere were misfortunes that hurt many good people in North Beach, an expansion of beach approximately 15 miles away from downtown Puerto Peñasco, bordering the Mayan Palace. Many people were attracted by developers with beautiful marketing material and equally attractive visions of grandeur. It is however, irresponsible to characterize the practice of real estate in Rocky Point or Sonora as similar in whole to one with issues older than most of the respected developments in this town. There is no question that North Beach has had some issues, some going back to 1996. Also very important to point out is that the problems faced by the developers and resting on the shoulders of investors are not losing their money; there are delays in gaining title. The article in one sentence wrongfully challenged the credibility of a bank trust, stating that “All believed literature published by government agencies, including the Arizona Mexico Commission, stating that Mexico’s Fideicomiso, or bank trust, system safely ensures property rights to Americans.” It then went on to say that none of the people devastated in the North Beach debacle ever received trusts. Raul O’Farrill, A notable attorney practicing in several Mexican cities as well as the U.S., was retained in 2003, long after the deepest of issues took root in North Beach. Two satisfied clients within the boundaries of North Beach were quoted, as being extremely satisfied; together they represented about 150 homeowners in North Beach’s sub-communities of Playa Dorada and its neighbor, Playa Miramar. This by itself indicates 150 satisfied clients. The Mexican, (Agrarian Law) legal system is complex much like the Common Law system used in the U.S. There are pros and cons involved with both systems; one example in the Agrarian system is the way the facts are presented to a judge, in writing, and not to a jury, thus eliminating the ability for flamboyant showmanship skills influencing decisions. O’farrill’s continued involvement through many disputes shows evidence of satisfied clients and no more implicates him than to imply that Johnny Cocheran was an accomplice of O.J. Simpson. The recent article, though it painted a much more dismal description than we are actually witnessing here may help bring the attention of Mexican officials, and help us resolve the issues in this one community, most of which have little to do with the developers themselves. HOW TO BUY SAFELY IN MEXICOThere are several things to consider when investing in Mexico. First and foremost, with proper representation it is totally safe to invest in Mexico. The Fideicomiso, also known as a bank trust is not a lease. If it was not a safe mechanism, companies like Stewart Title, First American Title and others would not warrant its validity. The United States Government would not allow the investment in Mexico Real Estate as legitimate self directed IRA’s if there was uncertainty. There are a number of highly regarded financial institutions lending millions of dollars that certainly would not risk this kind of revenue on leases or unwarranted real property, and more than 1.6 million Foreigners in Mexico would not be happy homeowners in MexicoINFORMED BUYERS GATHER INFORMATION AND DEMAND DISCLOSUREAnother consideration is that an uninformed buyer can get hurt. When someone buys a home, they have a right to expect honest full disclosure. Disclosure is a very important aspect that has often been overlooked by investors in Mexico’s beachfront communities. Impulse has driven many investors toward their acquisitions, most experienced positive results. When purchasing real estate anywhere, remember to ask yourself, “Who is representing me?” In the end, any buyer can protect themselves, in any development with the proper contract that addresses potential issues. In Rocky Point we often refer to all buyers as investors because in a sense, real estate for most has outpaced the stock market, or most any other holdings. It is however important to differentiate a condo buyer looking for a place for the family to enjoy, from an investor. A one time second home purchaser expects to pay money and receive a clear title with no liens and no surprises. An investor looks to overcome risks based on gathering information and implementing controls or risk management through carefully drafted contracts. The concept of higher risk/higher gain comes to mind, but needs clarification. The risks can be identified by asking the right questions. What is the title situation? What are the financing sources? Is my earnest money expected to be used for construction or will it be held in a third party controlled escrow account? (Third party escrow accounts were not commonly available when the first clouds appeared over North Beach.) There are many other questions that need full disclosure that require attention. If the answers are not explained in full, there should be yellow flags going up and these and all other questions need to be addressed in the offer of trust contract. If title insurance is offered, understand what is insured and what is not. If title insurance is not available ask why. Title insurance is not the magical savior in all cases and in some rare instances can simply be an extra unnecessary expense. Proper representation is what is important. Demand proper representation and full disclosure. Do not hesitate to request information, and make sure your agent knows what questions to ask. You are not out of line to ask your agent or developer for full disclosure, or request specific documents, such as permits, title insurance documents, as well as financing agreements; and have these looked over by a Mexican attorney or qualified individual. LICENSED REAL ESTATE AGENTS ARE HELD ACCOUNTABLEThe real estate community as a whole in Sonora has changed dramatically in the past several years. In Puerto Peñasco there are approximately 200 agents and two organizations with the specific purpose of protecting buyers and sellers. AMPI for example is Mexico’s National Association of Realtors. About a year ago, AMPI Puerto Peñasco started requiring its members to be certified at the state level. This certification included criminal background checks, fingerprinting, as well as continuing education classes to insure the highest level of trust and security. An AMPI agent is a Realtor that has accountability enforceable by law. Effective in 2007 every single real estate professional obtaining income in the state of Sonora, by virtue of commissions not only needs to be certified but needs to hold a real estate license. The licensing process is very similar to that in the U.S. including a course mandated by the state that is 109 hours of intense real estate studies. The topics included in this course provide current technical and administrative skills to participants allowing them to improve their performance in Real Estate activities this accreditation did not come easy, but was done to insure problems in the past do not surface again. Both associations, AMPI and PPREA hold integrity of ethical standards as their most important virtue. Has Arizona seen its share of real estate scandals? How many buyers threatened with foreclosure due to the turn of the market and the sub-prime lending craze would speak of questionable representation? Were some not pressured with hard to understand documents explained briefly by commission hungry agents? Does this mean that all real estate transactions in Arizona are suspicious? There have been examples of prime debacles in many places but to paint us all as Frito banditos is wrong. There are plenty of upstanding ethical professionals selling real estate in this community, and there are highly credible developments worth noting. SAFE INVESTMENTS ARE ABUNDANT Not all agents are the same, and our system is not perfect, but with the best interest of the long term growth of Rocky Point and beyond, in the hearts and minds of licensing and oversight organizations there is no reason not to consider investing in what so many Americans and Canadians have found to be paradise. You truly can enjoy your investment portfolio in Mexico, but as they say, don’t leave your brain at the border. There were issues handled poorly in the past, and there will be projects with all the best intentions in the world that fall short yet to come. But with the right information available now, and your ability to protect yourself through contracts that address any of the unknown variables you don’t have to be a victim. Do not attempt the process alone recruit proper representation. Kent WhiteRealty Executives, SonoraPresident Elect AMPI Puerto Peñasco

Vaya  con   Dios !
KENT  B.  WHITE
Realty Executives
Puerto    Peñasco
602 –  288  –  8649
    

First Course in Real Estate Management Concludes.

