BajaNomad - The Problem with Baja Real Estate

The Problem with Baja Real Estate

Santiago - 11-12-2011 at 11:26 AM

I read with interest the thread regarding the nice compound for sale at Papa Fernandez; truly a great place, superbly accessorized and obviously well maintained. Priced well under the market and an absolute steal at $130K, right? Wrong.
As recent retirees and just turning 60, SWMBO and I are the perfect buyers for this property and we wouldn’t touch it for $130k. The particular reasons follow but it really boils down to old adage: we simply can’t walk away from an investment this large and while this used to not concern us, it certainly does now.
1. The subset of buyers who would like to own this property and who can walk from $130k must be very small, probably no more than a dozen or so.
2. 4 or 5 years ago I had a number of friends who asked me to find a place just like this, about $200K or so, split it 4 ways and divide up the calendar. All have rescinded their offer.
3. The road finally getting paved actually increases the risk in my view. The families who own these leases are often the first or even the second generation now and likely live north of the border. They are the ones who will benefit from the increase in the underlying property values, not the renters. This is as it should be. Already wealthy Mexican families are buying the property along this entire area and it’s not to rent lots to retirees who plan on setting up their trailers for 10 years. It’s to make it look like the corridor between TJ and Ensenada.
Let’s do a thought experiment; everybody who would buy this property for $1000 raise your hand. Ah, I see some of folks have both hands in the air, good one. Ok, now the same but for $10,000. Oh, a few dropped out; sir, you over there in the plaid shirt, why did you lower your hand? Well , yes, times are tough and not everybody has an extra $10K lying around. How about $20,000 – still about half of you in the game. $50,000K? Whoa, what happened? Where did all the buyers go? You ma’am, why did you drop out above $20k? I see, everything you could drag north of the border and sell would cover your investment; after that it’s just a place to live. Hmm interesting.
Any takers at $75,000, no? I can’t say I blame you – 50 grand is my choke point anymore. It don’t matter if it’s the fricking Taj Mahal…..
edit for spelin

[Edited on 11-12-2011 by Santiago]

DianaT - 11-12-2011 at 11:40 AM

Interesting read---

especially number 3.

DENNIS - 11-12-2011 at 11:42 AM

One man's evaluation, Jim. I don't disagree with you one bit, but there are more reasons to make a commitment to Baja than the supposed inevitable bail-out. Some would actually spend their energy thinking of day-to-day enjoyment rather than an equitable escape.
The fear factor, if taken seriously, is more than enough to remove Baja from the list of desireable locations, and price reductions shouldn't be a factor. If the place is going to cause distress, just stop it before it starts. Don't consider a purchase at any price.
I can't understand how a lower price will compensate for a bad situation. Is it the gambler in some of us that would make it appealing?
It wouldn't be for me.

Osprey - 11-12-2011 at 11:44 AM

I've counted at least 70 new gringos families who bought homes/lots in this little village over the last 15 years or so. No one I know of has any property rights problems, most have bank trusts, only one or two are gringo resales mostly from older folks who died and their heirs wanted to sell out.

What if I began to say "Don't buy anything anywhere unless you can afford to walk away from it." In the U.S. (and the world) you takes your ticket and you takes your chance. I see little difference down here. How about the million plus people who didn't heed that advice and are happily living in homes and condos all over Mexico (and Central America, South America -- millions more).

I'll join the Jeremiahs in one area of security for this question? You want to bet the farm that your U.S. Title Insurance Policy will bail you out in a foreign country? But, that's another rant altogether....

Santiago - 11-12-2011 at 01:40 PM

I'm only commenting on the market - not giving advice. In my view, the market for homes on leased land over $100,000 is very small and growing smaller. I know of 2 or 3 deals in my area and have heard of quite a few others where people sold (or tried to anyway) their leased homes in order to buy a place with a banktrust. I know of none who have gone the opposite direction.
For those of you who have leased the same lot for 20 or 30 years and have made it a great Baja place I commend you and even envy you. Heck, I'm trying to do the same thing a small way. But actually sell it to someone else? - walk away money is all it's worth and nowadays, that's $20-$25 thousand, tops.

norte - 11-12-2011 at 01:45 PM

Listen to what Santiago is saying. The land is only as good as the lease. when the owner wants his land beck you must take your house with you or leave it to the buzzards. How many of you would build on lease land in the states and then expect to sell it? come on. Personally I think buying land in Mexico is a risk as well.

