Buying property vs renting for longer term stays

[robd]

Would you share some of the Various finacing options your refering to? It would help me

 

[mstevens]

Would you share some of the Various finacing options your refering to? It would help me

I can't say anything about Mexican mortgages or seller financing, because we paid cash for our house using a home equity loan. However, a Google search will turn up a range of things. In particular, developers of new condo projects sometimes line up financing options.

In general, dealing with banks in Mexico is challenging for non-residents. For example, Banamex would not give me an ATM card to use with our (or, as they saw it, my wife's) account because I was not at the time a legal resident of Mexico. Once I could show them my residency card, they gave me an ATM card. I can't imagine they would even have given me information about mortgages, let alone considered giving me one.

Mexicans, by long tradition, save up and pay cash for real estate. They'll buy just about anything else using credit (socks, pens...), but usually not real estate.

As you can see from my earlier posts in this thread, I don't think Mexican real estate is a sufficiently liquid investment for it to make sense to use money you need for anything else, and might not make rational sense at all. If you can reasonably get a home equity loan in the US that will pay for your Mexican property, that's the equivalent of a mortgage on your Mexican property and gives you a mortgage tax deduction.

I'm a physician, not a financial person. Like many of my kind, I like toys and am fairly bad at saving. You do not want to take financial advice from the likes of me.

 

[deepsea21]

If you can reasonably get a home equity loan in the US that will pay for your Mexican property, that's the equivalent of a mortgage on your Mexican property and gives you a mortgage tax deduction. I'm a physician, not a financial person. Like many of my kind, I like toys and am fairly bad at saving. You do not want to take financial advice from the likes of me.

Under the new tax law, interest on HELOCs (Home equity lines of credit) is no longer tax deductible. Lots of people used to use HELOC's to finance purchases of everything (especially automobiles) because the interest was tax deductible. No more. That's not necessarily a bad thing though as lots of people also lacked the discipline to pay down their HELOCs over time and after 7 years ended up with the same $30K on the HELOC that financed a car that's worth $5K today!

The way around this of course is to refinance your home, leverage it to the hilt, and pull as much cash out of it as possible. Is that really the smartest course of action? To start all over for the sake of Island property ownership? As a finance guy, I say no way but we live in a free country and everyone is free to manage their equity/capital AND DEBT as they see fit.

 

[RayfromTX]

Even then, we only rent it from the government. Stop paying the property taxes and they will eventually repossess it.

 

[fishi]

The way around this of course is to refinance your home, leverage it to the hilt, and pull as much cash out of it as possible. Is that really the smartest course of action?

That would depend on the rate of inflation over the next 10 or 20 years. Sense nobody knows what the rate of inflation is going to be nobody knows what the smartest course of action is. To quote John Bogle “nobody knows nothing.”

If we have high inflation in the future then buying a house in Mexico with 2018 dollars and paying for it with 2028 dollars would work out rather well.

 

[mi000ke]

That would depend on the rate of inflation over the next 10 or 20 years. Sense nobody knows what the rate of inflation is going to be nobody knows what the smartest course of action is. To quote John Bogle “nobody knows nothing.”

If we have high inflation in the future then buying a house in Mexico with 2018 dollars and paying for it with 2028 dollars would work out rather well.

Inflation is at historic lows. 30 year T-bills are around 3%. I wouldn't count on it.

 

[cvchief]

Kriminee, HELOC are no longer tax deductible? Jeez. Guess I better get on paying that off.

Hey I like condo living. Took a little getting used to shared spaces and all, but now I like it. Someone always keeping an eye on things.

We have had it like 8 years now. I doubt it has appreciated much. I think it was resistant to the downturn back then and keeps a more constant value.

Best advice I got was don't expect to pay for it with rentals.

I loving having a vakay house. The missus went through some health issues that changed my perspective a little, so now we focus on more on enjoying life and that is part of it. So with the exceeding low interest rates, we thought lets go for it.
I grab my backpack with my travel laptop, dive watch and kindle and go. (Of course once you are spotted as a frequent flyer, you will end up with a couple big bags of crap for your island friends or donations to worth causes and the like. I NEVER get to go down with just my backback....)

I didn't kid myself that it was going to be a revenue source or an investment property that was going to appreciate. I cover operational costs and I am happy with that. How do I put a value on thinking about retiring and zipping down to Coz and staying as long as I want? That keeps me going!

 

[MMM]

I want to triple like this one. Kind of how I feel about our property.

Kriminee, HELOC are no longer tax deductible? Jeez. Guess I better get on paying that off.

Hey I like condo living. Took a little getting used to shared spaces and all, but now I like it. Someone always keeping an eye on things.

We have had it like 8 years now. I doubt it has appreciated much. I think it was resistant to the downturn back then and keeps a more constant value.

Best advice I got was don't expect to pay for it with rentals.

I loving having a vakay house. The missus went through some health issues that changed my perspective a little, so now we focus on more on enjoying life and that is part of it. So with the exceeding low interest rates, we thought lets go for it.
I grab my backpack with my travel laptop, dive watch and kindle and go. (Of course once you are spotted as a frequent flyer, you will end up with a couple big bags of crap for your island friends or donations to worth causes and the like. I NEVER get to go down with just my backback....)

I didn't kid myself that it was going to be a revenue source or an investment property that was going to appreciate. I cover operational costs and I am happy with that. How do I put a value on thinking about retiring and zipping down to Coz and staying as long as I want? That keeps me going!

 

[deepsea21]

That would depend on the rate of inflation over the next 10 or 20 years. Sense nobody knows what the rate of inflation is going to be nobody knows what the smartest course of action is. To quote John Bogle “nobody knows nothing.” If we have high inflation in the future then buying a house in Mexico with 2018 dollars and paying for it with 2028 dollars would work out rather well.

Optimally, if Mexico could enter a state of hyper inflation while the U.S. dollar holds firm that would make investment in Mexico quite attractive but, then again, perhaps not so much. You could buy a home in Venezuela right now for a thousand dollars but, you'd also probably be foraging for food to eat and banana leaves to stack by the toilet as there is nothing to buy.

 

[cvchief]

Optimally, if Mexico could enter a state of hyper inflation while the U.S. dollar holds firm that would make investment in Mexico quite attractive but, then again, perhaps not so much. You could buy a home in Venezuela right now for a thousand dollars but, you'd also probably be foraging for food to eat and banana leaves to stack by the toilet as there is nothing to buy.

Not really. Everything in the vacation market is priced in dollars, no matter what the paperwork says. Just like the diving and such.