BajaNomad - Baja Land Speculation

Baja Land Speculation

Bajaboy - 9-18-2005 at 05:09 PM

A few weeks back, I drove down to Ensenada for lunch. I was amazed with all the new condo developments along the way. I saw prices from 150K on up. It seems as if much of the real estate fervor of Southern California has reached into Baja.

Now here's my question to all the Nomads...Do you think that the Baja market will collapse as a result of the tightening real estate market in Southern California?

San Diego is already slowing down. I don't think there is a bubble, at least here, because there is too much demand, a growing economy, and not enough developable land. None of those factors are present in Baja, though. Also, people are more likely to walk from a vacation home than their primary one. What will happen if interest rates rise and people become spooked with real estate just as people became skittish towards the stock market a few years back.

Just curious as to what everyone thinks?
Zac

[Edited on 9-19-2005 by Bajaboy]

Skeet/Loreto - 9-18-2005 at 05:20 PM

I think that the slowing of the market in San diego will help the Market in and around TJ

I think the market in Mulege, Loreto, La Paz and the East Cape will be good for many years. I like La Paz because of its location and flavor.
I am looking into some new Homes to be built above the Hotel marina in the $2oo's. I know the people invloved and it should appreciate very good in the next few years.
I like anything around Loreto but the Villages of Loreto Bay. I am concerned about the Water. We shall see.
Skeet

jerry - 9-18-2005 at 05:23 PM

real estate is a lot different that stocks first of all its real there not making anymore land and i do think theres way too mutch money out there in the hands of the baby boomers for bubble to break any time soon and this is just the beginning of the baby bummers with all the IRAS PENTIONS,STOCK OPTIONS, MUTUAL FUNDS, AND OTHER SAVING THAT WILL BE CASHED IN THERE HAS TO BE A PLACE TO PUT THE BUCKS if you look at the history in the long run dirt has been a great investment now some things that are built on the land might be a different story i can say that its been a great long term investment for me have a good one jerry

Dave - 9-18-2005 at 05:37 PM

Quote:

Originally posted by Bajaboy
Do you think that the Baja market will collapse as a result of the tightening real estate market in Southern California?

Also, people are more likely to walk from a vacation home than their primary one.

With rare exception, homes (in Baja) are bought with cash. If there is a crash I would expect folks would first walk away from a mortgage.

Reposted from Sharks thread on Baja's future

Gypsy Jan - 9-18-2005 at 05:47 PM

Well, many somebodies

are betting big time on big growth on the so-called "Gold Coast" between Playas de TJ and Ensenada.

Playa Blanca (just south of Playas TJ) and surroundings have websites and ads promoting huge "quality living, fully self-contained resort communities".

There are two separate high rise towers finishing out and taking deposits near Fox Studios/Popotla, (despite the court fight about land ownership concerning one of them).

Calafia (the tower) is building a second one.

Calafia (the hotel) is building a tower.

Club Marena is finishing out the rebuild of the burned tower and building a fourth one.

Montebello (?, not sure of name, but Coldwell Banker has offices there) is building a high rise.

Between there and La Fonda, there are several developments building busily away, including the new Polo Club, which will host a meet in October.

That's not even to mention the Baja Las Vegas development near Bajamar and the Ventanas al Mar in the zona de fallas on the road to Ensenada.

As Skeet has said, "Where is the water?" and, by inference, where's the infrastructure and services to support all this?"

Myself, knowing the history of the burnout at Club Marena, I would never, ever live in or own a property over three stories high. And I certainly would never, ever live in a complicated, high rise building that requires a reliance on the proper maintenance skills and dedication of others.

Adding to my original post: Real estate developer attitudes are very different here and I don't know through what prism they view the future. After the peso devaluation of '94, many developments were left in the state they were and are now being restarted. Banks that acquire defaulted land don't fix or lower the price for it, they insist on getting full price, but that may all be changing with the new financial landscape and the internationalized banking structure.