DENNIS - 11-12-2011 at 02:01 PM

Quote:

Originally posted by norte
The land is only as good as the lease. when the owner wants his land beck you must take your house with you or leave it to the buzzards.

Actually, you can't even do that if it's not on wheels. It belongs to the landlord.
On the other hand, if built to accomodate, you can cremate a house to a point it will fit into an Urn. [personal satisfaction is it's own reward]

Cypress - 11-12-2011 at 02:16 PM

Quote:

Originally posted by Osprey
I've counted at least 70 new gringos families who bought homes/lots in this little village over the last 15 years or so. No one I know of has any property rights problems, most have bank trusts, only one or two are gringo resales mostly from older folks who died and their heirs wanted to sell out.

What if I began to say "Don't buy anything anywhere unless you can afford to walk away from it." In the U.S. (and the world) you takes your ticket and you takes your chance. I see little difference down here. How about the million plus people who didn't heed that advice and are happily living in homes and condos all over Mexico (and Central America, South America -- millions more).

I'll join the Jeremiahs in one area of security for this question? You want to bet the farm that your U.S. Title Insurance Policy will bail you out in a foreign country? But, that's another rant altogether....

Cypress - 11-12-2011 at 02:18 PM

Quote:

Originally posted by Cypress

Quote:

Maybe pot shouldn't be legalized? :biggrin:

J.P. - 11-12-2011 at 02:23 PM

Quote:

Originally posted by DENNIS

Quote:

Originally posted by norte
The land is only as good as the lease. when the owner wants his land beck you must take your house with you or leave it to the buzzards.

If it is destroyed you may have to prove you bought and payed for any and all materal to construct it or the landlord can sue you for the cost to replace his house.

J.P. - 11-12-2011 at 02:32 PM

Buying a house in Baja or anywhere else is no more of a risk now than it was in the past the only value Realestate has is at the time of sale what a WILLING BUYER AND A WILLING SELLER AGREE ON .thats all its worth .

mcfez - 11-15-2011 at 09:28 PM

Some of us will lease / buy in other countries....because it's not all about investment. 130 k for that place is a deal if you spend a lot of time in Baja doing the ol outdoor stuff. A 4 way split....32K over say ten years is 4 thousand plus change...a year...kicking in the lease.....maintenance. That's around 350-400 a month.

Cheap.

[Edited on 11-16-2011 by mcfez]

larryC - 11-16-2011 at 07:24 AM

As I see it, it boils down to "do you want to be down here or not?". If you do then you will do what ever is necessary to make it happen. Some folks just plain shouldn't be down here, they are not cut out for it. Others thrive. Myself, I couldn't be happier, I do what I want when I want to do it. But I am not stupid either, I still own a house in San Diego so when the fan starts to throw brown stuff around I have a back up plan.
Life is good.
Larry

mcfez - 11-16-2011 at 11:12 AM

Quote:

Originally posted by larryC
As I see it, it boils down to "do you want to be down here or not?". If you do then you will do what ever is necessary to make it happen. Some folks just plain shouldn't be down here, they are not cut out for it. Others thrive. Myself, I couldn't be happier, I do what I want when I want to do it. But I am not stupid either, I still own a house in San Diego so when the fan starts to throw brown stuff around I have a back up plan.
Life is good.
Larry

I still own a house :light:

I hope a few might understand this great statement of yours! Glad to see that there are others here that are willing to enjoy life without make believe barriers.

akshadow - 11-16-2011 at 09:41 PM

People build on leased land in the us all the time. What do you think trailer courts are? How about those who live in park model mobile homes all around Yuma, parts of California etc. They have no real protection since most are annual leases and it is unlikely you could move their abode with all of the costs in the out buildings. I would agree owning is better than leasing, but I could not afford to own so lease property

bajafam - 11-17-2011 at 01:52 PM

see? A great reason to have a kid in Baja.
:lol: