The Punta Brava course is just one of three courses that Tiger Woods has designed. The other two are at Dubai and the Blue Ridge Mountains between North and South Carolina. Punta Brava will be one of the most exclusive properties in Mexico, and with the chance to be near the best golfer of all time, properties will probably sell out fast. Tiger told the Wall Street Journal in an interview that he plans to have a home in Punta Brava and that he plans to only do a select few golf courses. 

Tiger says the course is on an “amazing piece of property” and will have views of the ocean from all 18 holes. The course is on the small end at just 6,800 yards but it will probably rank as one of the most desired golfing locations in the world. You can view the planned layout of the course at the development’s website, www.puntabrava.com. 

The planned development looks as impressive as the golf course. One of the unique community amenities are locally grown organic fruits and vegetables from the Punta Brava Farms. Master chefs prepare authentic local dishes with ingredients from the development’s own farm. The renderings of the rooms have a unique modern design by renown architects and the site describes their focus on sustainability. This will definitely be one of the most exclusive and desirable developments in Mexico, if you can afford it. 

Sources

Tiger Woods and Flagship to Build Mexico Golf Resort Bloomberg

Tiger Woods Discusses His New Course in Baja Wall Street Journal

Today we welcome Thomas Lloyd, who owns www.TOPmexicorealestate.com , a new web page and blog of tips & “how to” regarding Mexico Real Estate.  Thank you Thomas, for offering to share your experiences on living and doing business in Mexico. My first question is what makes real estate in Quintana Roo a good investment?

This question deserves an entire chapter and even an entire book for a response.  But, I will try to answer in two or three sentences.  Mexico is an emerging market versus developed markets found in the USA, Canada, and/or various countries/markets of Europe.  In mature markets it is becoming more and more difficult to find opportunities with strong returns.  In emerging markets, you will have a better probability of finding such opportunities but the risks may be higher. Surrounding yourself with a good, knowledgeable team on the ground will help you greatly in managing such risks.  Now within Mexico, there are various regions that have different scales of opportunities, one of those being Quintana Roo.  A unique aspect of this region would logically be its location.  This state is located on the eastern part of Mexico on the shores of the Mexican Caribbean.  Approximately one hour from South Florida, about 2 hours from Texas, 4 hours from Chicago, 5-8 hours from Canada, 9 hours from UK, etc.  It is the second busiest airport in Mexico after Mexico City, and it is Mexico`s number one tourist destination.  Basically,  this market is fueled by tourism, and the tourism is diversified from several originating markets:  the United States, Canada, and the European market.  These tourists and visitors creates the demand side opportunities.

What specific real estate markets in Quintana Roo have the best opportunities for appreciation?

Waterfront investments have had many opportunities.  Preconstruction projects have had some incredible returns if administered correctly.  Tulum has been buzzing for about 2 years with much speculation of a new international airport, along with their existing beautiful turquoise beaches.  Playa del Carmen developers have narrowed the gap between existing rooms versus tourist visitor demand, but tourist visitors are projected to expand very strongly for the next 5 years.  And finally, there are some interesting new Real Estate projects that have discovered some niches in the markets which are quite interesting for review.

Do you think the real estate market in Cancun has peaked or are there still opportunities for growth?

The population of Cancun is still growing at impressive rates.  The city, state and federal governments have some interesting projects relating to industries other than tourism that has continued the creation of new jobs and opportunities.  I am surprised at the amount of Mexican nationals that have been moving and purchasing on the residential inventories.  On the luxury and international market side, Cancun has introduced some new gated communities with marinas and golf courses.  Deep draft marinas with capacity for yachts over 100 feet are an interesting and developing market.  These developments  are opening up new markets of end user prospect client types.  In the past 12 months approximately 4 new golf courses have been introduced or are in the process of being introduced to this region.  Boaters in the southern Florida region for example, will now have the option to cruise down to the Mexican Caribbean to explore and play in the Yucatan peninsula.

Have you seen any signs of slowdown of real estate in the Quintana Roo region due to the recent financial crisis in the US?

