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Real Estate Investing School Podcast
177. Mexico Real Estate Investing 101 with Sean Gillespie
00:45:52
Welcome to the Real Estate Investing School Podcast! Today, host Joe Jensen welcomes entrepreneur and biohacker Sean Gillespie. Sean, who has a significant following on Instagram, is living in Playa Del Carmen, Mexico, and focuses on helping others...
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- [00:00]
A
I love real estate investing in Mexico. I would say I'd have to put a caveat on Mexico. Mexican real estate right now is probably the best opportunity for real estate that has occurred in my lifetime.
- [00:17]
B
Welcome to the Real Estate Investing School podcast. I'm your host, Joe Jensen. Our guest today is Sean Gillespie. Sean is an entrepreneur and biohacker who is currently focused on connecting people wanting to live in Mexico with the best resources to make that possible and to do it in a way that can, they can live longer and healthier lives. Welcome to the show, Sean. Glad to have you here.
- [00:40]
A
Well, thank you, Joe. I appreciate the invite.
- [00:43]
B
Yeah, this is cool. So the way I came across you is, was on Instagram. You got a pretty good following there. And I was living, I was, I lived in Hawaii for a while, which a lot of people know. And, and I love that tropical lifestyle. I love going to the beach every day. I love good weather year round. You know, there's so many beautiful things about it. But I, you know, I've been trying to get back and the price point is just really, really difficult. So I was like, dude, I wonder if there's like some more off the beaten path places in South America somewhere that I could live a tropical life. And started looking at Costa Rica and Mexico and you came up and started following your stuff and, and you're, you're doing it, you're living the life. So I'm excited to dive into that, man.
- [01:26]
A
Yeah. Just real quick, if you have time, I'll show you my view. I don't know if you can see this, but this is.
- [01:31]
B
Wow, you are right on the beach. So the ones that can't see, I mean, literally held up his computer to his window and it's just grass and the beach and the ocean right there, just right out on your step.
- [01:43]
A
I'm literally, yeah, literally living in paradise. It's, it's, it's amazing here.
- [01:48]
B
And that's your full time residence?
- [01:50]
A
Yes.
- [01:51]
B
That's awesome. Man. Oh man, so many questions. So many questions. So I guess to back it up now, you, you've been doing, you've only been really doing in real estate for like a year, but you've already done like five or six deals, is that right?
- [02:03]
A
I've really only been dabbling in real estate maybe for a couple, maybe three months, four months. I mean, we started shooting a series called Making Mexico home on YouTube. It's actually under my Caribbean Gringo channel. So under creebay gringo on YouTube we do a, it's like a reality show. Like House Hunting International. Yeah. And we initially were looking at two houses and we were paired up with another couple, realtors husband, or I guess it was boyfriend and girlfriend that owned the brokerage. And we would go tour two homes and at the end of it, we wouldn't pick a winner, we would let the audience decide. So that's how the first eight episodes went. And they were very well done. They were very well. The, the videography and everything is amazing. The drone work is amazing. And then they decided to go take the summer off and go back to Canada because it's really hot here in this part of Mexico in the summer. And so I continue to start shooting through the summer. And I changed the show a little bit. So now I look at a couple different programs. I do. One is I look at three houses. We call it Making Mexico Home House Hunters Edition. So I look at three houses and then we will look at them and make a choice on which one we think is the best of the three. But people are getting to see everything that we're seeing and there's like nothing. If there's bad stuff, we talk about it. If there's good stuff, we talk about it as well. So we do that show, we do a showcase addition where, you know, if somebody has a really nice high end home, like two, $3 billion home or more, we'll go in there and stay for a few days and then shoot content. You know, I've got some, you know, a very young girlfriend and she goes with me and some of her friends and we can get some pretty good content when we go. And then the other thing that people don't realize, I don't think, because you don't have this product in the US And Canada, is there are a ton of what they call pre sales here. They call them preventas. And pre inventa means sale. So in Spanish, preventa is pre sale. And so what happens is you have these developers come in and they'll buy land someplace in the jungle. And then once they have clear title and everything, then they will, you know, get it to an architect and say, okay, you know, give me some kind of plan for here. So they'll either build like it could be a condo or it could be a full scale, like housing development with houses, condos, everything. So it can, it can vary in scale, but when you get into these preventives early enough in the process, like before they break ground and stuff, you can make it, you can make a killing. Like I bought 10 lots here for $40,000 in September and they're currently selling it, I think $105,000.
- [04:48]
B
Jeez.