Wednesday, November 21st, 2007

Firm steps towards the regulation and professionalism of local real estate activity were recently taken upon the conclusion of the first certificate course in real estate management. Twenty-six
people from the U.S.A., Canada, Spain and Mexico graduated from the course held from mid-May to mid-June. The Sonoran Institute for Public Administration, in coordination with the Sonoran Secretary of Finance and the Mexican Association of Professional Realtors (AMPI), put on the valuable course with the goal to promote knowledge and compliance with the laws and regulations that make up the “State Registry of Real Estate Agents.” This registry will allow for regulating operations of selling and purchasing, renting and other related legal actions, so that those carrying out such operations can have greater legal protection. The recent course was directed at real estate agents, individuals and companies who work as intermediaries in real estate transactions in order to obtain their registration with the Secretary of Finance. The course consisted of nine modules for a total of 104 hours of instruction and was held in the auditorium of the Technological Institute of Puerto Peñasco. In the graduation ceremonies, René Martínez Argueta, academic director of the Sonoran Institute of Public Administration, highlighted the fact that this is the fifth class of its kind in the state and the first in Puerto Peñasco to complete training to comply with the laws created by the State Registry of Real Estate Agents. He paid recognition to this first Peñasco class, as they are a positive example to follow in promptly tending to the call of the Sonoran government to provide legal assurance to the real estate market. José Galván Flores, speaking on behalf of the graduates, emphasized that there is real interest in regulating this sector while increasing professionalism. He remarked that as part of the work carried out, graduates prepared a document expressing some observations to consider in the enforcement of the new Law of Territorial Order and Urban Development. These include assuring there is legal security for development in areas subject to litigation, and to not allow indiscriminant publicity of developments “just on paper.” He observed that these concepts were introduced to the state government in the last plenary of the Sonora-Arizona and Arizona-Mexico Commission, as well as to the local administration of Puerto Peñasco. Galván Flores noted that previously in Puerto Peñasco there had been fraudulent real estate transactions, but the conditions are now such to insure this does not continue to occur. Martín Rafael Martínez González, President of the Mexican Association of Professional Realtors, thanked the Municipal and State Governments for the interest shown in opening the real estate market while paying attention to the needs for modification of the legal framework. He remarked that real estate agents, and the people of Puerto Peñasco, are committed to prepare themselves to maintain and promote professionalism among real estate agents. Mayor Heriberto Rentería Sánchez stated, “This is a very important step for real estate work in Puerto Peñasco, as the training of professionals in this area will allow for reinforcement of work required of promoters and give more confidence to investors.”
He emphasized that the city government is in favor of supporting all actions directed to the professionalism of the real estate sector and, through the Urban Development Office, they are intent on making sure that everything is done under regulations. Present at the ceremony were Rodolfo Elías Calles, Director of Commerce and Services from the Secretary of Finance, Enrique Carrión Contreras, director of ITSPP, other heads of departments and special guests

Investment Opportunity In Mexico

Tuesday, September 25th, 2007

Sacramento, CA – Governor Eduardo Bours-Castelo, Sonora Mexico, announced that his state is looking for American investors and business owners to think about his state before going into another foreign country. Speaking to a group of investors, business owners, and government leaders, Bours-Castelo outlined the benefits of investing today in Sonora Mexico.

“One of the reasons to invest in Sonora is our location,” Bours-Castelo told the group through a simultaneous translator. “And, although we share our border with the State of Arizona, California is very close to us. San Diego is only a five-hour drive. And, Los Angeles is only 6 hours away.”

Sponsored by the California Chamber of Commerce, attendees included Lt. Governor John Garamendi, Secretary for Environmental Protection Linda Adams, and, Secretary of Economy for the State of Sonora Francisco Diaz Brown Olea. After his presentation, Governor Bours-Castelo met with California Governor Arnold Schwarzenegger where they discussed investment opportunities in Sonora Mexico.

“There are many reasons to invest in Sonora. We have airports, highways, and a seaport (on the sea of Cortez) in the city of Guaymas, where we can ship to Asia. It is a seaport that could compliment seaports like that of Long Beach,” said Bours-Castelo. “But the most valuable thing Sonora offers is our people,” he continued. “We have a very well educated population. We have 31 universities and 8 technical institutes.”

When asked about plans to build the “Cancun” of northern Mexico, Bours-Castelo briefly outlined their interest to sell beachfront property for residential and commercial use, including hotels and related tourism. “We have invested $20 million on developing Puerto Penasco, which is a small driving distance from California, by building a new highway and opening beachfront properties,” added Bours-Castelo.

“It’s actually interesting to see that a Governor is doing what maybe the President of the country should be doing,” says Jesus Fernandez, Jr., an International Trade Expert. “I think in taking initiative and trying to find investments is creating employment and greater opportunity for people in the state of Sonora. It’ll bring trade opportunities and it’s getting ahead of the problem and that’s what I applaud him for,” added Fernandez.

To view Governor Bours-Castelo’s presentation, readers are invited to visit www.calmagazine.com, Channel 1 “Latino Journal This Week.” The video is available on demand. Readers interested in seeking more information about investments in Sonora Mexico may also submit an email requesting information to info@calmagazine.com.

www.live-pr.com  

Owning Real Estate in Rocky Point, Puerto Peñasco, Mexico

Thursday, August 30th, 2007

“Frequently Asked Questions”

We believe that “Rocky Point” Puerto Penasco, Sonora Mexico is a superior investment alternative to real estate in the U.S. and elsewhere in Mexico. Studies show that Rocky Point to be in the third year of a 25 year upward real estate cycle. Even though Rocky Point is still small and relatively underdeveloped, it is attracting investments at a higher rate than any other resort area in Mexico, surpassing even Cancun and Los Cabos. Long term real estate appreciation will be driven by a limited supply of beachfront property paired up against the virtually unlimited income and population growth of the southern U.S.

Do you go to Mexico, enjoy the beautiful sandy beaches, and experience an intense desire to have your own property there? If so, you have a lot in common with many other Americans and Canadians. Buying property in Mexico can be a good investment, financially as well as emotionally, since Americans and Canadians enjoy approximately six times as much buying power in Mexico as in their home countries. Recent changes in Mexico’s economy suggest that this may even be a conservative estimate.

But many Norteamericanos, as the Mexicans call us, are afraid to buy property in Mexico. Often their fears are based on stories they’ve heard third hand, or confusions between past history and present practice. Here are some of the myths we hear most often, followed by an explanation of the true facts.

Foreigners can’t own real estate in Mexico?

Not true. In most of Mexico, Americans, or any other foreigners, can own land outright with what is called a fee simple title, the same as we have in the United States. Only in the restricted zone — 50km (31.05 miles) from the ocean and 100km (62.1 miles) from the borders — is it true that foreigners can’t hold a fee simple title. “Rocky Point” Puerto Penasco is in that area, so these limitations apply.

Perhaps the main reason for establishing the restricted zone is that the Mexicans lost so much territory to the United States in the 19th century — about one third of their country: Texas in 1845, and in 1848 through the treaty of Guadalupe Hidalgo the territory that became California, Nevada, Utah, most of Arizona, and parts of New Mexico, Colorado, and Wyoming. The treaty was signed shortly after American forces had captured Mexico City. The United States paid only $15,000,000 for all of this land. And in 1854 through the Gadsden Purchase the United States acquired the rest of what is now Arizona and New Mexico. It’s not surprising that Mexico was a little nervous about allowing foreigners, especially Americans, to acquire any more land.

But old wounds heal, and now the United States and Mexico are working hand in hand. NAFTA has promoted good business relationships, but even before NAFTA, Mexico wanted to make it possible for foreigners to invest in their country, so in 1971 they developed the bank trust (fideicomiso) as a way for Americans to buy residential property in the restricted area.

Americans can’t own real estate unless they have a Mexican partner?

Not true. It used to be that for a partnership or Mexican Corporation, foreigners had to have Mexican partners who owned at least 51% interest. This is no longer the case. Under the new Foreign Investment Law of 1993, a Mexican Corporation can be owned 100% by foreigners, and the corporation can buy and own any property with a fee simple title, as long as its use is non-residential.

A Bank Trust is a Lease Agreement?

Not true. Under a Bank Trust the beneficiary (buyer) has all the rights of ownership: the right to buy, sell, lease, use, bequeath, improve, transfer, and encumber. On the other hand, a Lease Agreement would grant only the right to use. If a lessee made improvements, such as building a house on the property, that house would belong to the landlord. Nor could the lessee sell the property or borrow money on it.

In “Rocky Point” Puerto Penasco, Sonora Mexico there have been in the past many long-term Lease Agreements for land. Before 1971 the Bank Trust was not available, and leasing was the only option for Americans. Apparently some of them were confused about the difference between a long-term Lease Agreement and Bank Trust ownership; thus they built homes and made improvements on the land that they were leasing. Under Mexican law, a Lease Agreement must be renewed at least every 10 years. After the Bank Trust was initiated, some Lease Agreements expired and the landlords declined to renew, which was their legal right. The tenants then lost the houses they had built. This frightened other Americans, who thought that their compatriots had had their ownership rights taken away, when in fact they had never possessed such rights. In many cases, however, the former lessees were able to regularize their situations by purchasing the property under a Bank Trust.

The Mexican government can take away foreigners’ property at any time?

Not true. The Bank Trust is established by the government and gives foreigners the same rights of ownership as Mexican citizens. The only difference is that they never receive the actual fee simple title. It is held in trust for them by a bank. When first established, the term of a Bank Trust was for 30 years only and was made renewable for another 30 years. In 1993 the term was extended to 50 years, and renewable for another 50 years.

Not long ago the United States media featured a group of Americans in Baja California who complained that they were being “evicted” from their property. And that they had “purchased” homes in an upscale development in 1986, even though they had been warned that the developer’s title to the land was in dispute and that litigation was pending. The courts eventually decided in favor of the Mexican landowners, and the Americans were dispossessed.

A similar thing happened some time ago in Cholla Bay, a community near “Rocky Point” Puerto Penasco, Sonora Mexico. Residents who had held Lease Agreements for many years and built improvements on “their” property were “evicted” when the owners decided not to renew the Lease Agreements. Although the Americans were outraged, the property owners were entirely within their rights. In the United States it was reported that “the Mexican government” had taken away their land. In fact, it was simply the law being enforced.

The Phoenix and Tucson papers from time to time have published negative stories dealing with the alleged injustices to a few Americans in Cholla Bay. Most of these stories have been ill-informed and one-sided. In any country, including the United States, title discrepancies exist, lawsuits get filed, and in some rare cases, buyers lose their property. Some Americans, we have noticed, have an irrational fear that the Mexican government can take away property at any time for any reason. This is absolutely not true. On the other hand, other Americans are incredibly gullible and will pay money to almost anyone if they believe they are getting a bargain. Rather than fearing the Mexican government, foreign buyers would do better to be wary of unscrupulous developers like the ones mentioned above.

Investment opportunities in real estate abound and are as well one of the safest for real estate investments. Foreigners can own coastline land with Bank Trusts held by Mexican banks. These Bank Trusts are set up with 50-year renewable beneficiary rights without limitations. Land and homeowners can enjoy the rights of ownership equally protected by the Mexican government.

This bank trust allows foreigners complete control over real estate in the restricted zones. Under the Fidiecomismo, the Mexican bank, through the Bank Trust, holds the title to the property in any restricted zone. The owner who is the beneficiary of the Bank Trust administers the Bank Trust and therefore controls the property. The owner is free to transfer ownership, rent or improve the property at their will. Foreign owners may also enjoy capital gains on sold property and can also instruct the Bank Trust to pass the property on to their heirs.

Mexican law also protects beneficiaries of the Bank Trust from any problems that the bank may have. A Bank Trust can never be seized to satisfy judgments against the bank. Mexican law, in 1994, established that Bank Trust deeds are to be 50-year terms and are renewable indefinitely in 50-year increments.

Mexican notaries, Notaria Publica, are government appointed attorneys specifically trained to handle the legalities of property transfers. Notaries are the only ones legally able to transfer title. They also make sure the title is clear from the local to the national level, make sure no liens exist and collect any taxes due on the property. Notaries perform title searches similar to American title companies guaranteeing your property is unencumbered.

Rental properties and other businesses can be owned by foreigners by forming a Mexican Corporation. In this case, the Mexican Company, which would hold the title, owns the property and a Bank Trust is not needed. The only benefit being a few hundred dollars for annual trust fees.

Closings are performed by the Notaries and most properties require only 30-60 days to complete the closing process, although it may take considerably longer to receive the Bank Trust or actual title. You can purchase Title Insurance but this generally is not needed with the Notary system.

If you plan to rent your property, understand you will need a passport to obtain your FM3 to conduct business in Mexico, even if you are using a reservation management company. Our Service Concierge, is able to assist you with those documents as well as bill paying and an assortment of other services. Tax bills, as well as utility bills are not sent to you in the mail therefore, using a bill paying service is an added convenience.

New Mechanisms for Buying Mexican Real Estate:

The country of Mexico is attempting to accommodate foreign investors in the real estate industry. In concert with United States title companies, banks, and appraisers, it is simplifying the process of determining property values, which will make it easier for buyers to purchase property and for lenders to make loans.

Financing

It can be extremely difficult to qualify for vacation home financing, as well as very expensive. Real estate loans offered in Mexico through United States banks are typically considered “unsecured” loans, as today there is no viable means to put a mortgage on the property. Qualifying for this type of loan is difficult, time consuming and usually expensive. On the flip side, currently, if a buyer is successful in obtaining a loan for property in Mexico, they will be rewarded with a Form 1099 Mortgage Interest Statement for use as a deduction on their United States Federal Income Tax.

Seller Financing

Seller Financing is a another means of obtaining a vacation home. Sellers often own properties free and clear, and appreciate the benefits of a long term payout with a higher interest rate than they may obtain on a traditional investment. Obtaining a credit report adds to the seller’s peace of mind. Often, an uninvolved third party collects, records and distributes the funds, and holds the necessary title documents.

Home Equity Loan

A Home Equity Loan, on the buyer’s primary dwelling is often the easiest and most affordable way to obtain the necessary funds to purchase a vacation home. In addition, a Form 1099 is usually provided.

Finally, Fractional Ownership, for instance with another family, is another option. A carefully worded contract with explicit shared-use and property-disposal clauses is an absolute necessity.

These are just a few examples of fairly typical financing arrangements. Creative financing arrangments are best left to a finance professional, and as always, it is best to consult an accountant and attorney to verify the appropriateness of the transaction.

Title Insurance

It is now possible to get United States title insurance on some Mexican properties. While this costs more and takes longer, it is worth it to American buyers to ensure peace of mind.

Title searches in Mexico are usually done through a Mexican law firm. The attorneys verify the owner and search for liens, encumbrances, and anything else that could affect the title. Since Mexico’s registries are not automated, this can be a lengthy process, taking approximately eight to ten weeks, as opposed to one to five days in the United States. After the search is completed, the Mexican law firm prepares its legal opinion of status of title, which will include owner of record, easements, liens, restrictions, and anything else pertinent to the property ownership. The closing of the transaction is done in the office of the notario, and funds disbursed through escrow.

Computerized Property Valuation

Access to public records is taken for granted in the United States, but comparable sales are not readily available to the public in Mexico. The Mexican MLS is working diligently to make mandatory disclosure of sales prices and terms available to the agents. This will make it possible for real estate agents to do comparative market analysis and determine fairer and more consistent pricing.

Past History and Future Trends

Financing has been available, but many Americans have financed their vacation homes by taking out home equity loans on their property in the United States, thus enabling them to pay cash in Mexico. Recently several American lending companies have made it possible for buyers of Mexican properties to finance their purchases. One key is the Title Guaranty Deed, which has a foreclosure provision similar to the American Deed of Trust. Lenders can now foreclose within 90 days and get their security back. Another key is title insurance, and this concept too is becoming more widely known in Mexico. Since it protects buyers and sellers alike, it is sure to be used increasingly in the future.

Appraisal is also coming to be an accepted practice. Without the computer data base American realtors are used to, it is more difficult to fix a fair price on properties, but appraisers are building up their own databases, and the states of Arizona and Sonora are cooperating to facilitate computer access to property registries in both countries.

All of these developments are making it easier for more Americans to buy property in Puerto Penasco, but they must never forget that they are obligated to follow the laws of their host country, Mexico. Knowing what to expect and what pitfalls to avoid should make it more comfortable for them. Knowing American practices should make it clearer to Mexicans what to expect from Americans and why they act the peculiar way they do.