Yes, over the past 12 months the quantity of Americans purchasing has been put on hold or reduced.  The Canadians on the other hand have spurted upward, taking advantage of the strong Canadian Dollar.  The amount of direct flights from European airports have been increasing over the past 3 years and a stronger euro and pound have also created increased demands.

Can you describe some of the advantages or disadvantages of investing in the Mexican real estate market versus the US real estate market?

As mentioned above, a mature market versus a new emerging market are some of the advantages that I can see as being advantageous.  The cost of every day living is another factor that creates interest for buyers as well.  Whether you are investing for yourself, or advising a client, Mexico with its natural beauty, its easy travel access, and lower costs per square foot on waterfront properties and other real estate, are a few of the main factors that should require investors to place Mexico as an top option for comparison and analysis.

Thomas Lloyd graduated from Purdue University Krannert School of Management with a degree in Management/Financial Option Investments. He has been living, investing, and working professionally in Mexico for over 15 years. Active broker and current president of TOPmexicorealestate, you can contact him at (512) 879-6546 or through the company`s web site www.TOPmexicorealestate.com

So what does this mean to Mexico real estate? Global finacial fears means that banks are more adverse to risk and it will likely become more difficult to secure financing for real estate in Mexico. Many individuals who are buying Mexican real estate get financed from US lenders because the interest rates are lower than Mexican lenders. In addition the decline of the stock market means that those wanting to cash out thier retirement portfolios have less cash available or may have to postpone their retirement date. With shrinking home values in the US, there is less credit available from home equity loans. Mexican home buyers could also face difficulty in securing financing since Mexico’s banking sector is about 80% foreign owned. One of the two largest banks in Mexico is Banamex which is owned by the United State’s Citigroup. Banamex and Spain’s BBVA Bancomer, account for 45% of Mexico’s banking sector according to buyusa.gov. The spread of financial fear across the globe means a lot of investors will hold onto their cash and wait to see what happens.

The other way to look at the current situation is that investors may be attracted to cheaper deals available in the Mexico real estate market. The tumble in the value of the Peso against the US dollar means it has become cheaper for US and international investors to buy real estate. This effect could be similar to when the US dollar fell in value and there was an increase in foreign investment in US real estate. Despite the attractiveness of Mexico real estate as an alternative, the fall of the peso and the Mexican stock market are bad signs for the Mexican real estate market.

Sources: Mexican Peso Sinks to Record Low as Financial Crisis Spreads Bloomberg.com

Financial and Insurance Services in Mexico BuyUSA.gov

When you attend a cocktail party in the US you dress appropriately. It’s the same for urban Mexicans attending similar functions in their city, naturally to the extent that they can afford to do so. So why then do many full and part-time Oaxacan residents of American citizenship dress unkempt, often in sloppy t-shirts, jeans and sandals when attending a formal function? February 10, 2006, was the first time that the unfortunate phenomenon hit home and caused this writer to hypothesize both why it occurs and how it can be prevented, with a view to enabling expats to have much more diverse and culturally rewarding Mexican experiences.

That February evening was marked by two significant events in the city, each of which centered upon reflecting the past and looking to a bright future for Oaxacans. The first was the formal installation of Lic. Edna Franco as the president of the Oaxaca Bar Association, attended by prominent federal and state legal minds and politicians, and some 400 attorneys. The agenda, within the context of speech-making and cocktails, aside from its formal raison d’etre, was a look back at from where Oaxacan society has come, and forward socio-economically in terms of how the Bar and judiciary could move forward to ameliorate the lot in life of the citizenry in general. The second function was a cocktail party honoring those benefactors who had donated between 1,000 and 3,000 pesos towards a scholarship program for indigenous women who would otherwise not have the opportunity to complete their education and achieve their intellectual and career potential. The party was held within the context of the following evening’s benefit concert by internationally renowned singer Lila Downs, the project’s main fundraiser since 1995.

As often occurs in Oaxaca, my wife and I had to flit between functions, initially attending the former affair, then the latter, and finally back to the more comfortable celebratory setting of the inauguration. I wore a suit, and my wife similarly appropriate attire, as did almost all of the attendees at our first stop, the Bar Association function. There was wine, hors d’oeuvres, and a five-piece string band. At the fundraiser there was also alcohol, appetizers and live music. But the similarities stopped there. Aside from the minority of native Oaxacans who dressed similar to my wife and me or otherwise neatly and tidily as dictated by their financial ability, most of those (mainly male) invitees who were English speakers dressed as if they had just come back from a trek through the countryside on a mule. Any sense of acknowledgement of achieving the goals of the cause which brought us together, and all semblance of an atmosphere of festivity and respect for process, was lacking: “Just point me to the troughs so I can eat, drink, and talk.”

The legal event was attended by attorneys, many of whom were of modest means (one doesn’t get rich being a criminal, human rights or labor lawyer working in the trenches), yet each owned or borrowed attire to match the function, knowing he or she was going to be at a formal affair. The fundraiser was in fact called a “cocktail,” right on the invitation. Everyone approached to contribute was told that with their level of donation they’d receive a double pass to a cocktail party. Therefore, one could not possibly mistake what it was. Then why the dichotomy in dress? Everyone who can afford to donate at least 1,000 pesos can afford a nice pair of pants, clean shirt with collar, and leather shoes. Everyone who lives here must own at least one set of respectable clothes, and if not, why not.

We live in a major urban center, the capital of a state, where as we all know or ought to know, social functions are a part of day-to-day life. This was not a village wedding where one dresses as one wishes. The “anything goes” adage works at a beach resort or for a two-week vacation. In both cases the likelihood of being invited to a formal function is slim. But those who spend longer periods of time in a large city environment must be aware of acceptable standards of dress and that conforming to same is a show of respect for native residents and their society…in which you’ve been given the privilege of residing.

If expats in fact want to be accepted into the broader Oaxacan society, have Oaxacan friends and be welcomed into their social circles, then they must act the part and treat custom and societal standards with the respect they deserve. It’s not enough to throw money at causes and do charity work.

Don’t envy my assimilation. Don’t ask how I’ve become integrated. It’s not hard to figure out. I may be smug and now well on my way to alienating my wife and me from the several non-Mexican narrow social circles, but I do look in the mirror. Perhaps my fellow expats ought to look in their mirrors as well … at least before leaving the house for their next cocktail party.

Alvin Starkman received his masters in social anthropology in 1978, and his law degree in 1984. Thereafter he was a litigator in Toronto until taking early retirement. He and his family were frequent visitors to Oaxaca between 1991 and when they became permanent residents in 2004. Alvin together with wife Arlene operates Casa Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com ), a unique bed and breakfast experience combining the comfort and service of a downtown Oaxaca hotel with the personal touch and quaintness of country inn lodging.

Patrick Killelea lists several reasons why it is “a terrible time to buy” on Patrick.net, a site about the real estate bubble. He writes “It’s still much cheaper to rent than to own the same thing. On the coasts, yearly rents are less than 3% of purchase price and mortgage rates are 6.5%, so it costs more than twice as much to borrow money to buy a house than it does to rent the same kind of house. Worse, total owner costs including taxes, maintenance, and insurance are about 9%, which is three times the cost of renting.” In addition the combination of less competition for mortgage lenders due to WaMu’s failure and tightening credit markets will likely mean interest rates will increase.

In contrast Mexico real estate has several factors that make buying in Mexico an attractive alternative. Real estate is much cheaper overall compared to the US, especially coastal real estate. The financial markets are in better shape since subprime mortgages are essentially non-existent in Mexico and the mortgage backed security market is still in the infant stages there. Traditionally Mexican’s pay much higher down payments like American’s did after World War II. There is growing demand for homes with the combination of 70 million American baby boomers, the Mexican government’s push to get people in homes, and the maturation of the mortgage market in Mexico. Developers are building as fast as possible to catch up to demand. There is a shortage of 4 million homes according to Inter-American Development Bank while in the US will have a surplus due to excess inventory built during the boom period and the record numbers of foreclosures. Simple economics suggest that growing demand and a shortage of supply will lead to growth in home values in Mexico, while more people in the US will rent rather than buy and sellers will have to drop prices to move their excess inventory.

The results were reported as part of KPMG’s Latin American Capital Flows Survey, which asked almost 140 executives from the most important multinational corporations in Latin America about their investment plans for the next twelve months as well as the next five years. The study focused on the economies of Mexico, Brazil, Argentina, Chile, Peru, Colombia and Venezuela.

Of all the investments by these corporations, Mexico will increase in direct investment in the country from 8 to 10%, while Brazil and Argentina will expect declines from 2 to 5%. Chile showed the greatest drop with a figure of 11% with Peru also showing signs of decreasing investment intentions from the surveyed executives.

A second survey survey published earlier this Summer, also from KPMG, showed that Mexico has the lowest costs of doing business when compared to G7 and other major economies. According to the survey, titled 2008 Competitive Alternatives, business costs run 20.5% lower than in the United States, largely due to lower labor, tax and transportation costs. This was the first time Mexico was included in the study, reflecting its status as an emerging industrial economy.

The study contains information for companies seeking advatnages in locating international business operations, measuring 27 key cost components that are most likely to vary by location, including labor, taxes, real estate and utilities as they are applied to 17 business operations over a 10-year planning horizon.

While international investors express confidence in Mexico, the currrent crisis in the United States has been taking its toll on the Mexican stock market. The Bolsa Index (or the BMV as it is known in Mexico) has fallen by 18.9% so far this year. Claudio Brocado, a specialist in emerging markets from the Batterymarch Financial Management firm in Boston commeted, however, that in the long term emerging markets like Mexico will be better able to withstand this type of crisis because this time they are not at the epicenter of the problem as was the case during the Mexican economic crisis of 1994.

KPMG is a network of professional firms providing advisory services operating in 145 countries. For complete versions of both studies, please refer to:
http://www.kpmg.com/SiteCollectionDocuments/Latin-America-Capital-Flows-survey-2008.pdf
http://www.kpmg.com/SiteCollectionDocuments/CompetitiveAlnternatives08.pdf

If someone is asked to be a padrino of a child upon baptism, it creates a new bond between two families, solidified by the creation of compadres. The parents and grandparents of the child become compadres to the padrinos (at times extending to their children…i.e. compadritos.) While family members are frequently asked to be padrinos, often friends, neighbors and business acquaintances are selected, as a means of strengthening ties which already exist. Academic writings, confirmed by my personal experiences here in Oaxaca, suggest that while as a godparent you have lifelong obligations to your godchild which may or may not ever be called upon, it’s the ties between compadres which on a regular basis can come into play.

Let’s examine other occasions when you might find yourself asked to be a godparent, obligations which may fall upon you at the time, and finally how your new status as a compadre manifests, and keeps on ticking. Why you and not someone else? To understand we must look at the pool of prospective choices from which you may be selected. My perspective may appear cynical, but is fact based and proven, using a functionalism model.

Godparents are selected for both religious and secular rites of passage, for godchildren ranging from infant to adult. In Oaxaca the most common events where custom dictates godparents be chosen are marriages, school graduations, girls’ 15^th birthday celebrations (quince años), confirmations, first communions and baptisms. Sometimes but not always, there may be a financial commitment involved, where for example as padrinos of a wedding or quince años a couple may be asked or simply volunteer to contribute to the cost of the affair. But don’t worry, financial obligations may be shared amongst several godparents. A case in point involved my wife and me. When asked to be godparents at the wedding of the son of then merely acquaintances, our mouths dropped, whereupon after a pregnant pause the request was concluded with “…of the rings.” This meant that we were responsible for buying the wedding bands, while another couple was being honored with being the primary padrinos of the newlyweds. In fact you can be asked to be godparents of (for purchasing) the cake, liquor, flowers, and the list goes on, depending often upon the financial ability of the people throwing the function, and in the case of individuals with resources, whether or not they want to bestow a special honor at that particular point in time of the already-existing relationship. You may be asked to make a speech, give a blessing, dance with the bride/groom or quince añera, almost always being an active participant depending on circumstances. If you’re not Catholic, don’t take communion or kneel, let your soon-to-be compadres know, even if it appears there won’t be a religious component to the proceedings. There will likely be a padre involved. For example, on occasion one finds padrinos chosen within the context of the opening of a new business. As part of the ribbon-cutting ceremony, the padre may be in attendance to give and direct blessings. Personally, this Jew doesn’t object to having a little holy water splashed on him by the padre…as long as it’s as a result of inadvertence.

Padrinos are almost always selected from people of the same or a higher socio-economic class. For example, a factory worker may select the supervisor of her department to be her daughter’s padrino at a baptism, but the corollary would rarely occur. A maker of handicarfts in a small Oaxacan village may ask a wealthy patron / shop-owner from Mexico City to be godmother to her daughter and future son-in-law at their wedding, but the opposite would be out of the question. And you may be similarly asked, by a Mexican friend / neighbor, a perhaps perceived equal, but for different reasons. Functions regarding the foregoing three examples? Bonds of friendship are acknowledged and strengthened for future utility; a patron-customer relationship is affirmed with comfort in now knowing that it will continue ad infinitum; and there will be the perception that a boss won’t fire a compadre.

Your status as a compadre begins immediately, and you may never again be referred to by your name, but rather “compadre.” You’ll experience the metamorphosis of your status, and will be treated differently. As an otherwise extranjero, you may feel as though you’ve come of age in your new hometown. Compadres give and receive more invitations. Favors may be asked of you more readily and of a different type, with an expectation of compliance, if not the most careful consideration…and just as importantly, you will come to feel more comfortable making requests of your compadres…borrowing a truck, helping out with an arduous household chore, lending money, housing a relative temporarily, providing counsel in trying times, receiving preferential treatment in business or politics. By the end of our first year of permanent residency in Oaxaca, of the foregoing we lacked personal experience in only the matter of politics.

In terms of the broader societal importance of compadrazgo, the number of kinship ties you have is relatively finite, and usually beyond your control. However, for as many life stages and changes as may arise, one’s immediate family has the opportunity to extend non-relative or “fictive” kinship ties through deliberate selection. One is able to build and nurture through mutual requests and compliance innumerable economic and social alliances.

Here in Mexico no one ever utters “you can pick your friends but not your family.” The strategies and decision-making processes involved in determining who would make appropriate compadres for a family, and why, are absolutely fascinating. I’ve touched upon only some of the dynamics. The internet and traditional anthropological print literature are exhaustive, and should be consulted by those interested in or thrust into the system.

Alvin Starkman received his masters in social anthropology in 1978, and law degree in 1984. He was a Toronto litigator until moving permanently to Oaxaca in 2004. Alvin now writes, tours couple and families to the ruins, craft villages and market towns, and together with wife Arlene operates Casa Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com ), combining the comfort and service of a four star downtown Oaxaca hotel with the quaintness of rural villa or inn style lodging.

Puerto Vallarta has grown from a quiet little fishing village to one of the fastest growing real estate markets in Mexico. Here are our top ten facts about this investment hotspot.

1. Sales of resort real estate in Puerto Vallarta has increased from $50 million in 2000 to $500 million in 2007 (NuWire).

2. Vallarta is home to 350,000 residents, with a community of 6500 expatriates (VisitPuertoVallarta.com).

3. PV is the number 2 resort town in Mexico with 2.2 million tourists annually (NuWire).

4. Vallarta’s continuously expanding international airport welcomes more than 450 flights daily (NuWire).

5. As of summer 2008, there are more than 100 developments around Banderas Bay making Puerto Vallarta first in resort property sales in Mexico (NuWire).

6. Banderas Bay is the largest bay in Mexico and stretches for 26 miles (Fodor’s Mexico 2008).

7. Puerto Vallarta is on the same latitude as the Hawaiian Islands.

8. Punta Mita, one of the better known developments, has Four Seasons, Ritz Carlton and St. Regis Hotels and two Jack Nicklaus Signature golf courses.