- [04:49]
A
And that's just been, you know, like if you, you know, nine months or something like that. So, so there's a lot of that going on here. So I talk about those as well. But you can lose your everything on those as well. So there's, you know, horror story, there's people in Merida, there's a developer emeritus from Canada that was selling like million dollar homes and a nice development. But again, you're just looking at Jungle and he got like, I think they told me he had something like 200 Canadians that had given this guy $200,000 down deposits and then the guy just walked away with 40 million. So. So the other. Yeah, so the other thing I do is I partnered with a real estate firm, or not a real estate firm, a law firm here in town in Playa del Carmen. And they do what they call due diligence on all of the developers, which catches probably 90% of the fraud. And then in addition to that, they also use artificial intelligence to crawl the web to look for any kind of negative feedback about the company or any of the owners of the company. And then the last step they do is they do what's called a fair market analysis on the property to make sure that the property's priced within the norms of what current real estate is selling for. And so they do those three things and then, and that's all for free. And then once they're, once the properties development certified, then I will go promote the development for free. So like last night I did a call and I should be releasing it hopefully today or tomorrow, but I did a call with a master broker in Tulum and you know, they're selling lots in Tulum for right now they're at $40,000. So if you buy them today, you can get them at $40,000 and then in two and a half years they'll be ready. But if you, in two and a half years they're going to be probably 100,000 each. So there's a lot of these types of investments that I like to promote. I just need to make sure that, you know, I'm promoting only good ones, not bad ones. So. So really I've only been doing this, you know, we started the show I think in March. So you could say we did the show March, April, May, June and or into July. So four months I guess. And yeah, I've got five properties that have either closed or in closing right now.
- [07:08]
B
That's awesome. So what Made you attracted to real estate specifically? Are you done investing before the whole Mexico stuff or is it just kind of came across the show and the lifestyle and what happened?
- [07:20]
A
You know, I ran a. All right, I owned a nutritional manufacturing company in Ohio. So we manufactured like, you know, really high quality protein, really high quality Korea pure, you know, creatine from Germany. And, you know, we were unique in that our guys did all of the work. So I ran that company. And then what brought me to Mexico was what tore me away from the company as well. So my wife and I just couldn't get along. And I mean, we've been married like 33 years and it just couldn't get along. And so we ended up parting ways and that's when I moved here to Playa del Carmen. Because I had been here several times and it was one of the only places in the world where I could just feel completely relaxed in that piece because I had, I don't know, a lot of. When you're running a company, you got a lot of turmoil going on all the time. So I've never really invested in real estate. And then so coming here initially, you know, because I moved here in October, October of 22. So initially, you know, I was just kind of relaxing, not doing a whole lot. And then probably starting, probably starting in like February, March, I started doing a lot of research on the economic data in Mexico. So, you know, I looked at like GDP to debt ratios, total debt, total gdp, unemployment rates, how much money is pouring in here from foreign investment, you know, what's driving the economy, you know, and, and what's funny is when you look around here in Mexico, you don't. Like, I used to come to Mexico 20, 30 years ago and you would see really old vehicles on the road and you could tell you were in another country when you're driving on, when you're driving on the highways now, you, you rarely see those types of vehicles. I mean, I see more G wagons here than I've seen, you know, anywhere when I was in Ohio. I'm sure there's more in LA and Vegas and stuff like that. But I mean, sure there's, there's a lot of really high end and Porsches, man. Like there's tons of Porsches here. So it was interesting. So there's a lot more money that's pouring into Mexico than people realize. And then the GDP, you know, it's now, Mexico now has the 12th largest economy in the world. Their GDP reported GDP is about $2 trillion. But their real GDP is probably in the neighborhood of three to three and a half trillion because they've got a shit ton of cash that comes in here. And so I know. So I started looking at all these things and then I started learning more and more and more. And the more I learned about what was going on, it's like, man, Mexico is really just like the United States was when it was coming out of World War II. So Mexico's kind of been downbeaten for many, many years. They benefited through the tariffs and stuff that we put on China. They jumped on that and created a program they call Near Shoring. And I've traveled like in several different areas of Mexico. There's probably on the neighborhood of I, I would say 4 to 5 million homes being built right now across Mexico. Wow. You know, a lot of those, a lot of those are right here in Quintana Row where I live. Like for instance, just in tulum. There's about 500 new developments going up right now. And they range in size from, you know, probably as small of eight units all the way up to, you know, five, 600 units. But everywhere you go, Cancun is doing the same. There's several developments here in Playa del Carmen. There are more going up. And there's a place called Bacalar here. If anybody's listening to this and has never heard of Bacalar, I would highly recommend you Google that and at least maybe try to get there once in your lifetime. But it's basically a lake that's a swimming pool because the whole bottom is made out of limestone. And then it has seven cenotes that are buried in the lake. So they call it the lake of seven colors. But it's probably the most beautiful lake in the world. So they're building a lot there. And then wall