eSignature Lawfulness for Mortgage in Mexico

How to eSign a document: e-signature lawfulness for Mortgage in Mexico

if you want to buy an airbnb in mexico then this video is for you because i interviewed marian pablo from moxie a mortgage company that helps u.s buyers buy properties in mexico we cover everything you need to know from fide comisos how taxes work do you actually own the home in mexico and much more and if you're looking to buy property mexico i created a free step-by-step guide that you can download in the description and if you're serious about investing i suggest you reach out to mary i left a link down below for you to have a call with mary to discuss what it's like getting a mortgage in mexico she'll get you all the information you need to get started yeah actually well the fidei commisso is the legal instrument that allows foreigners to buy property within the restricted zone in mexico the reciprocal area is the the borders and the coastlines so those are the only restricted area where foreigners needs this instrument which is called fide comiso de comiso it's only created but it's only allowed for financial institutions to do it like banks only banks pretty much so the bank is the one who owns the property but the trustee owns the rights for the property so they can use the property they can rent the property they can leave the living the property they can sell the property they want it but they own the right truck for that particular property so it is because the mexican government only allows property for foreigners in the restricted area through affidavi comiso or what is called as a translation which is a trust okay so then once once the properties paid off in 25 years and you guys are no longer in the picture how does that work right because they're defeating you is a bank trust right so how does how does it work then after the commission is necessary if they're using financing or not if they're paying cash they still need to have a fee they commit so but if they are using or financing the the the the illegal instrument is called also a fide committee but we are adding the guarantee so it is called a guaranteed truck or fide comiso de guarantee so when they when and this is just to a security guarantee for us as a lender when the when the borrower or the client pay off the mortgage will be removed from that guaranteed trust and it will continue as a regular fidei committee okay so uh it starts off as a fide commission uh d guarantee at the beginning because you guys are backing up the loan right or you guys are the ones giving the loan for the property but then afterwards after it's paid off um then it becomes a regular feta commission regardless of of whether or not you know you refinance or until you refinance or whatever until you refinance or it just paid off and then you don't want any more financing then it's all happy they commit a normal fidei commissa in the restricted area for a for a buyer who owns a property in mexico okay is the federal commission a a charge that varies every year like is it like an hoa fee or property taxes that can go up over time or is it static like when you buy the house this is the same the defense yeah a good question depends on the bank or or the financial institution normally there is a fee a flat fee like for example orpheus starts at 406 dollars but it could go it could go up yes but depends on the conditions that are set on the fedex committee from the financial institution so some people serious or some trustee from some banks they are charging like an increase every five years of a ten percent for the arnold for the last previous uh annual fee but that's written on the contract oh that'd be written on your on your mortgage contract not the mortgage but the trust contract the trust the trust contract but it would all happen at closing yes you will know this potential increase in contract from the very beginning and depending each bank is different some of them they're saying no i i will never increase my fee or some of them they were saying you know every five years or every 10 years or even are those who say every year i will increase like one percent two percent depend each bank is different at least the one we work with for my understanding is that we are not um doing an extra or we are not increasing our fee while the mortgage is in place okay and then once the mortgage is not in place does the does the the cost for the feta camiso go lower no it will continue the same but depends on the trust conditions that uh the the the bank institutions mentioned on the contract from the very beginning so each bank is different but with financing we have all those conditions from the very beginning okay and this the trust that exists after the mortgage is paid that is technically a different trust but it's still a trust with you guys no well we are not longer involved as the the mortgage was paid off will be removed from the trucks from the document and it will continue as a regular fidei comiso like the one who uh the one that is necessary for a foreigner to to own a property in the restricted area okay so mine uh i from my research it said that a feta commission is a bank trust so does that mean you need another bank to no to agree to do it from the very beginning we'll have a bank trust to create this document okay but so then so let's say i do buy a house with cash right if i buy a house with cash who is the bank that i use this trust with you decide there are several mexican banks who offer fide comisos so there are several banks so you decide with when there's financing involved we have our own bank who does this for us oh okay so that's what i'm trying to understand is so uh like that that other bank that does it for you right that does the fedex missile for you after the mortgage is paid off that's the bank that i'm still using yes correct all right but it's not a it's not a moxie company it's just no a partnership you guys have with them to get the feed of kamiso's done yes okay and i could choose to work with other ones if i wanted to if you wanted to but it's not recommendable i mean because you need to extend it or you need to cancel it and you need to create another one and there are fees involved so depends it's up to you but you can do it okay um all right so thank you for that that that helps clear up a lot about about that um uh taxes would you happen to know about how taxes work when you're trying to buy a property in mexico income tax you have to pay or is there a specific class of tax for real estate investors it is yes it is called acquisition tax position it is an acquisition acquisition tax yes and it is a percentage of the purchase price and uh each area is different for