In recent years, an increasing number of foreigners and expats from the U.S. and Canada have contemplated purchasing a home in Mexico. You may be drawn to its picturesque landscapes, vibrant culture, and favorable real estate market.
In 2021, the average cost of buying a house in Mexico was close to $73,556 USD (1,324,000 Million Pesos). Compare that to the 2021 Avg of buying a house in the U.S. at $347,000 USD- it’s easy to see the allure of buying a house in Mexico. That’s an average of 80% less when compared to the U.S.
This blog post will help you understand the benefits of buying a house in Mexico, comparing it to the costs associated with the average home in the United States.
Let’s start with Predial, aka Property Taxes in Mexico.
Property Taxes in Mexico v.s. the U.S.
One significant factor that sets Mexico apart from the U.S. regarding real estate is the substantially lower property taxes.
Property taxes are often significantly more affordable in Mexico than in the United States. This can be a game-changer for prospective homeowners looking to minimize ongoing expenses. The favorable tax environment in Mexico contributes to the overall appeal of investing in property south of the border.
For example, when we had our property in Austin, TX, our property taxes for our 1800 Sq ft home were $8,000 USD a year in 2020. We rent in Mexico City and don’t pay predial or property taxes. Assuming the property value of our 2,000 sq ft home in Mexico City is what I think it is, the property taxes are around $350 USD a year! That’s about 95% cheaper than living in the U.S. or Canada.
Aside from having already ridiculously low property taxes in Mexico, many cities give you a significant discount if you pay them ahead of their due date. It’s no wonder why there are so many expats in Mexico from the U.S. and Canada.
Maintenance Costs – A Closer Look
When you see the average cost of a house in Mexico at around $75k USD you might think, “I haven’t heard of or seen those prices in a while!” And while homes are selling for USD 100k, 75, or even 50k are available in many cities around Mexico, I also want you to keep in mind these are averages, which take the highest-priced homes as well as the lowest-priced homes.
It will all depend on the usual things such as location, size of home, finishes, and age of the home. It also doesn’t take into consideration HOA fees, which are common in private or gated communities across Mexico.
Another aspect to consider when weighing the pros and cons of buying a house in Mexico versus the U.S. is the difference in maintenance costs.
On average, homeowners in Mexico tend to experience lower maintenance expenses than their counterparts in the United States. Whether it’s routine repairs, landscaping, or general upkeep, the cost of maintaining a property in Mexico can be notably more budget-friendly, allowing homeowners to allocate resources to other aspects of their lives.
One example is plumbers and electricians, who charge about 50-60% less than their equivalents in the U.S. and Canada.
However, it is essential to note that not everything is roses and peaches in Mexico. One common gripe amongst Canadians and Americans living in Mexico regarding repair services is the lack of urgency. The term mañana (tomorrow) takes on a whole new meaning here. So, be prepared to pay less but also be prepared to wait a lot more for something to be completed.
Things to Also Consider
When comparing maintenance costs, it’s essential to consider various factors contributing to the overall expenses. Here’s a quick breakdown:
- Labor Costs: Skilled and manual labor costs are generally lower in Mexico, making hiring professionals for maintenance tasks more affordable.
- Climate Considerations: Mexico’s mild climate in the central highlands reduces wear and tear on properties, resulting in fewer weather-related maintenance issues. However, in hotter or more humid conditions, you do have to weatherize your home to prevent mold or possible hurricane damage.
- Materials: Construction and maintenance materials may also be more affordable in Mexico, further contributing to the cost-effectiveness of property upkeep.
Renting vs. Owning in Mexico
If you have read any of my previous blog posts, you know I am a big advocate for RENTING BEFORE YOU BUY.
And while the dream of homeownership is universal, some individuals in Mexico choose to rent instead of owning a house. The decision is very personal.
Here are some reasons why some people prefer renting in Mexico:
- Mobility: Renting offers you the flexibility to move without the commitment and complexities associated with selling a property.
- Financial Freedom: Some find that renting frees up down payments or large sums of cash needed to buy a house. They are instead setting that money aside for emergencies or other investment opportunities.
- Maintenance-Free Living: Renters often enjoy a maintenance-free lifestyle, as the responsibility for property upkeep typically falls on the landlord.
What Will You Do?
The decision to buy a house in Mexico versus the United States involves a careful consideration of various factors, including property taxes, maintenance costs, and the cultural perspective on renting versus owning.
The allure of finding the best rentals in Mexico or purchasing a property comes from the unique advantages each option offers. So whichever way you decide to go on this, it’s crucial to weigh the financial pros and cons alongside the lifestyle preferences that will make a house in Mexico truly feel like home.