Your Guide to Buying Real Estate in Puerto Vallarta, Mexico

1. Is Now the Right Time to Buy? View the latest market statistics and outlook for 2019

2. Why Choose Puerto Vallarta? All the benefits of buying and living in the Banderas Bay area

3. Buyers’ Guide to Buying Property in Mexico Real estate purchase process and legal requirements

4. Transaction & Closing Costs What costs are incurred by the buyer?

5. The Happiness Calendar What will your new life in Puerto Vallarta look like?

6. Buyer Needs vs. Wants Checklist How to find the home that will be right for you

7. Contact Us to Get Started Whether you are ready to buy or just have a few more questions,

we’re here to help you

Banderas Bay Real Estate Market Sales Statistics For 2018 Compared To 2017

Totals of Condo, Home and Land Sales

Totals for 2018: 3,441 Listings Active 1,101 Properties Sold Sales of $336,808,064 USD Sales Volume 23 % Higher than 2017

CONDOS HOMES LAND 2018 + / - 2018 + / - 2018 + / - Active Listings 2,033 979 - 10% 429

Sold Listings 808 + 14% 252 41

Sales Volume 227,841,201 + 20% 96,637,096 + 37% 12,529,767 - 14%

Average Sales Price 281,734 383,481 + 6% 303,804

CONDOS – 2018 COMPARED TO 2017 Leading Areas Active Listings Sold Sales Volume Av. Sales Price +/- Sales To List

Centro South 512 240 75,984,322 316,801 +11% 93%

South Shore 194 97 41,570,848 428,565 +13% 94%

Hotel Zone 430 198 40,296,445 203,517 96%

HOMES – 2018 COMPARED TO 2017 Leading Areas Active Listings Sold Sales Volume Av. Sales Price +/- Sales To List

South Shore 125 18 18,513,000 1,028,500 97%

Nuevo Vallarta West 187 43 15,502,631 360,526 +14%

Punta Mita 27 3 8,365,000 2,788,333 -14% 90%

Centro North 62 18 8,145,000 452,528 94% Centro South 32 17 7,657,000 452,528 94%

La Cruz de Huanacaxtle 52 9 7,065,000 785,000 +87% 89%

LAND – 2018 COMPARED TO 2017 Leading Areas Active Listings Sold Sales Volume Av. Sales Price +/- Sales To List

Punta Mita 10 1 6,000,000 6,000,000 Bucerias 25 6 1,895,732 315,955 92%

Nuevo Vallarta West 34 7 1,646,185 245,773 92% MARKET SUMMARY: Indications are we have sufficient inventory at this time to sell without adding more. But, as in times past, new construction demand is hard to access. New construction in condos has been the main product and sales volume producer for the last several years. OUTLOOK FOR 2019: 2018 was our best year since 2009 for overall sales volume by units sold and overall sales price. 2019 has begun in a different direction: Sales volume and inventory is down. Average sale of a condo or a home is up from 2018. The leading product being sold for the past 4 years has been new condominums. We believe the new product announced for condominiums, will have a good chance of being absorbed, and the average higher prices for new construction will remain stable. It remains to be seen how much this impacts resale prices and inventory.

Benefits of Living & Owning Property in Mexico Lifestyle. Happiness. Climate. According to the annual Expat Insider 2018 Survey, expats in Mexico are the happiest in the world. Also ranked first in the world: friendliest population; and ease of making new friends. Thousands of people just like you move to Mexico every year to enjoy a healthier and happier lifestyle in a warm and sunny climate to pursue a better quality of life.