9. Puerto Vallarta was recognized in the Most Beautiful Beaches of the World Club by the French Institute.

10. Named one of the top 15 destinations to visit in 2008 by the New York Times.

“My investment plan remains the same. I expect real assets will greatly out-perform financial assets. First, I want to buy gold and silver in physical form whenever I can. In the world of inflation, while cash is king, gold is the emperor! Second, I look to accumulate real assets if they are quality assets and the prices have crashed down. So, I do believe that in a few years even real estate will again be a great inflation hedge!”

If one of the consequences of the 2008 Financial Crisis is a loss of faith in the financial system, we could see more people shift their portfolios to real assets such as international real estate. A shift in investing behavior could help international markets like Mexico, with stronger overall demand for real estate investments. This coupled with factors such as the increasing number of Baby Boomers moving to Mexico full time, should result in good prospects for real estate markets in growing markets like Puerto Vallarta. The flip side, is that many Americans have lost wealth in their financial investments and nationwide home values have dropped significantly. Many Americans can not borrow as much against home equity to buy a second home, or their 401K has now shrunk and they can not cash out as much. However, Mexico is a great place to move, if you want to stretch your retirement bucks as far as they will go, with lower health care costs and cheaper oceanfront real estate. A smaller nest egg may lead retirees to choose Mexico, over a more expensive but similar lifestyle in Florida.

While there is anecdotal evidence of an immediate fall in demand for Mexico real estate (see US Financial Turmoil Affecting Mexico Real Estate), the long term prospects still look very promising.

Here in southern Mexico we’re tempted to follow neither gut instincts based upon a northern worldview nor the fount of knowledge we’ve accumulated in our earlier lives. Instead we are guided by a Mexican multitude of advisers, friends and tradesmen.

Rent

On the other hand, long ago I received sound advice that it’s imprudent to lay down permanent roots until you’ve lived in a city at least six months. While in our case we never rented for more than six weeks while on vacation, we nevertheless ultimately decided upon building. A dozen or so years vacationing in Oaxaca two or three times yearly reduced the importance of that counsel in our particular case.

Determine whether or not on balance you’ll feel comfortable in your prospective neighborhood. Chock up one point for initially renting, since you are not tied to a particular home or area of the city. You have the opportunity to get a sense of the life of the colonia (neighborhood), to determine whether or not you can tolerate the level of noise at night, to make an informed decision as to whether or not it will be overly burdensome for you living away from the zócalo and heart of the city, or for that matter too close to el centro with its unique set of issues. Finally, there’s the water issue which you may want to understand first-hand, especially if you won’t be blessed with a large cistern and don’t want to be at the mercy of the pipas (water trucks) which, during dry season, can take a couple of days to arrive after ordering.

Initially renting makes sense if you are in the fortunate position of not having to make an irreversible life decision, let’s say if you own a business and can have someone manage it while you’re doing a trial run so as not to burn a very important economic bridge, or if you’re an employee with marketable skills enabling you to go back and get another job if things don’t work out. The downside is that your money is “thrown away”, and you’ll be subject to inflationary factors since the cost of buying a home, or acquiring land and building, increases significantly on an annual basis, at least here in Oaxaca. Those who are former homeowners tend to lack that sense of comfort while in a rental, resulting in an unsettled feeling, the last thing you want when deciding upon a dramatically new lifestyle.

Buy

If you’ve previously rented in a certain colonia or have otherwise familiarized yourself with it, then buying an existing home in that neighborhood has many advantages. You avoid the dual problem of having to buy land and then build, and the plethora of pitfalls associated with the process. You know what you’re getting and have already decided that it’s what you want, or are willing to accept … you can look out and see the vistas (or lack thereof) from your bedroom window, rather than wonder based upon reviewing an architect’s plans, of which you can make little real sense. You’re not faced with the uncertainly of a landlord asking you to leave or not knowing when your home-in-progress will be ready for occupancy. Your home will have already stood the test of time in terms of resisting minor earthquakes and dealing with leaks during the rainy season. You don’t have to deal with many issues which frequently crop up when you build: you can hear the phone ring and know there’s phone service, turn on the light and know that there’s electricity, listen for water entering the cistern and know that there’s already a city water connection, and you can drive up to the house and know that you won’t have to wait years for pavement.