Our focus is on organization and protection of the interests of our clients at all times. We adhere to the strictest of ethical guidelines and always place the interests of our clients above all. We seek to attract and retain the highest quality sales associates in the market area in order to provide high quality client services. Please let us know how we can help you and your investment partners here in “Rocky Point” Puerto Penasco, Sonora Mexico.

www.thepepper.com

Environmentalists vs. Luxury Developers

Wednesday, August 29th, 2007

Mitra Taj
August 29, 2007

Puerto Peñasco, like much of the northwestern coast of Mexico still reeling from a decline in the fishing industry, is getting a makeover. The city, 60 miles south of Mexico’s border with Arizona, is increasingly better known for its designer golf courses than for the 850 tons of shrimp it pulled into its harbors last year. But as investors pour millions of dollars into luxury vacation developments, many worry that the rush to cash in on tourism could destroy the unique desert-marine environment — think, coyotes hunting crabs — that draw more than 1.6 million visitors annually.

“Sometimes because we’re so desperate we don’t think of the future, of preserving what we have,” said Fernando Garcia Pacheco, one of 11 councilmen who govern one of the fastest-growing tourist destinations in Mexico.

“We’re still dealing with the effects of having ravaged our fisheries,” said Pacheco, looking at the city’s downtown pier where shrimp trawlers bob in the water near recreational boats. “And now we’re inviting developers to bury estuaries where marine species reproduce. It doesn’t make sense.”

In the past five years tourism has outperformed fishing as the strongest industry in Puerto Peñasco, bringing more than half a billion dollars in private investment last year to a city where most streets remain unpaved. Pacheco’s concerns resonate little among municipal officials who see multimillion-dollar developments as central to the city’s success.

“Nature and development can coexist,” said Hildegardo Hernandez Castro, secretary of the Puerto Peñasco city council. “Environmental impact statements ensure that these developments don’t hurt the environment.”

But environmentalists say the statements, prepared by private consultants and submitted to Mexico’s environmental regulating authority, SEMARNAT, frequently violate the spirit and letter of Mexican environmental laws, allowing developers to sell condos faster than they can build them.

The lack of enforcement is ushering in a tourism model that will ultimately do more harm than good for Mexico, according to Sandra Guido, executive director of the Alliance for the Sustainability of the Northwest Mexican Coast (A.L.C.O.S.T.A.), a coalition of environmental non-profits in the region. “If you take a picture of a resort in Puerto Peñasco, you’ll find the same irrational combination of marina, golf course, and condominiums in Mazatlan, Los Cabos, Nayarit,” said Guido. “It’s copy and paste. It doesn’t matter if the places have water treatment plants or not, if there are unique species in the area that need to be conserved, or what the cultural practices are. It’s a race to offer a product to a public that doesn’t know better.”

In the first half of this year Mexico took in more than 11 million international tourists who left behind $6.8 billion, up 9 percent from the same period last year, points out Victor Hugo Castañeda Soto, director of communications for the Secretary of Tourism. “Tourism is a real influence on economic development and generation of jobs and well being of communities,” said Castañeda. “By 2025 tourism activity could generate as much currency as the energy sector.”

Maria Isabel Cervantes said she worries that an authorized residential tourism development could contaminate the oysters she cultivates in the Morua Estuary, a 10-mile-long (16-kilometer) hypersaline lagoon in Puerto Peñasco where more than 100 species of birds nest or pass through on their way up the Pacific flyway, a migratory avian route spanning the length of North and South America.

Cervantes has worked as part of Cooperativa Unica de Mujeres del Mar for the past 26 years, one of four oyster-farming cooperatives that operate out of the Morua Estuary. Opposite the one-room restaurant where she and her coworkers alternate featuring their oysters every week, Arizona-based developer Canusa Homes has plans to build The Pointe de Las Conchas — five luxury high-rise condominium towers, six swimming pools, a putting green, and 30 beach houses — on a strip of land between the mouth of the estuary and the beach.

“We’re hoping the construction won’t disturb them but oysters are very sensitive,” said Cervantes, pouring water over crates of oysters in the estuary at low tide. “I really enjoy this kind of work. It can be hard but it’s better than being enclosed all day working in a room for someone else.”

Conservation groups are challenging the legality of the project, charging it will disrupt natural water channels and destroy a colony of least terns, a federally-protected species of small black and white sea birds said to fly so quickly their wing beats can’t be counted. “Developers basically said there is no colony of least terns in the estuary and that just in case there is, they won’t bother it,” said Alejandro Castillo Lopez, assistant director of the Intercultural Center for Study of Deserts and Oceans (C.E.D.O.), a non-profit biological field station in Puerto Peñasco. “It’s unbelievable, really.” John Alty, sales manager of The Pointe de Las Conchas, declined to discuss the project as it relates to the environment.

Complicating efforts to stop developments thought to be illegal are Mexican judicial procedures that require plaintiffs to provide the court with enough money to cover losses the project’s owner faces from suspending construction, according to Jose Pablo Uribe Malagamba from the Mexican Environmental Law Center. “It’s practically impossible for members of the community to come up with enough money to challenge a large development that threatens the environment,” said Uribe.

Last month Ricardo Juarez Palacios, SEMARNAT’s director of environmental impact and risk for the past six years, resigned amid allegations that his department regularly authorized projects that contravened environmental law. Congressman Diego Cobo Terrazas presented the Secretary of Public Function (S.F.P.), in charge of investigating government corruption, with a list of 73 “irregular” authorizations under Juarez’ leadership, including at least five in Puerto Peñasco. The S.F.P. is in the process of investigating six complaints against Juarez, including approval of a tourism development in Cancun that would destroy 932 acres (377 hectares) of mangrove forest set aside for conservation.

Last year A.L.C.O.S.T.A. identified more than three-dozen estuaries or wetlands along the northwestern littoral at risk of destruction due to development. In Puerto Peñasco, the national Mexican development group, Grupo Vidafel, has already disrupted natural water channels by building the hotel resort Mayan Palace over half of La Pinta Estuary, according to Castillo. Mayan Palace didn’t respond to numerous phone calls seeking comment.

Castillo said besides providing a home and breeding ground to a number of endemic species, estuaries help mitigate flooding. “If you block an estuary’s water channels, the water will find somewhere else to go,” he said. “It’s kind of like what happened in New Orleans.”