DID YOU KNOW? The average age of expats in Mexico is 54.7, 29% are single and 44% are from the United States, while 11% are Canadian and 5% are British. Source: https://mexiconewsdaily.com

Living in Puerto Vallarta has so much to offer; here’s a sample of the many reasons and benefits:

- Warm sunny climate - Healthier, laid-back lifestyle - Thriving expat community - Ease of making friends - Friendly and welcoming locals - Affordable dental & health care - World class hospitals and medical facilities - Lower cost of living - Beauty of nature and birdlife - Sense of community and belonging - Wide range of volunteering opportunities - Watersports - Sailing and marine life - Golfing and fitness - Active lifestyle - Mexican culture and friendly people - Mexican cuisine - Colonial charm & Mexican authenticity - Live theater and music - Festivals and fiestas - Lower cost of living

- Easy immigration and residency options - Low property taxes and maintenance - Safety and security - Health and wellness services - Spa lovers’ dream – very affordable treatments - Living well on a fixed income - International airport - Short flights to home and family - Easy to travel/immigrate with your pets - Wide variety of real estate options in all budgets - New condo developments with all the amenities - Villas and condos with authentic Mexican charm - Pet friendly city and properties - World class restaurants and dining - English is widely spoken - Internet and WIFI access - Satellite or cable TV options and/or Netflix - Big box stores – Costco, Walmart, Home Depot - Local mercados – fresh locally grown produce - Art lovers – galleries, exhibitions and classes - Opportunities to earn rental income

Guide to Buying Property in Mexico

You are ready to invest in your future and start living the lifestyle you’ve been dreaming of. If purchasing your own home here in Puerto Vallarta is part of that dream, here’s what you need to know and be aware of when purchasing property: 1. Can Foreigners Buy & Own Property in Mexico?

Foreign ownership is permitted within the restricted zone (defined as all land located within 100 kilometers of any national border and within 50 kilometers of any ocean and beach) by the use of a bank trust (the “Fideicomiso”) for 50 years; this is renewable.

In the trust, you are named as primary beneficiary, and you should also name your secondary heirs to the property. The Fideicomiso does not need to be probated and protects the decisions of the original beneficiary. This trust concept is centuries old and originated with the Romans.

The bank does not hold the trusts as an asset, but as a fiduciary responsibility to the beneficiary.

2. The Bank Trust

The bank that holds your trust will charge you an annual fee which Is paid annually on the anniversary date of the formation of said trust. Average price is $575.00 US per year. Not all banks do trusts, so your realtor or notary can recommend one.

3. Purchasing Outside of the Restricted Zone

If foreigners do not own in the restricted zone, they do not have to have a trust, but have an Escritura (deed) in their name. They will need to have a will, and it will have to be prorated.

4. The Notary Public

A Notary Public is a Mexican attorney with training in the speciality of Notario Law. He is appointed by the state, based upon the population need. A Notary is appointed for life unless he is removed by the state.

He is the only person allowed to transfer real estate.

He also validates the legality of documents such as mortgages, liens, marriage corticates, divorce decrees, etc. A document is legalized only once the Notary Public has certified it. Note that Notarios are the only authorities to transfer property in Europe and South America.

5. The Public Registry

Public Registry registers legal documents to become public record. Private documents are not recorded. For centuries in all countries, all deeds or contracts were private. Recordation of property records in government offices began in most cases, only in the last few hundred years.

6. Escrow

Escrow is not required in Mexican law. Escrow companies in Mexico are not under a body of law to regulate their business or responsibility to the public.

Escrow companies have become popular with foreigners in their purchase of real estate. The concept to allow a legal appointed, insured company to be a third party to hold purchase funds, is preferred by foreigners. Funds held are disbursed upon written instructions at the transfer of property by the notary.

7. Capital Gains Tax

The Capital Gains Tax will be owed by the seller if he has a capital gain upon sale. Important to know when buying in a foreign country that you are investing in currency, not real estate. Countries recognize their currency for the recorded value of real estate. Currently the buyer here receives an electronic file showing what their purchase price is officially recorded at. The buyer needs to save this file on a USB to keep in a safe place, as he will need it when he sells.

8. What are the Closing Costs?

Closing costs for buyers are currently on average 6 - 7% of the sales price. The Notary can give an estimate in pesos of buyer costs, once the purchase price and address of the property are determined. (Note: Nayarit and Jalisco have a few laws different from each other.)

Buyer pays 50% of his closing costs when he removes contingencies and makes a deposit escrow to start the process of closing.

The largest part of the closing cost is the transfer tax, which can be 2.5 to 2.75% of the purchase price or tax value, depending upon the state.