Whether you buy or build, ensure that you look out from the home / piece of land, and consider whether or not your exquisite view of the valley and mountains could possibly become blocked by new construction on the vacant lot next to you, or a two-storey addition onto the home of a neighbor. Building codes outside of the centro histórico are generally do not deal with aesthetics, and there will be little to prevent a new, tall structure from blocking your vistas.

Build

On the other hand, with all of these and a multitude of other problems associated with building in particular, still nothing compares with fulfilling the fantasy of constructing one’s dream home in the mountains, which in Toronto or elsewhere north of the Rio Grande would be virtually impossible to achieve due to climatic, and much more importantly economic factors. While some may have gone through the building process, you are in the minority, especially when it has included searching for land and knowing that you’re building this one time, and never again. The phrase “wouldn’t it be great if we could…,” here in southern Mexico is not necessarily a pipe dream … but the process does take a lot out of you.

Some of my comments regarding process are applicable to purchasing a home as well as buying land and building, but in our particular case refer to the latter. As a representative of one of two loathed vocations (law and real estate), I have no difficulty generalizing that one ought to exercise the utmost caution in trusting real estate agents, anywhere. In any job where there’s potential to make a lot of money with little effort in a short period of time, there is significant potential for abuse, cutting corners and putting one’s own financial interests ahead of those of the client, especially when the relationship with the client is for a single transaction. The use of real estate agents is still in its infancy in Oaxaca, as compared to in the north (and the more popular retirement communities relatively close to Mexico City), and thus as one would expect, in a society with relatively little in the way of consumer protection laws, the regulatory framework within which agents work lacks the training procedures and checks and balances to which we are accustomed. Put another way, you have reason to be overly vigilant when working with an agent. Our realtor urged us to buy a lot in suburban Guadalupe Victoria, with services close-by … too close, as it turned out. It was only after viewing it for the second time with an architect friend that we learned that because of the wires running above part of the tract of land, we would be subject to restrictions and complications when it came to building. But the agent was from a then prominent realty company, so we stuck with her. Next time out, while climbing a brushy hill trying to determine the exact measurements of a smaller yet equally attractive property, our rep, with title papers in hand said: “Yes, this is it.” Then someone came by asking why we were on his land. After the proprietor and agent compared papers, we learned once again that the knowledge of the agent was suspect.

It is not only foreigners who can be deceived by unknowledgeable or less than forthright vendors of land or their agents. A Oaxacan friend purchased a piece of sloped land from a friend of his, whose family had been the landowner for years. It was only after excavation had begun that my pal learned that the lot had previously been filled, and that his “friend”, the vendor, knew it. The cost of construction immediately became much greater, and the proposed construction methods would have to be dramatically altered. My friend could no longer afford to build what he wanted, or how and when he wanted to do it, and is stuck with land that must now be sold at a discount.

After giving consideration to land in various colonias, ranging in size from 200 to 3,000 square meters, in fraccionamientos (gated communities) and otherwise, both fully and “soon-to-be” serviced, we settled on a lot in Guadalupe Victoria owned by Don Julio and his wife. We found it on our own, and after checking with an architect and negotiating price, executed the papers and provided our deposit to Don Julio personally (here, such deposits are often not held in trust by the attorneys), in our notary’s office, the deal to close as soon as government okayed subdividing, since the land was close to an ecological zone. The closing was to be completed within days (cince días or two weeks, as they always say). The deal didn’t close as a result of administrative issues, but some three years later, after several discussions and the execution of a release by us, Don Julio’s widow and children counted out that 10,000 peso deposit, late at night at their kitchen table, saying that they didn’t want to have to look the other way and run if they came across us on the street. Knowing that the likelihood of getting title was growing slimmer and slimmer, by that time we had already purchased another much smaller lot and on steeper land, but closer to downtown, serviced, and with a wonderful panorama … welcome Colonia Loma Linda.