After initial rejection by SEMARNAT, the Arizona development group Sandy Beach Resorts Realty won authorization last year to build two marinas in La Choya Bay in Puerto Peñasco. Castillo said the project will destroy rocky reef habitat where protected invertebrate species live and disrupt natural sediment and current patterns in La Choya Estuary.

Almer Elzink, marketing director of Sandy Beach Resorts Realty, said the marina poses no threat to the estuary or the environment. “The marina doesn’t affect flora or fauna. We have all the necessary licenses to build the marina on our property,” he said. “There’s huge demand for boating and we’re answering that demand by building a state-of-the-art marina. It’s going to be a big job generator and big attraction in the town.”

Projects like the vacation homes Sandy Beach Resorts Realty offers in La Choya Bay, which its Web site calls the largest American subdivision in Mexico, are fueling a debate about what kind of tourism Mexico should court. “We’re not saying no to tourism,” said Castillo. “We’re just saying let’s get the best quality of tourism we can get. The assumption is that the more tourists come here every year, the better off we are. But that’s just not true.”

According to a recent study on tourism in the northwest region of Mexico by the non-profit research organization, the Mexican Institute for Competitiveness (I.M.C.O.), for every dollar of tourism-related investment Mexico brings in, federal and state governments spend $2-$6 to attract it.

“Mexican authorities are not taking into account all the externalities in the area,” said Francisco Fernandez Castillo, director of the I.M.C.O. study. “And the main attraction in the region-the environment and wilderness-is not being protected. This growth is not sustainable.”

According to Puerto Peñasco’s tourism and urban development plan, growth in the hotel industry has leveled out while growth of residential tourism is still strong. Fernandez said retirement and second homes create fewer permanent jobs and fewer incentives for developers to think beyond short-term profits. “If you build a hotel you have to invest in making it profitable in the long term,” said Fernandez. “If you’re building condos you can sell them before you get permission to build and you don’t have to worry about what happens afterward.”

Elznik said Sandy Beach Resorts is a positive force in Puerto Peñasco, donating money and land to community projects and employing up to 1,000 people. “Five years ago, people were crossing the border to find a successful future,” he said. “Now they can work here.”

A $1.9 billion national tourism venture sparked the current real estate boom in 2001. Initially named “Escalera Nautica,” and reportedly called the “stairway to prosperity” by former president Vicente Fox, the plan envisioned coastal communities from Sinaloa to Baja California as a series of steps from which recreational boaters could sail port to port. Having overestimated demand, Mexico has since renamed and scaled back the project but real estate development in the proposed destinations continues unabated, drawing on investment money from Americans to the north and cheap labor from job seekers to the south.

Islands of Luxury in Seas of Poverty

After hopping off a freight train passing through central Puerto Peñasco, Juan Atienzo said he isn’t sure yet where he’ll sleep but has no doubt he’ll find work. “There are a lot of jobs on the coast now,” he said. “Of course, I’d rather work at home where my wife and kids are, but like everyone else, I’m looking for a better life.”

Atienzo said he makes about $20 a day working in construction on the beaches of Puerto Peñasco, twice what he can make in his hometown of Empalme, Sonora and more than four times the daily minimum wage for Puerto Peñasco. It’s his fourth time here and said he also works in construction for months at a time further along the coast in Cabo San Lucas and San Carlos.

Secretary Castro said Puerto Peñasco is one of the fastest-growing cities in Mexico. He estimated the current population to be about 75, 000, almost double what the Mexican census reported for 2001, and said the city expects to absorb another 50,000 people in the next five years.

Fernandez said rapid population growth and high impact developments are overwhelming municipal public services all along the coast. “Municipal authorities believe that success comes from building luxury hotels and bringing in investment so they give a lot of concessions without thinking about how to support it,” said Fernandez, who found that the three-year term limits Mexico imposes on municipal governments discourages long term planning. “They ignore the real problems and expect the next administration to take care of it.”

Puerto Peñasco and other coastal cities have overexploited the region’s aquifers, leading some to wonder how future plans for growth can be sustained in one of the driest regions in the country. “We need to be sensitive about the desert environment this growth is taking place in,” said Castillo of C.E.D.O. “Should we really be planning to build more golf courses?”

Puerto Peñasco consumes three times as much water per person as it should, said Gerardo Figueroa Zazueta, director of the municipal water agency. The city is planning to contract a private company to build a desalinization plant before 2009 when the current administration leaves, he said. In the meantime, while private resorts rely on reserve cisterns or private desalinization plants for a steady flow of water, parts of the rest of the city suffer from water shortages, low water pressure, and at times, no water at all.

“Peñasco is growing very nicely in some parts of town and in other parts, very disorderly,” said Figueroa. “About 90 percent of the city usually has water service most of the time. And we’re working on getting water to the remaining 10 percent. In the meantime, a truck distributes water in barrels to them.”

Rosalva de Jesus Flores and her family moved to Puerto Peñasco from the central Mexican state of Puebla one year ago. “You move because you expect to improve your life, to create a better future, not to end up in the same situation,” she said, standing in the sand in front of the home she and her husband crafted out of scrap wood and metal.

De Jesus and her mother and daughter are one of about 4,500 families that councilman Pacheco estimated live in squatter settlements stretching for miles along Puerto Peñasco’s outskirts, without running water, electricity, or plumbing.

“Here life is very cruel,” said de Jesus. “Everything is very expensive here. My husband used to make 1,000 pesos a week but here you can’t rent a house for less than 3,000 pesos per month. We couldn’t afford to rent a house and eat.” Her 20-year-old husband worked in construction at a nearby resort until he died suddenly of a heart attack in their home in March. Seven months pregnant and recently widowed, de Jesus said she will probably get a job in housekeeping at one of the resorts after she gives birth. Her most immediate concerns, she said, are the snakes and scorpions that she and her neighbors struggle to keep out of their houses. “Last night when we were sleeping a snake got into the house. I was terrified but what could I do? I got a stick and took it out.”