Other closing costs include notary fees, no lien certificate, bank trust fees (if applicable,) foreign investment permit, municipal tax appraisal, and recording fees.

9. Immigration and Resident Visas

There is no requirement for foreigners to apply for residency status prior to purchasing real estate. As a tourist, you may invest in Mexican real estate and enjoy the same protection of the law regarding real estate transactions as Mexican citizens. If you intend to work or operate your own business, you will be required to obtain the appropriate visa. These are the 3 categories of visas/permits:

• Visitante Permit or Tourist Visa: if you intend to be in Mexico as a visitor/tourist. Valid for 180 days and non-renewable.

• Temporary Resident Visa: if you intend to live in Mexico for more than 6 months in a calendar year, but not longer than 4 years. An annual visa which is renewable for up to 3 additional years. Proof in income/funds required.

• Permanent Resident Visa: if you intend to live and/or work in Mexico permanently or indefinitely. Proof of income/funds required.

Note: As Mexican laws can and do change, we recommend using the services of an immigration attorney if you plan on applying for a Temporary or Permanent Resident Visa.

10. Income Property

Rentals are very popular and in great demand. Many owners will choose to rent when they are not using the property themselves.

Earning income from a Mexican asset does require registration and payment of income taxes in Mexico. Do not ignore this, as there are fines and back income taxes are due, if the government comes to you first.

Use an accountant unless you are very qualified to do your own. You can apply for special registration to phase in taxes, to give you time to learn the business and start to make an income.

11. Is Your Real Estate Agent Licensed?

While Mexico is in the beginning stages of requiring federal licensing of real estate agents, know that agents are currently not licensed nor under any federal or state oversite.

AMPI (Mexican Association of Real Estate Professionals AC.) is one of the largest private organizations of real estate agents in Mexico, with three chapters here in the Bay of Banderas. Local chapter members commit to education and training with stated goals of being professional and knowledgeable to help the buyer and seller: to cause no harm.

Currently, any Mexican can perform the role of selling real estate through the notary. Foreigners acting as a real estate agent must have a work visa. The situation is very much ¨buyer and seller beware”. Be sure to seek out agents who are associated with a formal real estate organization. Interview them and ask pertinent questions. The entire system is NOT what it is in the US and Canada.

Be sure to choose an agent who is a local, well-established member of AMPI.

12. Property Taxes

Property taxes are very reasonable in Mexico, as these taxes are not used for schools, infrastructure, or government budgets. Taxes can be paid either annually or bimonthly, so all owners can afford to pay their obligations.

13. Mortgages & Financing

Financing in Mexico is still a challenge for a foreigner. Mexico is overall a cash economy, not a credit economy. Mortgage rates are higher and terms shorter. Currently, residential mortgages are not a large business in the country, however some banks and private companies offer mortgages - albeit at high rates of interest.

14. What to Know About Buying Pre-Construction

Pre-construction is different in Mexico. Condominiums are built in Jalisco without a recorded condo regime until after completion and the issuance of legal address with a certificate of occupancy. Lower purchase prices are an advantage to buying pre-construction, however the risk is great for the buyer, and it is very important to use a competent attorney and evaluate the risk. Similar to the escrow process, there are no formally recognized laws to provide a procedure in the event of default of the developer.

15. Condo By-Laws & HOA Fees

You’ll find that condo regulations and fees are similar to other countries. A developer sets the beginning condo fee, and when the owners take over their condo association, they create their own budgets and vote each year on their budget.

Buyers should compare what is in included in the HOA fees. They should also establish a budget of what it will cost and what supervision is required when owning an individual home.

Condo insurance for the building needs to be an expense of the HOA. Individual owners can buy their own household content policies. Fire is not a common hazard and not included usually, however you may want to include hurricane and earthquake coverage. Costs associated with HOA fees include administration, common area maintenance and utilities, insurance.

If the building is adjacent to the beach, the HOA should include the maritime concession - a yearly fee for use of the beach front by the building. This concession prevents third parties acquiring it to have businesses such as a palapa restaurant or boat rentals.

