Is buying a condo a good investment?
- Thread starter tyler
- Start date
I am sure everyone will have their own opinion about whether prices will rise, fall, or stay the same. I believe they have been generally increasing over the last year or so. But I do want to point out a couple of important considerations: the value of currency and transaction fees and taxes.I see this topic was started back in '08 when the economy wasn't so hot. How would you describe things now? Still a good investment? I'm a nurse and work 3-4 days a week leaving plenty of time to head down to RP. Lemme know!
I bought a condo in December of 2014. At that time a US dollar (USD) would buy about 13 Mexican Pesos (MXP). Now it is more like 18. PP condos are typically priced in USD, but the actual transaction is completed in MXP. So, let's assume the condo did not change in value in USD over the December 2014 to May 2016 period. Still, if I sold it the Mexican tax authority would probably see it as a capital gain of (18-13)/13 = almost 40% and I would owe them something like 12% of the value of the condo as Mexican Income Tax!
The moral of the story is that it is important to consider what you think the value of the USD with respect to the MXP will do over time as well as the purchase price.
Also, buying and selling fees are high in Mexico. On a $120k USD condo we paid about $9k in fees and taxes for the purchase, and the seller paid a similar amount.
The fees will be a significant factor no matter what condo you buy/sell. The currency factor only matters if the currency of your money is rising versus the MXP. For example if your money was in Canadian Dollars (CAD) it would have been less of a problem over that same time period because the CAD went from abou 12 to 14 MXP...still an increase, but smaller, and since the condo is priced in USD there would be a real (offsetting) gain due to currency exchange over that period if the condo sold and the proceeds moved back into CAD.
Think through the currency aspect: it could be a bigger deal than the nominal increase or decrease in the selling price of the condo.
wildtoucan
Guest
Just happened to our friends that sold their condo in cabo. They sold for less than what they paid but doe to the peso/usa rate when they bought several years ago...they had to pay capital gains. They found it much more costly selling now then when they bought/sold 10 yrs ago.