Guido said communities around the Sea of Cortez are becoming “islands of luxury in seas of poverty” that typical of tourism destinations in developing countries. The intensity of development on the coast, she said, would have been impossible without President Carlos Salinas de Gortari’s constitutional reform in 1991 allowing for the privatization of ejidos, communal land that was protected by the state beginning in the 1930’s.

Maria Luz Cruz-Torres, an Arizona State University anthropology professor who has researched coastal communities in Mexico, said that as government support for farmers and fisherman dries up, ejido members increasingly find themselves selling their titles to investors. “On the coast almost all of the ejidos have been sold,” she said. “And most have turned into tourism developments.”

A Baja California Sur senator wants to reform the constitution further by removing a restriction on direct foreign ownership of Mexican coastal land. Senator Luis Alberto Coppola Joffroy, who directs the hotel chain Grupo Coppola, is introducing legislation this month that will allow foreigners to directly own land within 31 miles of Mexico’s coasts instead of through a Mexican real estate trust as they do now. While both supporters and critics of the legislation say the reform will strengthen foreign investment along the coast, they disagree on whether it will be good or bad for Mexican communities.

“Sometimes I feel like a foreigner in my own country,” said Jose Ybarra Solis, a gas station attendant and long-time resident of Puerto Peñasco. “On the one hand all this tourism is good for the people because it creates jobs but it has its negative side too. The Sea of Cortez doesn’t feel like ours anymore. We can’t go to the beach like we used to and seafood has gotten too expensive to eat.”

Earlier this summer 60 people protested the lack of public access to beaches in Puerto Peñasco, ending in seven arrests after protestors tore down a fence on property owned by Americans. While beaches are federal zones in Mexico and cannot be privatized, side-by-side gated private resorts effectively block people who aren’t residents or guests from a long stretch of Puerto Peñasco’s beaches, where visitors get pedicures, ride jet skis, and swim in warm clear waters.

“Local communities are still waiting to see how they’re going to be integrated,” said Torres-Cruz. “Everything is controlled by the tourism industry. It’s a very top-down approach.”

In May, Secretary of Tourism Rodolfo Elizondo Torres made public comments about the need to support sustainable and orderly development that works in Mexico’s interests, giving hope to supporters of localized eco-friendly tourism. Castañeda said the Secretary of Tourism and 13 other federal agencies signed an interinstitutional agreement a few days ago that will strengthen conservation efforts and rural and indigenous community development through the promotion of ecotourism.

“We have to think more and more integrally about tourism, not just a strategic instrument of economic policy in Mexico but also as an instrument of social policy,” said Castañeda. Such talk builds on environmentalists’ victory in February, when the newly-elected President Felipe de Jesus Calderon Hinojosa approved legislation putting coastal mangroves off-limits to development.

Guido said the law protects mangrove swamps that Gulf of California fisheries depend on and eases fears that rapid development around the Sea of Cortez will permanently damage the fourth most biologically diverse region in the world. “We’ve got to leave something to future generations,” said Guido. “I don’t think we have the right as a society to transform a coastal lagoon into a marina or golf course or to decide that people in the region will only be able to work in tourism in the future.”

In the meantime Puerto Peñasco is opening itself to visitors via land, sea, and air. Castro said the state’s construction of a 375-mile $30 million coastal highway will cut hours of driving time from California along the Sonoran coast is nearing completion. The city is also building a new marina and this month expects to finish a $50 million international airport in time to receive Arnold Schwarzengger and other governors of U.S.-Mexico border states in September for the annual Border Governor’s Convention at Las Palomas Seaside Golf Community.

“Development is very strong right now,” said Castro. “It’s a good moment to invest in Puerto Peñasco.”

www.worldpress.org

Airport makes Progess

Tuesday, August 21st, 2007

Many people have been asking what is going on with the new airport. I took a flight over the construction site the morning of August 21, 2007. I was happy to find very good progress over the past several weeks.  I took several pictures from different angles and altitudes. Let me know what you think. If you have any specific requests about other project, let me know.

Steve Schwab

Airport Progress in 2007.jpg Airport Progress in 2007 (1).jpg Airport Progress in 2007 (2).jpg Airport Progress in 2007 (3).jpg

You can click on any of the pictures above to make them bigger so you can see them better!!!

Buying Property in Rocky Point Mexico using your self-directed IRA

Monday, August 20th, 2007

 by Carl Fisher

Trillions of dollars in IRA’s and 401(k)’s and the NYSE is at all time highs — where is one to invest? True diversification today includes portfolios beyond stocks, bonds, and mutual funds — portfolios that include global investments including real estate. As California and Florida — old time favorites — are suffering from a glut of properties,
falling prices, increased taxes, and outrageous hurricane insurance premiums, real estate investments outside the United States have become increasingly attractive.

Mexico offers a number of advantages for American retirement fund
investors. Mexican real estate of virtually all types it is still relatively
a bargain, and several markets — notably including Rocky Point —
have experienced very rapid appreciation of the value of a broad spectrum of properties. Many investors want a locale that is relatively easy to travel to from the United States, which is another factor that makes Mexico a great choice because many Americans simply like to go there. At Entrust CAMA we believe strongly in the maxim “Don’t own a property in an area you don’t want to visit.” Today, many financial planners and professional advisors in the United States and their clients realize that IRA’s and 401(k)’s can buy real estate, provide mortgages, loan money, and invest in private entities. However, the Mexican government does not recognize the IRA/401(k)/trust as a legal entity able to purchase property.

How does one proceed?
Raul O’Farrill, President of OTP Trust and Founding Partner of O’Farrill & Associates (two of Mexico’s most prestigious bi-national real estate services firms), informs us that the Mexican government does recognize other entities that allow the IRA’s investment in Mexico possible!. The acceptability of the United States companies and other entities — a highly sophisticated and adaptable ownership mechanism — is extremely good news for American IRA’s/401(k) owners considering Mexican real estate as an investment option, and
is especially attractive as California and Florida — old time favorites —
are suffering from a glut of properties, falling prices, increased taxes,
and outrageous hurricane insurance premiums.