Closing Costs: Who Pays What? You should expect to pay approximately 6 to 7% of the property purchase price in total closing costs.

Once you have a signed Purchase Agreement, you will be provided with a Closing Cost Estimate.

It is important to note that while the “purchase price” and some of the closing costs and fees are typically conducted in US dollars, the final transactions established/registered with Mexican authorities will be in Mexican Pesos, the official currency of Mexico.

At the time of Closing, all US dollar amounts will be converted to Mexican pesos at that day’s exchange rate and all final costs and fees payable will then be established.

A breakdown of the various USD fees and costs with estimates are outlined below:

ACTION / DOCUMENT USD COST WHO PAYS Notary fees Price of Operation* Buyer

Due Diligence / Attorney Review $1,500+ (based on hourly fee) Buyer or Seller

Escrow fees $750 - $800 average Buyer (and Seller as negotiated)

Home Inspection $350 average Buyer

No Lien Certificate $50 Buyer

Transfer Tax 2.5 - 2.75% of purchase Buyer

Foreign Investment Permit Fee $1,000 Buyer

Bank Trust Fee (Set up fee +1st year) $1,200 Buyer

Public Registry fee Price of Operation* Buyer

Foreign Investment Registry fee $80 - $236 Buyer

Tax Appraisal Price of Operation* Buyer

Real Estate Commissions Negotiable Seller

Capital Gains Tax 35% before deductions or exemptions

Seller

NOTES: * Purchase Price in USD converted to pesos day of closing ** Prices are subject to change by the authorities. (Information furnished November 13, 2018 courtesy of CC Legal Advisors.)

Did You Know? Mexico is #1 in the world for finding friends and friendliness

The country ranks first for the subcategories Finding Friends and Friendliness. In fact, over four out of five expats (82%) find it very easy to make new friends, while over three-quarters (77%) don’t struggle to make local friends. More than a quarter (27%) are in fact mostly friends with locals, and just half the global average of 34% state they have mostly just expat friends (17%). It is no surprise then that almost all expats in Mexico (94%) rate the general friendliness of the local population positively, and more than half (56%) believe that attitudes towards foreign residents are very friendly. https://www.internations.org/expat-insider/

The Happiness Calendar The Banderas Bay region is blessed with an abundance of natural beauty, activities and opportunities for social engagement. As you think about what type of property you would like and what area(s) would best suit your needs, dreams and wishes, consider your lifestyle and what activities and surroundings will be most important to you.

Picture your new life here - how will you spend your days? Browse the sample weekly calendar below filled with social, leisure, learning,

and fun activities enjoyed by residents of Puerto Vallarta:

Sunday Monday Tuesday Wednesday Thursday Friday Saturday

7:00 coffee & sunrise

early breakfast on the terrace

early dog walk on malecon

early morning kayak to Los Arcos

sleep late!

8:00 walk the dog on malecon

Zumba class in the park

Freddy Toucan’s for pancakes

Page in the Sun for coffee with dogs & friends

yoga at the beach

9:00 quick swim then breakfast

grocery shopping & errands while maid cleans

Daquiri Dicks for breakfast

10:00 hubby: golfing me: spa day!

morning tour & lunch at the Botanical Gardens

11:00 Olas Altas market

12:00 beach day at El Dorado

whale watching tour

1:00 watercolor painting class at ArtVallarta

lunch at the beach

2:00 afternoon at the pool

Spanish lessons

3:00

4:00 afternoon swim and siesta

5:00 siesta/relax afternoon swim

6:00 tequila tasting tour

South Side Shuffle

7:00 meet Doug & Sue at Joe Jacks for fish & chips

movie night at La Isla

Purr Project fundraiser cocktails & art show

Art Walk tapas and cocktails with Stan & Barb

8:00 date night at Hacienda San Angel 9:00 live music

concert at the Palm Theater

Dinner with George & Julie at Warique

Late show at Act II

10:00 stargazing on the terrace

11:00

Your Happiness Calendar: How will your weekly schedule look? How do you want to spend your time and what activities are you

most looking forward to? And how will that help you determine the best property and area for you?

Let’s Find Your Dream Home Needs vs. Wants Checklist

Whether you are ready to buy now, or in a year from now it’s important to determine and clarify what you will need in your new home in Puerto Vallarta. By spending a little time to tell us about your property preferences and space requirements, you’ll help us get you closer to your new home in Mexico. Instructions: complete this checklist with your comments and / or your need vs want column with an “X” or checkmark; if it’s a “want” please indicate from 1 to 10 (10 being most important to you)

1. HOME BUYING BUDGET

What is your ideal price range?

2. PROPERTY USE How will you use your property? How much time will you spend here?

full time living

winter months only / part-time

part-time + optional rental income*

investment property / rental income* + vacations

* will rental income be a factor in your home buying budget? If yes, do you have any other comments or questions:

3. TYPE OF PROPERTY Are you looking for a condo, or a small casa, or a villa or house? Are you willing to do some renovations?

Are you open to looking at fixer-uppers? Are you open to building your own residence and looking for building lots?

Property Type Yes No Maybe Comments

condo house or villa building lot renovations / fixer-uppers

4. SPACE REQUIREMENTS Will you have regular visits from family & friends? How many bedrooms and bathrooms do you need? Will

you need an office or extra space for hobbies or art pursuits?

Rooms No. Need Want 1-10 Comments

How many bedrooms? How many bathrooms? Den or office? Extra room for hobbies?

5. INTERIOR FEATURES What other interior property features will be most important to you? Please check all that apply:

Feature Need Want 1-10 Comments

one level living / no stairs insuite laundry terrace / outdoor space A/C – mini-splits or central insuite storage bathtub(s) formal dining area large gourmet kitchen entertaining spaces open floor plan ocean view city, jungle or mountain view handicap facilities pet friendly*

* do you currently have pet(s) or will you adopt pets in the future? What do you have and what specific needs will you

require for your pets:

6. ARCHITECTURE & STYLE What are your preferences in architecture and interior style? Are you looking for traditional Mexican

charm, hacienda style, or contemporary Mexican with Mexican tiles, concrete walls, arched doors and windows, etc? Or would you prefer a modern esthetic with granite countertops, lots of glass, marble floors, clean contemporary lines, etc?

Style Need Want 1-10 Comments

Traditional Mexican Mexican Contemporary Modern & New Not Important

7. EXTERIOR FEATURES & AMENITIES What building or exterior property features will be most important to you? What amenities will you need

and want in your new home? Please check all that apply:

Feature Need Want 1-10 Comments

swimming pool heated swimming pool gym or fitness area elevator on site administration 24/7 security restaurant or lounge on site parking outdoor garden space

8. LIFESTYLE & ACTIVITIES What does your perfect day look like? What activities are most important to you? Do you want to live right

on the beach? Do you want to be able to easily walk to the beach? Do you want to be close to a golf course? Would you prefer to live where the action is and to be able to walk to restaurants, cafes and local markets and shops? How do you feel about living in one of the colonias (Mexican neighborhoods)?

Lifestyle Need Want 1-10 Comments

beachfront oceanfront walking distance to beach in town Romantic Zone or Centro easy distance to golf courses other neighborhoods/colonias close to boating & water sports walk to restaurants and bars walk to music & entertainment venues

9. ADDITIONAL COMMENTS AND/OR REQUIREMENTS

Thank You! As you begin your journey to achieving your dream of living in Mexico, we hope this Guide has helped to clarify the steps and procedures of purchasing property in Puerto Vallarta.

Whether you are ready to buy your dream home now, or just have a few more questions, we are here to help you in any way we can.

Contact us today to get started:

Harriet Murray Owner / Agent Email: harriet@casasandvillas.com

Mobile: USA / Canada: Puerto Vallarta Office: Puerto Vallarta Office:

+52 (322) 205-7550 +1 (504) 298-6730 +52 (322) 223-4027 +52 (322) 228-0419

www.casasandvillas.com 230-D Leona Vicario, Centro Puerto Vallarta

Because Expertise, Experience and Integrity Matters

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