down south up here they're building, you know, they're starting to build there. So it's just crazy the amount of construction and then like even like on prices. So the house I'm in right now is about a million dollar home, maybe 1.1. It's, you know, not big. It's, it's. But it's right on the beach. But where, where in the world can you go with an ocean with, you know, have the Caribbean right there mean I'm literally on the Caribbean ocean. I've got Cozumel. Cozumel is a backdrop in the, in the horizon. But you're at $1 million for a 1600 square foot, you know, condo right on the beach with a nice patio and everything. And you know, When I compare that, that kind of price to like what you would get in California or Florida, you know, it's. The real estate has a long way to grow here and then couple that with. Almost every transaction on the real estate side is made in cash. There's not a lot of financing going on here. Then you don't, so you don't have the bubbles. Like in the US you'd have all these bubbles because people are getting all credit to buy things, sometimes with, you know, nothing down, sometimes with 5% down. So you don't have the bubbles and, you know, the pesos been killing the dollar. It took a little hit when the new president was elected, but now it's on. It's, it's killing the dollar again. And so it's just all of these things lined up. But, but I think, you know, property here is as expensive as it may be to some people, it's still 1/20 of what California prices would be and probably 1/10 of what Florida prices would be and probably one fifth of what Cabo San Lucas prices are. So Cabo San Lucas in Mexico is already seeing that kind of appreciation. So real estate's going up like 10 to 20% a year. You know, Airbnb continues to get stronger and stronger. The tourism industry is expected to grow, you know, I think from 30 million to 50 million a year. They put up that new airport in Tulum, and so that's starting to draw another, a lot of more people in. And they put this big railway in that connects all of the Yucatan Peninsula. So there's just a lot going on in Mexico and they're spending money on infrastructure, which is very unique for a country that have money to go do that.
- [13:20]
B
Yeah, just becoming so much more accessible. And like you say, you feel like it's just really on the upswing with, with where it's going, even if it's not, you know, like dirt cheap stuff, like an unknown town. Obviously people have heard about this. It's a hot, you know, tourist destination, but it's got a lot of room to, to grow it sounds like.
- [13:41]
A
Yeah, like I've been looking at, you know, we just one of the properties that we sold. And I'm not a realtor, what I do is I just connect people with resources. So I have realtors that I work with all throughout, basically all throughout Latin America. So there's another property in Argentina that we're going to be promoting here pretty soon. It's almost through the certification process. And you know, there you can buy a two bedroom condo for $70,000 in, in wine country. And you know, if you're a retired person, you could live out your entire life there and you know, be way under your cost in the US or Canada. But so anyway, so I partner with realtors across Latin America and then when I talk about their properties, provided they're certified, then I send them the leads and then we do a split on the commissions.
- [14:29]
B
Yeah. So explain to the listeners and to me, how does one make sure that they're not going to get burned? You shared that story at the beginning. Hey, they gave money to this guy and then he walked away with it. I think that's a lot of people's concern with investing out of the country. They're like, well, what if the government there is corrupt? Or what if the people are corrupt? What if someone just says, no, you don't own this land all of a sudden. Or what if they just take my money and leave? Like people kind of know the safety protocols here. You know, we, especially with real estate, you know, we've got title companies, there's ways to vet things out. You've got agents and brokers and there's, there's this whole structure that feels very safe when buying and selling real estate. But out, when you start stepping out of the country, it's like, what protects anybody, but especially a foreigner.
- [15:15]
A
Yeah, I mean, so like in Mexico, Mexico has a law that says you can't buy land within x kilometers of a waterway, like an ocean. Then they also say you can't buy land, foreigners can't buy land within, you know, x x kilometers of a ocean or a border. Right, right. But so then to bypass that or to get around that, you, you can, you know, pay a thousand dollars one time and a bank will hold the trust or hold the title for you. And it's essentially, for all intents and purposes, it's essentially your property. It's a 99 year deal. If you need to renew it at any time, you can renew it. When you sell your home, it can transfer with the home so the owner, the new owner can, can buy that. There are a couple cases in. So, so the other thing I didn't realize is your question about the government. So you can buy the land.
- [16:08]
B
And.
- [16:09]
A
Then, you know, if you're not near, you know, a border or a waterway, then they don't really have a lot of requirements. I think you still need permission, but there's no, you know, you can own the title outright or you just, you know, you put an American corporate or you put a, you can create a Mexican corporation. You can put all your properties in that. So that's kind of what people do. I've never really seen properties taken away, but you do have title disputes. So I will run into people that have bought. There's this land, they call it. The word is called ao. It's like E, J, I, D, O. And they call it Iito land. They probably pronounce a little difference in Spanish. I call it a land. And so the AO land was property that was given to the locals by the Mexican government years ago. And so like Quintana Row in this part of Mexico, it's only been a state for like 50 years. And so, but the, but the government gave. When it was a territory, the government is one. That's when the government gave every, you know, the people that were here, all of the, the basically a contract. They called it a heato land, but it's not owned by one individual. It's owned by, like, groups of individuals. And so.