Investors are using their IRA’s/401(k)’s to purchase shares in partnerships that subsequently purchase or already own property in Mexico. The types of properties being acquired using this mechanism include raw land, single family residences, town homes, condotels
fractional and multi-fractional holdings. It is still a common — and often profitable — practice to purchase pre-construction contracts and
flip them prior to ever taking title. O’Farrill further states that the IRA’s investments in Mexico has been a great opportunity for Americans looking for a profitable investment for their retirement that can be combined with other IRA’s to make a bigger and more profitable investment. This profit is passed through to the IRA or 401(k) which is either tax free in the case of the Roth, or tax deferred in the case of a traditional account. Of course, there are IRS rules and regulations that must be followed. The first thing that the potential IRA/ 401(k) investor should be aware of is that the owners cannot use the property personally, which is strictly prohibited by the IRS. The purchase must be made for investment purposes only. It would be considered a prohibited transaction should an IRA owner receive a present benefit from their IRA’s investment. Related parties of the IRA owner such as parents and children are also prohibited from using the property.
It is imperative for an IRA owner to select an administrator that is knowledgeable in the area of self-direction. We also strongly suggest that you choose an administrator familiar with foreign investments. When choosing an administrator/custodian you should look for one that offers continuing education credits for professionals such as CFP’s, CPA’s, attorneys, realtors etc. so that you can be assured of a smooth, seamless transaction with all parties involved. The company should have a knowledgeable and accessible staff that offers one-on-one service throughout your transaction process. As real estate transactions are often time-sensitive, the company needs to be readily
available with information and resources. At EntrustCAMA we differentiate ourselves from other administrators by giving personal, one-on-one services. I take calls on my mobile phone every day from clients who just have a question, or who want me to explain something to their CPA or Financial Planner. At EntrustCAMA we are also investors who know how investors feel and what they need. So how complicated is this process? Not very complicated at all, as the following outline of how these transactions are executed at our firm demonstrates:

1.Open a self-directed account with EntrustCAMA and transfer the required funds for the purchase from your existing administrator to EntrustCAMA.

2.Through an attorney, form the beste entity in the US and have the IRA purchase the shares of the LLC. The shares purchased will be vested “EntrustCAMA FBO (for the benefit of) your name IRA #12345.” (Note; it is good practice to have an attorney provide an opinion letter stating the entity is IRA/401(k) compatible.)

3.The entity now has the funds to purchase the Mexican property. Mr.
O’Farrill suggests using a one-stop firm familiar with corporate entities and United States law, Mexican law, IRA’s/401(k)’s, and that can provide services including deed preparation, title commitment, insurance, etc.

4.All expenses are paid from the entity; earnings including rent or sale proceeds are returned to the entity and then passed to the IRA thus providing excellent tax advantages. For added convenience, all expense and income checks can be processed by the administrator if the client prefers.

5. Taxes paid in Mexico will be credited in the United States because of the United States-Mexico treaty that prohibits double taxation.
The set-up fees for the self-directed IRA and LLC together range $400 to $700 — which obviously very rapidly pay for themselves when you
consider the tax savings in any good investment.

Carl Fischer is a Principal & Senior Selfdirected IRA Administrator at EntrustCAMA, a firm specializing in self-directed retirement fund investments with offices in Pennsylvania and New Jersey. For further information you can contact Carl Fischer at
cfischer@ EntrustCAMA.com, through EntrustCAMA. com or 866 559 4430.
Thanks ro Join Us in Rocky Point Newpaper for allowing us to post this article to our blog. check out www.joinusinrockypoint.com for more great articles just like this one.

First phase of road-Paving to begin August

Sunday, August 19th, 2007

    On August 10th, work on the first phase of Rocky Point Mexico’s, comprehensive road-paving program is set to get underway. The project, to be carried out by the local administration, will start up with resources of nearly 25 million pesos financed through the North American Development Bank. Heriberto Rentería Sánchez ( Mayor of Puerto Penasco ) reported that this was the date stipulated in the tendering process already underway. The work is to include eleven roadways and an area of just over 128,000 square meters. He remarked that the tendering process, announced on June 21st, would review proposals from participating companies and issue a judgment on July 20th as to which company would then carry out the work. Rentería Sánchez indicated that in total nearly 8,100 lineal meters would be paved through an estimated investment of 24.8 million pesos. He insisted that the work would begin on August 10th and wrap up within a period of about eight months. The Mayor stressed that there was no more red tape to go through, nor excuses, and conditions are so that finally they are able to take firm steps in broadening the coverage of pavement throughout the city. Rentería Sánchez detailed that the streets to be paved include: Juan Aldama from Sinaloa Ave. to Josefa Ortiz Blvd.; 14th St. from Venustiano Carranza to Plutarco Elías Calles St.; Puerto de Ensenada Ave. from Eutiquio Amador to López Portillo Blvd.; López Portillo Blvd. from Puerto de Ensenada Ave. to Benito Juárez Blvd.; Ruiz Cortinez St. from Constitución Ave. to Juan de la Barrera; Adolfo Ruiz Cortinez Ave. from Sinaloa Ave. to Josefa Ortiz Blvd.; León de la Barra St. from Kino to Josefa Ortiz Blvd.; and Melchor Ocampo St. from Josefa Ortiz Blvd. to Nuevo Peñasco Blvd. A three-stage paving process will also be undergone along Lázaro Cárdenas St.: the first phase from Ferrocarril Ave. to Benito Juárez Blvd, the second from Josefa Ortiz Blvd. to Nuevo Peñasco, and finally from Nuevo Peñasco Blvd. to Las Conchas Blvd. Heriberto Rentería Sánchez

In total nearly 8,100 lineal meters would be paved through an estimated investment
of 24.8 million pesos

 

Thanks to our freinds at Join Us magazine for allowing us to post this article on our website…

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