I guess it all goes back to, "Know before you go", i.e., research, research and research before you write that check. And if you can't afford to lose if you make a mistake, then, don't do it.

[Edited on 9-19-2005 by Gypsy Jan]

Bajaboy - 9-18-2005 at 06:00 PM

Quote:

Originally posted by jerry
real estate is a lot different that stocks first of all its real there not making anymore land and i do think theres way too mutch money out there in the hands of the baby boomers for bubble to break any time soon and this is just the beginning of the baby bummers with all the IRAS PENTIONS,STOCK OPTIONS, MUTUAL FUNDS, AND OTHER SAVING THAT WILL BE CASHED IN THERE HAS TO BE A PLACE TO PUT THE BUCKS if you look at the history in the long run dirt has been a great investment now some things that are built on the land might be a different story i can say that its been a great long term investment for me have a good one jerry

Jerry-I agree with you for the most part except that real estate historically has produced an average return of 6 percent while the stock market has averaged closer to a 15 percent return.

My thinking is that many people in SD are tapping into their home's equity to purchase additional properties. As interest rates rise and appreciation get back to normal (3-5%), will the demand still be there for a $350,000 condo?

I'm enjoying the input and look forward to hearing more thoughts on the subject.

Zac

Diver - 9-18-2005 at 06:01 PM

There won't be a serious "bubble" or downturn in that market due to housing excesses or pricing. It's a disposable income market, for the most part. If you could be certain of the security of your money, many areas in Baja would be investor dreams.

We could start a "Nomad Investment Group". What do you think ?
As I have done in the past for major corporations in the states, we could prioritize the desireability of property in various locations and then research the potentially available parcels.
Anyone elso want to try an offer for El Requeson ? Coyote ?
.

Dave - 9-18-2005 at 06:06 PM

Quote:

Originally posted by Gypsy Jan
Myself, knowing the history of the burnout at Club Marena, I would never, ever live in or own a property over three stories high. And I certainly would never, ever live in a complicated, high rise building that requires a reliance on the proper maintenance skills and dedication of others.

They rebuilt the Marena tower without a sprinkler system. I asked the builder why and he said it wasn't in the budget. (The budget the insurance companies provided.)

Go figure.

JZ - 9-18-2005 at 06:13 PM

Quote:

Originally posted by Dave
With rare exception, homes (in Baja) are bought with cash.

True for the most part, but there are many lenders setting up shop in Cabo. I've also heard some main stream lenders are working business plans now.

JZ - 9-18-2005 at 06:15 PM

Quote:

Originally posted by Diver
There won't be a serious "bubble" or downturn in that market due to housing excesses or pricing. It's a disposable income market, for the most part. If you could be certain of the security of your money, many areas in Baja would be investor dreams.

We could start a "Nomad Investment Group". What do you think ?
As I have done in the past for major corporations in the states, we could prioritize the desireability of property in various locations and then research the potentially available parcels.
Anyone elso want to try an offer for El Requeson ? Coyote ?
.

Diver: I'm up for hearing more.

jerry - 9-18-2005 at 06:30 PM

zac im not too sure about the percentage but if you buy a house at market value not inflated value or in inflated times rent it out it makes it own payment and gives you a great tax advantage so you can buy another and another then they all apreacachate in value and rent goes up it turns into a cash mechine and you have a hedge against inflation you keep depreacating them then do a 1031 exchange and up grade you will be buying them soon with dallars that other wize would be going to uncle sam when your readdy to sell them live in each for at least 2 yrs and you will only pay tax on the amount you depreacated
its not the same if you only have your own house but its the way to start and get the best intrest rate just dont sell it or refi it and take cash rent it out when you deside to buy anorther in essaents uncle sam provides an insentive to invest if your intrested in quick bucks??? play craps have a good one jerry

Diver

Al G - 9-18-2005 at 07:15 PM

Quote:

