Real Estate Investing School Podcast

Episode 177: Mexico Real Estate Investing 101 with Sean Gillespie
Release Date: July 22, 2024
Host: Joe Jensen
Guest: Sean Gillespie

Overview

This episode explores the booming opportunities in Mexican real estate with guest Sean Gillespie. Sean, an entrepreneur and biohacker, shares his recent dive into Mexico’s property market, drawing on his YouTube series and personal experience relocating to Playa del Carmen. The discussion covers why now might be the best time in a generation for Mexican real estate, the unique dynamics of buying as a foreigner, navigating risks, and how Mexico stacks up in terms of lifestyle, returns, and safety.

Key Discussion Points & Insights

1. Sean’s Journey into Mexican Real Estate

• Sean moved to Playa del Carmen after leaving a business and marriage in Ohio (07:20).
• Started his real estate journey in early 2024, creating the “Making Mexico Home” YouTube series, modeled after "House Hunters International" (02:03).
• The show features tours of properties and honest commentary on the pros/cons of each option, including “preventa” (pre-sale) deals—a primary opportunity in Mexico (03:30).

2. The Pre-Sale (“Preventa”) Phenomenon in Mexico

• Developers sell lots or condos before completion, often at significant discounts (03:40).
• Sean shared:
  “I bought 10 lots here for $40,000 in September and they're currently selling at I think $105,000.” (04:35)
• High potential gains—but also risks of developer fraud. A notable scam: “a developer...was selling like million dollar homes…from 200 Canadians that had given this guy $200,000 down deposits and then the guy just walked away with 40 million.” (05:18)

3. Due Diligence and Fraud Protection

• Sean partners with a law firm that does developer due diligence, AI-based background checks, and market analysis, all at no cost to buyers (06:10).
• Emphasis on using certified attorneys and notaries, not simply trusting the seller’s team:
  “Don't just use their attorney, use an independent attorney that's recommended…That’s pretty risk free in that regard.” (18:03)

4. Mexico’s Economic and Real Estate Boom

• Sean compared Mexico’s growth phase to post-WWII America:
  “Mexico is really just like the United States was when it was coming out of World War II.” (11:00)
• Major foreign investment, infrastructure (new airport in Tulum, train system), and massive housing development (over 4–5 million homes being built) are driving market expansion (10:00–12:00).
• Real estate is primarily a cash market, insulating against the kinds of credit bubbles seen in the US (12:45).

5. Affordability & Return on Investment

• Beachfront property in Mexico is a fraction of comparable US prices:
  “Still 1/20 of what California prices would be and probably 1/10 of Florida prices.” (12:45)
• Appreciation rates of 10–20% a year are common, with strong short-term rental demand (12:58).
• Example: $1.1M property generating $250,000 gross yearly (31:27).

6. Safety & Security for Investors

• Title ownership for foreigners is handled via a bank trust (fideicomiso) or Mexican corporation.
  “You can own the title outright or create a Mexican corporation...I've never really seen properties taken away, but you do have title disputes.” (16:08)
• Discourages buying “Ejido” land, which is collectively owned and challenging to secure title for (17:08).

7. Residency and Expat Living

• Residency isn't required to own property, but is highly beneficial for opening bank accounts, starting businesses, and longer stays (21:52, 23:59).
• Sean connects contacts to affordable, reputable services ($2,000 for residency vs. $5,000 he paid) (20:48, 21:42).
• “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.” (23:59)

8. Crime and Lifestyle Comparisons

• Cartel violence is real but not a day-to-day concern for expats/foreigners:
  “Ninety, ninety-five percent [of crime] is cartel and cartel crime…if you’re just a normal person doing your own business…” (25:36)
• “I feel a lot safer. And not even a little safer… I've never once seen anything that made me feel even a little unsafe.” (29:33)
• Provided city-by-city crime comparisons showing several Mexican cities are safer than many US counterparts (27:53).

9. Short-Term Rentals & Regulations

• No significant restrictions on Airbnb; recent focus is on income reporting and taxation (31:08).
• Net returns can be exceptionally high, especially for luxury properties—up to 17–19% in certain cases (32:15).

10. Financing, Taxes, and Leverage

• Most buyers use cash; limited financing from Mexican banks or private lenders at higher interest rates (10%+), often with 20–30% down (33:50, 34:26).
• Little to no ability to leverage US-style depreciation or tax benefits unless the purchase is tied to a loan or improvement on a US residence (33:22–33:50).

Notable Quotes & Memorable Moments

• On opportunity:
  “Mexican real estate right now is probably the best opportunity for real estate that has occurred in my lifetime.” (00:00, 44:15)

• On risk and due diligence:
  “You can make a killing…but you can lose your everything on those as well.” (04:33)

• On lifestyle:
  “I'm literally…living in paradise.” (01:42)
  “It's a slower pace of life...People still congregate here at night...it's much more social here than anywhere I've lived.” (38:37)

• On buying process:
  “In Mexico… you don't rely so much on the realtor. You rely more on the lawyer and the notary. And the notaries in Mexico have more power and more education, I think, than the lawyers do.” (19:00)

• On crime:
  “Organized crime is safer than disorganized crime or unorganized crime...with 90% of the crime predictable, you know the rule, and it's pretty simple.” (27:23)

• On summary advice:
  “If you have a good attorney and a good notary, you're going to be in good shape.” (18:03)

Timestamps for Important Segments

• [00:00] – Episode introduction; Sean's enthusiasm for Mexican real estate.
• [02:03] – Sean’s real estate journey, “Making Mexico Home” YouTube show.
• [03:30–04:47] – Pre-sale/“preventa” investments, risks, and rewards.
• [06:10] – Legal/AI research and fraud protection for buyers.
• [10:00–12:00] – Mexico’s economic rally and infrastructure boom.
• [16:08–18:03] – Property ownership mechanics for foreigners.
• [21:42] – Residency process and benefits.
• [23:59] – Sean’s rationale for obtaining residency.
• [25:36–29:33] – Safety, crime, and lifestyle, with statistical comparison.
• [31:08–33:00] – Airbnb/short-term rental rules and return rates.
• [33:50–36:12] – Financing and leveraging property in Mexico.
• [38:37] – Upsides and downsides of life in Mexico.
• [40:31] – Lightning round questions: lessons learned, book/podcast recs, mistakes, and why Sean loves investing in Mexico.

Upsides & Downsides (37:14)

Downsides

• Less developed credit/financing tools than in the US.
• Online/in-person shopping options more limited, certain goods more expensive.
• Must be vigilant about conducting due diligence and avoiding scams.

Upsides

• Low property prices and high appreciation in select locations.
• Strong returns from vacation rentals.
• Relaxed, social lifestyle with perceived greater safety.
• Lower day-to-day cost of living.

Connect with Sean

• Instagram: @caribegringo
• YouTube: "Making Mexico Home" on the Caribe Gringo channel

Sean:
“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.” (45:11)

Episode summary prepared for listeners who want a detailed yet approachable overview of investing in Mexican real estate, as well as for those considering a cross-border lifestyle change.