- [17:20]
B
Interesting.
- [17:22]
A
So there's a lot of people that will try to buy that. And you know, that can take five years and can be very complicated. So as long as you're purchasing a property with clear title and as long as you hire a good attorney and a good notary, then you're extremely well protected. And there are some title insurance vehicles that are coming this way as well, where some. I know there's some companies now that are doing something very similar to title insurance. So that kind of eliminates your risk. And then on the other side, those are like, for properties that are already completed on the other side.
- [17:57]
B
So there are just normal, like title companies like we have here in the States that kind of vet all that out for you, make sure it's clean.
- [18:03]
A
There are companies that are. Yes. That are. That are providing title insurance very similar to the U.S. it's not, you know, it's a very new environment. So if somebody was, you know, looking to get into a business, it could be a really good business for somebody to start. But. But provided you do you have a good attorney and a good notary, you're going to be in good shape. One of the things that you don't want to do, and this I've come across this is somebody's going to buy a house and then the homeowner says, well, just use our attorney. It's like, no, no, no, don't. Don't just use their attorney, you know. Right. Use an independent attorney that's recommended from, you know, me or from your realtor or something like that. But so that, I mean, so it's pretty risk free in that regard. And then, so as long as you.
- [18:49]
B
Have a good attorney to kind of back you up and keep your. Keep an eye on things and vet it out, like, that's kind of your. Your safety net is getting a good attorney.
- [18:58]
A
Yeah.
- [18:59]
B
Make sure you're doing it right.
- [19:00]
A
Yeah. Like realtors in the US And I think Canada is similar, it's a lot more arduous process to get certified to sell real estate. Not anybody can sell real estate. Right. So in Mexico, they do have a government certification. I don't think I've met anybody yet that had the government certification. Okay, they have one and they also. They also have several, like private companies that offer their own certification. So, like, for instance, there's one called ampi that's one of the most popular in Mexico. But outside of that, you know, and even in this one, this part of Mexico, I would say less than 10% of the realtors even have the AMPI certification. Location. If you go out to Chapel San Lucas, you know, like 90 have it out there. So, so, so basically anyone, like literally anyone from any country can come here to Mexico, pretty much any place in Mexico, and you can start selling real estate and you don't have to work for a broker or. I mean, I know people that are just like, essentially on their own that don't have any certification. So that's why in Mexico you don't rely so much on the realtor. You rely more on the lawyer and the notary. And for those of you watching, the notaries in Mexico have more power and more education, I think, than the lawyers do. So it's not like a notary in the US where you just go sign your name and you're authorized. It's a lot more complicated than that. Cool.
- [20:35]
B
So notary and attorney and then obviously getting help from, like, guys like you who have done it, have been there, can give some direction, resources and stuff like that. You can. So do you connect people with these attorneys and notaries if they're looking to buy something?
- [20:48]
A
Yeah, exactly. Yeah. Because. Because, you know, like, when I first got here, I give you a good example, I went and got residency. Well, first to get residency, you have to get an appointment with a U. S. Consulate and, and, you know, outside of Mexico. And so I called, like, I don't know, four or five different consults in the United States, sent them emails. I couldn't get a return call or anything. So then I was getting frustrated. I went to an attorney. He said, give me $5,000, I'll have your residency in, you know, 10 days, basically. And so I gave him the money, took my passport, 10 days later, I got a resident, I got residency, but it cost me $5,000. So now I've got a company I work with that I refer everybody to and they can get residency for $2,000. So that's the cheapest I've seen. And if I get another attorney that can do it for less and I'll refer them to the other one. But yeah, I'm just trying to keep people from getting, you know, taken advantage of because it's easy to get taken advantage of if you don't know what you're looking at.
- [21:42]
B
So walk me through the residency thing. So does someone need to be a resident to own or is it just more beneficial or why become a resident?
- [21:52]
A
Yes, that's a good question. Because like you get a. Mexico grants everybody a six month visa. Not everybody. The Mexico, believe it or not, is very strict about people from Central America coming. So people from South America can come, but they don't like people from. Not. It's very difficult for Central Americans to get here. Interesting people from pretty much everywhere else in the world, including Russian, you know, like here in playa, there's probably 50,000 Russian speaking people that live here in Playa del Carmen, you know, from Belarus, Ukraine, Russia, a couple other near, I think Georgia. So anyway, so they're, what they do is you have to provide, you know, you have to provide income requirements, but they're, they're pretty low income requirements. So I always tell people if you want to move here, you have to figure out your income first. Right? You can start businesses here, you can do all kinds of stuff here, but figure out a way where you're drawing in, you know, three, $4,000 a month just to live on and then, then move here and then, you know, you know, like whether it's remote work, whether you've got your own business, you know, whatever you're doing, you know, get that covered first. But the residency, the biggest thing with the residency is it allows you to, it's easier I think for starting businesses. It also allows you to get a bank account. So without residency you can't get a tax id. Without a tax ID you can't get a bank account. So that, that's the main reason I went and got residen was I needed a bank account. Plus it helps and go on. No, I like the locals. You know, if you ever get pulled over by the police, I mean they all Kind of like seeing that you're a resident, they don't, you know, they treat you a little bit better, I think. Yeah.
- [23:36]
B
And then you can stay longer than the six months. Right. Because if you're on.
- [23:40]
A
Yeah.
- [23:40]
B
When you don't have a six month, you're living there. What, what if someone just wants to invest? If they're like, just want to invest there, but they're, you know, maybe come out for a few months here or there, but they don't want to live there. Would you still recommend getting residency just for those other benefits, like I said, for the bank accounts and business interactions and stuff, or not necessary?
- [23:59]
A
You know, this can be my political slant comes out here, which I used to be very politically oriented when I was in the US and, and I pride myself now and I really don't care. Yeah. So my personal belief is the United States has way too much debt and it's in the process of losing the petrol dollar probably over the next 10 to 15 years. And so those two factors are going to completely collapse the economy on top of, you know, I would call what I call moral degradation that I see with all the drug addiction and homelessness and everything in the street and crime that's going on, that seems to be okay with people. So for those reasons, you know, if I was anyone in the United States, I would be doing everything I could to figure out how to get residency in another country. Because I think there's going to be a time in the near future where people are going to be, you know, trying to leave the US in pretty big numbers.
- [24:56]
B
So let's talk about, say, safety a little bit. Like, say you talk about drug use and homelessness and like, you know, a lot of times when people think about Mexico or some of these, you know, southern countries, they're just like, oh, like, but that's not safe. Like, they think of like drug cartels and like all this dangerous stuff that's happened and corrupt governments and, you know, so the thought of, like, wait, why it'd be better to be in another country than America, like, yeah, we might have some homeless people, but like, that's.
- [25:26]
A
Not, you know, nice drug cartels, you.
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B
Know, and again, these are just probably ignorant thoughts that, that people have, but that's what we know from Netflix TV shows and stuff like that, you know.
- [25:37]
A
Yeah, I mean, there's. So that's, that's, it's a very interesting piece there because the cartels are, do account for a lot of crime. And it's, it's like 90, 95 cartel and cartel crime. So the cartels are warring with, with each other. And there's. There are, you know, lots of things that go on related to that. But if you're just a normal person doing your own business, like, you know, for instance, I've never heard of a carjacking in Mexico, and carjackings happen repeatedly in the US I've never heard of a. It's very, very rare that somebody breaks into your house with a knife or a gun and, you know, is trying to, you know, steal from you while you're there. You know, it's. It's more common when. It's more common when, you know, you, you leave your. Your. They break in your house when you're gone for a long period of time. So you don't. So, so what you have is you have very little random crime. And most of the crime, like, probably 90 of the crime is what I would call organized. And so, so the cartels all have their own rules, which are pretty similar. Like, you know, you don't sell drugs in my territory. You don't traffic girls in my territory. So as long as you're not trafficking drugs or moving girls, you know, you can buy drugs, you can buy girls from the cartel if you want, but you can't do that as a business. If you do that as a business, then you know, it. The outcome is pretty predictable. So like, so from my standpoint, with 90 of the crime predictable, you know, you know the rule, and it's pretty simple. You know, you, you have, you know, only 10% of probably the reported crime is really in reality what's happening. That a normal.
- [27:23]
B
It's almost like I just had the, the phrase comes in my head. It's like organized crime is safer than disorganized crime or unorganized crime. You know, and because I'm here, you talk about, oh, you buy and sell people and drugs and like, that sounds rough, but like, if, if you can. If it's predictable and you know what's going on, because it is organized crime, that, that. I can see how that would be more livable than just the random craziness of San Francisco or, or Ohio or, you know, wherever, you know, you're seeing a lot of crazy stuff going on nowadays.
- [27:54]
A
I put together a spreadsheet a while ago because I, you know, I get a lot of that feedback. But like, if you. I looked at 29 cities, basically 12 were from the U.S. 12 were from Canada or 12 are from Mexico, and then 5 were from Canada. And so out of that, the Safest city in all of North America that I looked at is Merida in Mexico with an in crime index of 25. And lower is better. Number two, safest city is Montreal, Canada at 32. Number three is PTO, Vallarta, Mexico at 35. Number four is Tulum, Mexico at 38. Number, I guess that'll be five is sitting, is Mazatlan sitting right about 40. Boston is just ahead of that. So Boston's next, then San Diego, then Cabo San Lucas, then Vancouver, Canada. Toronto, Canada is at a 42 or 43. Edmonton 46. And then Playa del Carmen is sitting at 46. Tijuana, which is generally regarded as the most dangerous city in the world is sitting at a 72. So that's not very great. But Memphis is sitting at a 76. So anyway, that's my take. I won't go through the, I didn't go through the whole list but you know, and those numbers are coming right from a website called numbeo.com so anybody can go into numbeo.com and look at the safety index for any city in the world that they want.
- [29:26]
B
So you feel pretty safe though in your day to day normal life. You feel cleaner, safer there than you did in Ohio?
- [29:33]
A
I feel a lot safer. I mean, and not even a little safer. And I, and I've driven Cancun, I've driven the streets of Cancun in almost every neighborhood at all hours of the day. Same thing in Tulum, same thing in Playa. I've never once seen anything that made me feel even a little unsafe. And so.
- [29:53]
B
Well, especially you're, you're in these tourist towns, you're in these tourist areas and it's like the government's very incentivized to. Because I've been there, you know, I've been to Cancun and Tulum and all these places. Like I felt I loved it, you know, and they want people to come there, right. So the government's very, very careful to make sure it doesn't feel bad or unsafe or else they're going to lose a huge part of their economy and tourism. So they've got a, you know, they've got a much better incentive to keep things clean than, than the streets of San Francisco or the streets of Cleveland or whatever. You know, they're just like, it is what it is, you know, but, but in these tourist places where they live off of that kind of economy, you know, they got a lot more motivation to keep it clean.
- [30:34]
A
Yeah, well, even the cartels have a very Positive influence on, you know, keeping crime reduced in these tourist.
- [30:43]
B
Sure, that's crazy. Let's pivot a little bit. Sean, you mentioned Airbnb. So short term rentals, are there Airbnb restrictions and stuff like that? I know in the States it's a big deal of like, oh, does this city or this place allow Airbnb? And if they do, like, how many or what are the rules? Like Hawaii's like crazy cracked down on short term rentals. Is there, what are the kind of regulations and stuff or are there any.
- [31:08]
A
I'm not aware of any regulations on Airbnb. In the last couple years, they have, you know, cracked down on Airbnb owners reporting their income for the last probably, you know, 50 years. People could buy property in Mexico. Well, you couldn't Airbnb it 50 years ago, but since Airbnb has been around until the last two or three years, you could basically take all that money and not pay any taxes to Mexico on it. So now they're cracking down. You know, they got a top end tax rate of 30% on your profits, but, you know, you can offset that with depreciation and other expenses as well. So, you know, in a lot of what's, what's interesting to me is a lot of the properties I see have like a 6 to 8% rate of return. Meaning, like if you buy a million dollar house, it may generate, you know, 60 to say $80,000 a year in income for you. But there are some of these higher end homes, like one of the ones that we just sold, where it was, you know, $1.1 million and it was generating 250 gross revenue a year. This particular, you know, couple had hired their own security gardeners and housekeepers, and they had solar panels. And so out of that 250,000 gross, this is, this couple is generating $190,000 net. And so I don't know anywhere on the planet where you can buy, you know, a property in a million one and get $190,000 a year coming in off of it. So, so not only do you have that, but you have the appreciation that probably going up 10 to 20% on top of that. So. So I see that those types of opportunities, but by and large, a lot of the properties are like in that list, especially the smaller ones are in that 6 to 8% range, but you can do close to 20.
- [33:00]
B
Let's talk a little bit about taxes and debt leverage. So first, taxes, is there any tax advantage? A lot of people in the states are buying real estate for, for tax advantage, they can depreciate the property and save a bunch of money on their taxes. You know, can you do that if you're buying in Mexico? Is there any, how does that work if you know, I mean you're not an accountant, but.
- [33:22]
A
Yeah, I'm not an account or anything, but I don't, I mean, you mean you pretty much, when you buy things here, you know, you, there are, there is some financing but most people are just taking whatever they have in savings or they're doing a second against their home. That happens. So there's a good taxes, savings there. I think you can take a home, like a second home improvement loan and use that money to go buy property in Mexico and then you could write that off, but you're not being able.
- [33:51]
B
To really write off the depreciation of property in Mexico on your US Taxes because it's not. And, and then so debt. Because that's one awesome thing about real estate, obviously especially when interest rates are low, which right now they're, you know, they're kind of mid, they're not great, they could be worse, but you're not. It makes a lot of sense to borrow money when debt's really cheap. But, but it sounds like there's not a lot of really good, like good looking debt options for buying real estate in Mexico. Most people buying cash, you know, they have 30 year low interest loans like we do.
- [34:27]
A
Yeah, most people buying in cash. There are a couple of lenders that I've heard about and if you're a lender watching the show or want to get into the lending business, even if somebody had a million dollars and say I would like to get into the business, you know, we could have you help finance one house. So in Mexico like you, you keep, so if you, if you like finance the house, you can keep title to that house even though you're not buying it because you were the one that up that put the money up front, you can actually hold the title until they, you know, get the house paid off. And then, and then, so you say okay, well I'm gonna. And then typically interest rates are the best interest rate I think I've seen so far is like 10%. So and then, you know, people can still do 20 or 30 year mortgages, but they're doing them out, you know, at a 10% rate and they usually have to put 20 to 30% down. So if you're a lender, somebody's putting 20 to 30% down and you're getting 10% and you're keeping the title. You know, if they don't make payments, property's yours. You almost want them to default on your money. So it's a very clean environment for, you know, lenders.
- [35:35]
B
But there's these just private lenders or they're like institutionalized banks doing these loans.
- [35:40]
A
You know, the one, one of them I know is an institutionalized Mexican bank. There's another company in the US Called Moxie, but I think Moxie is like a frontman for somebody else that has the financing. And then there's some other companies that the realtors here kind of keep tight to their vest that they don't divulge to everybody, including me, because that's a huge competitive advantage here.
- [36:04]
B
Gotcha is they can help guide people to the right kind of financing. If you use me, then we'll help you get financing.
- [36:13]
A
Yeah, like, I know a guy right now that's he's got like a million and a half to invest, and he's going to be able to get financing through a bank, and he'll be able to buy then probably about 6 million he's got. So he's got a million half cash. He's going to leverage that and buy about six or $7 million worth of Airbnb property. So he's going to buy six or $7 million homes, basically. And, you know, he should be able to rent each of those out for probably close to 180,000 net. So take 180,000 net times, say, six. That's going to be his income off of these, you know, houses that he's leveraging. So. So yeah, you can make some good money here.
- [36:49]
B
Yeah, it makes all his money back in the first year or two, and it's all profit after that.
- [36:54]
A
Right?
- [36:54]
B
That's awesome, man. Well, obviously there's a ton of moving parts. This stuff. It's exciting, it's interesting. But, you know, I guess you. You love it. You see, you see me love the lifestyle. You know, it's. It's something people should. Should check out. What are the downsides and what are the upsides before we roll out, you.
- [37:14]
A
Know, downside, I would have to say it probably more centers around you don't have access to, you know, some of the same type of credit, you know, system, you know, tools that you have in the US you don't have, you know, shopping is whether it's online or in person is not. Not at the level that it is in the US there's some things that are better, but you don't have the variety like, you have in the US and then some things, you know, on the shopping side, you know, sometimes clothes and cars and stuff, depending on where they're made, may cost a little bit more here, but that's probably offset by the ones that are less expensive here. So that's kind of the only downsides I see. You know, you don't have, I don't know, like. Like when I went to Ohio, I would, like, if I was in Columbus, I would have homeless people coming off the street, like, probably drugs, and they're like right up on my window wanting money, you know. Here. Yeah. When you see a person on the street that wants money, they're usually like washing your windows or juggling or they're doing something to get your money. You know, you don't have that in the U.S. in the U.S. man, they're just like, money, money, money. So that, to me, that was always the. Did not make me feel comfortable. I don't know if you see that when you go to Vegas or around, you know, where you live, but for sure, yeah, Vegas. Yeah. Yeah. So. So that's. I mean, that.
- [38:37]
B
So.
- [38:37]
A
So the upside is, you know, I live on the beach, I have the weather here in. It's. It's a slower pace of life. It's just everything is relaxed. You don't have to be in a hurry. People still congregate here at night. Like I remember in the US and was. I wasn't the only one, but pretty much everybody. You do your work during the day, you go home and you might go out to dinner, but you're pretty much stuck in your home all night. And we're here, you know, people are socializing till 11, 12 o' clock at night, almost seven days a week. So it's a much more social. I think it's much more social here than anywhere I've lived.
- [39:18]
B
I love it, man. Well, this is super exciting. Something to think about, you know. So if people want to invest in Mexico, where they want to go live in Mexico personally or maybe get some more Airbnbs or whatnot, what's the best way for people to reach out to you and be in touch with you to be able to do that and access your resources?
- [39:37]
A
Yeah. Best way to reach out to me, I think, is probably right now just through Instagram or Tick Tock if they're. You know, Instagram's usually where I get most of the people reaching out to me. So just Karibay Gringo on Instagram, just reach out to me and just tell me whatever you need, you know, I want to start a business or I. I need residential, I need residency. I need to buy a house. I'm, you know, interested more about these properties where I can, you know, get 19 return, that kind of stuff.
- [40:04]
B
And that's Karibay Gringo. C A R I B E Caribe Gringo. G R I N G O. Karibay Gringo. Yeah. On. On Instagram. Yeah. That's awesome, man. That's how I found you. Well, before we roll, I want to kind of go through four quick questions we always do with each of our guests, and then we'll let you get on to living your. Your in paradise, man. Living the good life. Go watch some soccer with your girl. Yeah, all right. Or football, I guess I should say.