I am interested, but it may be beyond my risk desire.
Al

jerry - 9-18-2005 at 07:24 PM

jz to me there are way too many verabiles in mexico no set rules to go by language barrier ****ure differences im sure theres lots of bucks to be made but ill keep it in a counrty that i can at least understand the language
besides i love mexico and my little piece of heaven i dont want to risk my happiness there have a good one jerry

JZ - 9-18-2005 at 07:52 PM

Jerry: talk about not understanding the laugage, seems we have that issue with English in the US. Can you restate. :lol:

capn.sharky - 9-18-2005 at 08:00 PM

first of all its real there not making anymore land ). True, they are or they're not making any more land but bare dirt does not provide an income either. Skeet and I agree on the Loreto Bay project.....it sucks. Were in the hell will they get the water. Who will treat all the sewage and Canadians do produce alot of sewage. Only the French produce more per person. True, your own home is the first and best investment one can make. Mine has gone up ten fold (at least) since I bought it in June of 75. I am not a stockbroker but I would think a good solid portfolio of stocks and bonds should come before land speculation. I have too many friend who were millionaires young and went broke during the busts. Just my thoughts to any that are interested.

jerry - 9-18-2005 at 08:04 PM

simple my investments will remain im the us my little piece of heaven in mexico is for my pleasure not figured as an investment ill die with it have a good one jerry ps i type with one finger and never look back :lol:

JZ - 9-18-2005 at 08:14 PM

Apparently, you never heard of a little thing called a "comma" either :lol:

, but good philosophy :lol:

jerry - 9-18-2005 at 08:22 PM

in my mind time shares, condos, buying into a big comglomerate pie in the sky, isnt investing in real estate and i agree that loreto village has a lot of up hill to goand i dont own any of itand dont want any part of it
i just hope that the mexicans do ok with it could care less about the investors they can make there own desisions
a very welthy old friend of mind told me a long time ago you have to get a lot while your young wink :lol:

jerry - 9-18-2005 at 08:25 PM

jz you a spelling or english teacher?? :lol:

JZ - 9-18-2005 at 08:29 PM

Defintely not!

Diver - 9-18-2005 at 08:44 PM

I wonder if you can do a REIT (real estate investment trust) in the US for investment in Mexico ? Or a limited real estate partnership ?
I'll have to find out.
If either of these are possible, investors money would go into an interest bearing or investment account to be held until a property is identified. Interest or profit on their investment would go to the investor and potential purchase information distributed before closing on any property.
Normally, a minimum term of investment is identified.

I know enough about investing in the US to do well but I'm a novice to Mexico/Baja so I would definitely need some local input. Maybe Bruce can offer a few ideas or contacts when he gets home. I'll let you all know if it looks feasible to put something together.

jerry - 9-18-2005 at 08:53 PM

hea diver skeet had a corp and invested in land might ask him on the mexican part??

Dave - 9-18-2005 at 08:55 PM

Quote:

Originally posted by Diver
I wonder if you can do a REIT (real estate investment trust) in the US for investment in Mexico ? Or a limited real estate partnership ?

yes and yes.

Skeet/Loreto - 9-19-2005 at 05:54 AM

I would invest in Loreto out North where I can buy my Water and have it delivered. I would have a second place to go to when the 7-10 year Driught comes and there is no water.

I am looking into investing in the new $200,000 homes that will be built above the Hotel marina in La Paz.

I would buy nearly anywhere in the Town of Loreto/Mulege/La Paz. something that i could fis up, live infor a while, then resale to anamericano.I never, never invest in "Ejido" property.

Bob and Susan - 9-19-2005 at 06:05 AM

Woah!!!

rember the "golden rule"!!!!...invest ONLY what you are will to LOSE!!!

Investing= is a business trying to MAKE money...

Baja is an area I would absoloutly buy in...but only for my own enjoyment...don't plan on making a profit, it won't happen.