Architects in Oaxaca are often also the project managers and builders, and as such may prepare plans, obtain permits, liaise with regulatory bodies and hire trades. Your architect should be hired before you buy land, since he should be consulted to determine the viability of what you have in mind for the land, any additional or unusual costs associated with building as a consequence of elevation, the subsurface composition or required municipal involvement in terms of pavement or sewer/water connections. In our case, that was one of the things we did right … that is, used architects at the outset.

Interview more than one architect. We walked through homes built by four, prior to deciding. Our error was not speaking to the owners about the relationship they had with their architects, problems with the finished houses not apparent to the eye, timeliness of completing the project, and financial issues, all of which became issues for us down the road notwithstanding that, and perhaps because, our architect was a friend first. Next rule is therefore, don’t befriend your architect. Keep the relationship as businesslike as possible, though this may be difficult in Oaxaca where business relationships quickly turn into friendships, and acquaintanceships frequently become solidified through compadrazgo (co-godparenthood, involving the appointment of godparents). In our contract our architect was to receive construction draws, with fee paid upon completion. Because of the pre-existing friendship, when she asked for a significant advance against her fee for some urgent family matter, we naively provided it. We lost the upper hand which resulted in ongoing problems, ultimately costing us an additional 100,000 pesos or more, and a year’s delay in completing the project. While I ought not generalize about lending money to friends, and I have done so in Oaxaca, at times without incident, if something doesn’t seem to sit right, follow your gut instinct. Surely our architect must have had closer friends than us from whom to borrow.

When contracting with an architect you should have someone with experience, from your camp, review and redraft the construction agreement. Be as exact and detailed as possible, no matter how long it takes to get it right and how many pages of verbiage are required. Take time to enumerate what type of wood and other construction materials will go where, the sizes, brands and models of appliances, tanks, pumps, etc., the type and quality of finishes, and a timeframe for reaching designated stages of completion. Include implications for missing or reaching deadlines, to create an incentive for the architect to finish on schedule. Go with her to the building supply outlets to choose. Let her factor into the timetable the weeks when trades will be off work in their pueblos with family for fiestas, how many times she’ll run afoul of regulations and be subject to an obra suspendida (stop work notice), and how much delay will result from unavailability of construction materials such as adobe during the rainy season. We indeed had a multi-page contract, but it failed to include all of the above. Had I been negotiating on behalf of a client, it would have been different. Get yourself a good, fully bilingual notary, or possibly a lawyer with a litigation background, to assist. A lack of solicitor-client confidentiality and conflicts of interest are not uncommon, so be careful to whom you say what, and ensure that there are no or limited connections between your architect and legal representative. Remember, you and your architect at this preliminary stage are adverse in interest. While certainly you can sue to attempt to obtain justice, recall that you are not dealing with the British Common Law system to which you are likely accustomed. In most if not all states and provinces we have legislated home ownership warranty plans to which home builders are subject, providing the new homeowner with speedy and effective recourse…not so here in Oaxaca.

The following is a short list of problems we encountered subsequent to moving into our home after our architect had been paid virtually all of her fee, which would have been covered by the standard warranty plan had there been one: leaky toilets, sinks and cistern; several areas where water pooled instead of drained; damp walls; a serious polilla problem (insects eating away at the wood and carrizo — river reed akin to bamboo); shoddy carpentry; a non-functional carport which had to be reconstructed at a cost to us of over 50,000 peso; and both water and gas leaks. But we do have our dream home, and look forward to years of ongoing expenses as further deficiencies become apparent, until the house is finally sound … and it’s time to sell. Would we do it again knowing now what we didn’t know then? In a heartbeat, but taking my own advice!

Alvin Starkman received his masters in social anthropology in 1978, and his law degree in 1984. Thereafter he was a litigator in Toronto until taking early retirement. He and his family were frequent visitors to Oaxaca between 1991 and when they became permanent residents in 2004. Alvin writes about life and cultural traditions in Oaxaca, consults to documentary film companies, leads couples and families on tours to the sights in the central valleys, and together with wife Arlene owns Casa Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com), a unique Oaxaca bed and breakfast experience combining the comfort and service of a four star downtown Oaxaca hotel with the personal touch and quaintness of country inn style lodging.