- [40:31]
A
You know, down there.
- [40:34]
B
So question number one, Sean, if you had to start your real estate journey over again, knowing what you know now, what would be? What would something you do different or what would you wish you knew?
- [40:44]
A
You know, I probably would have, you know, not waited for almost two years or a year and a half. I would have gotten sooner. And then kind of related to that is I just recently, I'm. There's no MLS in Latin America. So the MLS's that we have in the US and Canada, those don't exist in Mexico. So most of the brokerages here, their competitive advantage is how big their list of available homes are, and they don't share. So I would have not only got into real estate sooner, I would have started working on the MLS. So I'll have the MLS system probably in 10 weeks. And it's going to be a complete game changer for real estate in Mexico because now everybody's going to have access to all the properties, which is the way it should.
- [41:30]
B
They're opening up an MLS system now.
- [41:32]
A
I'm creating one.
- [41:34]
B
Oh, okay, awesome. You're, like, bringing all the brokers together. Why would they want to collaborate?
- [41:39]
A
Now? What I'm doing is using artificial intelligence to crawl the website of every.
- [41:46]
B
Got it.
- [41:46]
A
Real estate company in. In Mexico. And then the problem with that is a lot of them even. Even doing that, I'm gonna. I'll have a lot of duplicates. I'll have a lot of properties that have already sold or come off market. And most of those properties don't have addresses. So we're basically using AI to go solve for all of those issues. So our artificial intelligence will be calling, you know. You know, artificial intelligence now can make phone calls. You can't even tell it's a machine and not a human. So our AI will Call the brokerages, make sure that the listings are up to date, and get addresses and that kind of stuff. And then we'll populate into the database and the Zillow type.
- [42:30]
B
Yeah. So I was thinking in my man. So it's kind of like a Zillow for Mexico. Yeah.
- [42:35]
A
For the ui, we just said, let's just duplicate Zillow.
- [42:38]
B
There you go.
- [42:39]
A
Yeah. So anyway, I would have done that sooner.
- [42:43]
B
That's cool. That's really cool. All right, question number two. What is a book or podcast recommendation you'd have for the listeners?
- [42:53]
A
Man, I still like. Well, how to Win Friends and Influence People is probably my favorite book of all time. Classic. Is it classic? Yeah. And then I would say, you know, I, I follow Jordan Peterson a lot, so I like listening to a lot of his podcast. And I'm also a fan of Joe Rogan. So those are probably the two favorite ones that I have.
- [43:15]
B
Cool. All right, what is one of the most expensive or interesting mistakes you've made in real estate investing?
- [43:25]
A
I guess so, one of the mistakes. So the mistake I made here was I went and I bought like 10 of those lots at 40,000 each that are now at like 105,000. Good. But it was all pure luck because I didn't do any vetting at all of the bro of the developer, and I just got dumb luck and. And was able to not, you know, lose everything that I put into it. So luckily I just rolled the dice and got a good one. But, you know, hindsight being 20 20, I can't believe how, how naive I was. And I didn't know that, you know, they could actually steal your money. Yeah, check.
- [44:03]
B
Vet out your developers. There we go. I like that.
- [44:06]
A
Yeah.
- [44:07]
B
All right, well, then, last question. Sean, what's one word or short phrase to encapsulate why you love real estate investing?
- [44:15]
A
Well, I love real estate investing in Mexico. I would say I'd have to put a caveat on Mexico because I think Mexican real estate right now is probably the best opportunity for real estate that has occurred in my lifetime. So I, you know, I, you know, I grew up in California where, you know, $20,000 houses are now $2 million or more, you know, and that took about a 30 or 40 year time frame for that to happen. I think in Mexico, you're going to see greater appreciation than that, and it's not going to take near as long for, for you to see that kind of appreciation. So I think it's the number one spot in the world right now to be. To make money on real estate or, you know, manufacturing or anything else you're, you're doing.
- [45:05]
B
I love it, man. Well, awesome. Any final words you'd have for our listeners or appreciate you have been on the show, Sean.
- [45:12]
A
No, not, I mean only thing I would say is I still answer all of my, you know, messages on Instagram. I don't have a person that does all that kind of stuff. So don't, don't hesitate to reach out to me. It's going to be me that responds and I do like interacting with people on Instagram. Instagram.
- [45:26]
B
So I love it man. All right. Well I appreciate it. Thanks for being on the show. We glad to hear your story and get your input.
- [45:35]
A
Well, thank you very much for having me. I appreciate it.
- [45:37]
B
This is Joe Jensen signing off for the Real Estate Investing School podcast reminding you to think outside the box and maybe outside the country.