Buy cheap land and build yourself! True or False?

Forget those expensive developments – you can go yourself, get cheap land and build yourself! If buying property in Mexico is at all on your radar, then you likely have heard this post’s statement (as well as many others from well-meaning friends). So what REALLY is the truth of it?
Well, yes you can buy very inexpensive land in Mexico, in fact in my opinion, Mexico is one of the best places in the world to invest right now. BUT (yes isn’t there always a ‘but’) the problem lies in determining if the inexpensive land is truly a great deal or a rip off. This applies to untouched land as well as property with a house already on it. Here are some things to watch out for:
1. Land that does NOT have clear title. First of all, while it almost need not be said, DO NOT BUY LAND ‘under the table’. Avoid handshake or deals without a government notary public like the plague. Like any transaction in Canada or the US where you use a real estate lawyer, you must use a “Notario Publico” with a registered number in order to purchase land in Mexico. No matter what someone is telling you about an easier deal – you must pay the Notary and make sure the title is clear. The notary actually works for the government on this issue, so if you would like to get a less expensive lawyer to draft the sale contract and have the notary only do their part, this can save you a little money. Any land that does not have clear title can result in a complicated process that is either not worth the effort, or the land could possibly be taken away from you as someone else has claim to that land.
2. Ejido Land. This is land that is owned by a collective group of people such as towns. The seller may claim to own the land – technically they do along with his neighbors – and purchasing this land can be done, but it will take a lot of time and money along with the agreement of everyone in the collective to sell it to you. Ensuring the land you are interested in is not Ejido land is another reason to use a reputable lawyer and notary.
3. Land without any services. The reason why land (especially beachfront) might be inexpensive is lack of power or water service to the property. The government is not going to do that for you. You will have to pay to bring electrical, or roads out to your property, or you may have to drill for a well to get water. These options are expensive, need permits, and may take a great deal of time as you may be required to get the permission of other property owners to proceed.
4. Land Use Permits. The land you are buying may not have the correct permits for what you want the land for. Getting the correct permits can be a difficult process. There are no easy how-to on this process as it can differ for each municipality. Buying land that already has the correct permits for the use you intend it for is the best way to go.
5. ROI. This is only for those of you who are buying land to hopefully see a nice return on your investment. With the current doom and gloom in the stock market, many are looking for solid assets that will put their money to work for them, as well as benefit the area they are investing in. Many hidden treasures are to be found in Mexico for that very purpose. What you need to evaluate is the price of the land verses the potential of the return. Beachfront is always more valuable than beach view, which is more valuable than ‘close to the beach’. Some areas of Mexico are already high priced, you may not see a great return there. On the other side of the coin, basic properties inland may not yield as great of a return as a beachfront will. Evaluate what you really want from your property before you buy.
I hope I haven’t completely deterred you from investing in Mexico. Like any investment, you must educate yourself on the area you plan to invest in. Whenever possible, use a reputable Real Estate Agent to walk you through this process. Many of the above questions can be answered quickly by an agent familiar with the area.
There is one other caution I must add to buying your own land to develop: Building a home or development in a foreign country has many other cautions that warrant a completely different post. Stay posted for my next post on building in Mexico to find out what you need to know.
It all comes down to common sense. Use reputable professionals –especially if they have previous clients willing to attest to their quality of service. You may have to pay a little more for prime land, but will see a greater return on your investment than land you buy at the lowest price. The great part about buying in Mexico is that this prime land is likely ½ to 1/3 the price of land in Canada or the United States. So the answer to the post title is: TRUE - Happy hunting!