Invest in the California realestate market if you want a secure investment.

Also everyone has a different agenda and when you "hook-up" with others there is NEVER harmony....NEVER!!!

Prepare

Dave - 9-19-2005 at 06:24 AM

Quote:

Originally posted by Bob and Susan
Invest in the California realestate market if you want a secure investment.

vandenberg - 9-19-2005 at 07:18 AM

Quote:

Also everyone has a different agenda and when you "hook-up" with others there is NEVER harmony....NEVER!!!

Prepare

Truer words were never spoken :lol:

4baja - 9-21-2005 at 06:59 AM

when the market slowed in the states back in the early 90's the market was allmost dead in the los cabos area. i remember comeing into town and the gringo realators would chase you down to sell you property. most of them became artist instead.

making money what a nice topic

Baja Bernie - 9-21-2005 at 10:36 AM

Quote:
Also everyone has a different agenda and when you "hook-up" with others there is NEVER harmony....NEVER!!!

I totally agree with the above quote and would never consider a REIT or a limited partnership in Baja.

Making money here DARN tootin!

Helped build the first house in La Salina and when the owner sold he multipiled his investment several times.

Build my own home, kept it for over 20 years, and walked away with a huge smile on my face.

Built a spec home, rented it for 4 years and got my money back. Sold it for a bunch! If you noticed it I didn't use any money amounts for obvious reasons.

"Ejido" property as Skeet says stay away from it---I'll add if you can because they always seem to be claiming 'improved' land and taking the owners into court and that is a game no average gringo is going to win.

Oh! The homes just north of La Salina and south of the La Mision 'River' are going for $600.000+ and most of the buyers are Mexicans with cash.

Property

rogerj1 - 9-24-2005 at 11:16 PM

Quote:

Originally posted by Diver
I wonder if you can do a REIT (real estate investment trust) in the US for investment in Mexico ? Or a limited real estate partnership ?

To save you a lot of trouble, here's one already going. It looks like it's still pretty early in the game.
http://www.libertycove.net/default.asp

Quote:

Originally posted by Bajaboy

Now here's my question to all the Nomads...Do you think that the Baja market will collapse as a result of the tightening real estate market in Southern California?

I've been holding off on buying property after researching investing in Mexico for the last year and half. My original concern was Californians with big fat HELOC's bidding up prices. I think a bigger concern is the historic volatility of the Mexican real estate market particularly in areas with little or no zoning. This is based on comments I've read and heard from those involved in Mexican real estate. There is a huge building boom going on in the resort cities of Mexico right now. According to a developer who's built properties in Puerto Vallarta, there's an oversupply of new properties that will ultimately lead to softening prices.
Having said that, the trend of buying vacation properties and second homes has a good twenty years to go before the baby boomers are tapped out.

[Edited on 9-25-2005 by rogerj1]

Bob and Susan - 9-25-2005 at 06:33 AM

The California Realestate IS NOT tightening now...SORRY!!!

Maybe later...prices are skyrocketing and interest rates are staying low.

California is a special place to live and buy. LOTS of new residents

People who wait to do ANYTHING are just wasting their life experience.

Those who never gamble CAN'T win!!! :bounce:

Just DO IT!!!

rogerj1 - 9-26-2005 at 09:22 AM

Good point Bob. If I was on the verge of retirement or some other trigger that would allow me to spend lot's of time in Mexico, I wouldn't think twice about going out and buying a place.

Personally, I can't even get down to Mexico to spend enough time to decide where I want to live! You could say that I'm an online Mexican voyeur, living off yours and others travels and adventures.

At this stage of the game I'm only looking at buying a property I can rent to travelers with enough cash flow to cover costs and begin paying down my loan so that someday, I too can enjoy the lifestyle so many other posters on this board already have.

Baja Bernie - 9-26-2005 at 05:12 PM

JUst realize that due dilligence is even more important in Mexico. Luck