example here los cabo it is two percent of the purchase price that's the acquisition tax so that's what you pay as a tax for to purchase a property in los cabo of course there are others or there are all other other fees associated to the purchase but the one that is called taxes is this acquisition tax and in los cabos it is two percent of the purchase price but other areas in mexico like for example puerto vallarta i think it's three percent uh san miguel de allende i think it's 3.5 or two or four percent and other areas could be five or one but it's it's different in each area okay so acquisition tax only happens when you close on a house yes when you're purchasing a property that's the taxes that you need to pay to the government or the municipality for you to purchase the property to do the transfer of rights in your behalf okay so the the the group of people that i i target on social media are people who want to invest and the people who want to invest mostly if they're looking to invest in mexico it's probably because they want to do an airbnb so if you have an airbnb business in your property in mexico and let's say you make ten thousand dollars from profit from your airbnb that year um what would you i guess that may be a more complicated question but like what's the tax rate or what's the income tax is there a special tax bracket for like in the us right we have capital capital gains tax is there a capital gains tax in mexico how does that look well that's that's that's something that's more for an encounter there is a tax implication whenever you are renting the property and depends if you are um if you are paying the taxes in mexico then you don't have to pay in the us because we have a street a treatment between two governments that don't to avoid doubles and effects taxation so if you're paying taxes in mexico you won't be paying taxes in the u.s or if you're paying taxes in the u.s you won't be paying taxes in mexico depends how you structure your income if it's a mexican company the one who owns the property or who or the one who is renting the property you will have to pay mexican uh taxes income but that that percentage of that bracket is more for an account i'm not very familiar with those brackets or that percentages about how much you need to pay for taxes whenever you're paying or you're having income for your mexican property uh here okay but so if i'm a u.s citizen and i buy a property in mexico not under an llc then i pay it as u.s dollar taxes or if i buy it under an llc that's based in the united states then i buy it for um i i can do it that way where i pay u.s taxes yeah taxes yeah the best thing to do antonio is to um speak with an accountant speak with your accountant first because there are some um reciprocity laws between the u.s and mexico okay your account would be the one to be uh best advise you on that do you guys have a a mexican accountant that you know of that i could speak to on this yeah i i i wore i'm i'm in a association here in los cabo that is called math it's the association max is the mexican association for a specialist in finance or or this kind of situation so i can actually refer you to a very good one who speaks english very well and who can explain you how to expect or what to how to explain this to a potential investor from the us what are the benefits of making that income here in mexico or uh in the us okay all right thank you yeah if you could send me that because i want to make sure i clarify this point because that was a comment from multiple people the instagram video had 190 comments and at least three or four of them were about um we're about taxing probably yeah yeah um yeah that says taxes depends on where you're when you where where did you want to file your income that's what you need where what the type of taxes you need to pay if you're filed your income in mexico of course you need to pay taxes in mexico but there are some several structures which will be more uh easy to explain by an accountant okay yeah totally thank you so then besides acquisition tax when you buy the property um are there any other like major closing costs other than like yeah mortgage origination fees like you typically have in the u.s yeah actually closing a transact a real estate transaction in mexico even without financing is very expensive i would say in los cabos on a on a cash deal transaction uh closing those are somewhere around six percent of the purchase price wow i've had it worse sometimes but the six percent's high for sure yeah it is losing the closing process in mexico is slightly different than that of the u.s there's there's a few more legal steps that have to take place in mexico than what we do in the u.s uh lawyers are definitely involved uh power of attorney at least through a moxie requires the power of attorney so there's a fee for that there's a couple extra steps but the advantage to purchasing here versus purchasing in the us if you're looking at investment property is that property taxes are substantially lower than they are that in the us and um if you're a mexican citizen trying to go get a mortgage loan um you're looking at with excellent credit and great income a minimum of 15 to 19 interest on the mortgage loan holy crap wait so that was one of the questions i have for you guys what are your interest rates right now at a high level you know give me a range between low sevens and low nines so because you're originating loans in the us you can give seven to nine because it's based off of the u.s fed versus uh mexico fed is that is that why our loans are funded in the us through our investors in the u.s so of course our vet our investors are they've got to add a couple extra points to make money as well yeah but between low sevens and low nines and if you think about where the rates are in the u.s right now that gap has closed substantially over the last what six weeks so yeah yeah but one of the important things here is that the collateral for the mortgage or the guarantee for the mortgage is the same property you're buying in mexico the collateral for the collateral for the mortgage is the same what the same property here you're buying in mexico we're not asking for any other collateral back in the u.s okay so like let's say i foreclose on this house it's not like you can come after other assets i have um anywhere else no correct okay can i i just want to say something real quick now every conversation i have with um uh people coming into our social media or website or even the um realist release that i work with here in cabo i suggest very strongly to them to contact us prior to going to whatever area mexico they're going to visit and and getting that pre-qualification and conditional pre-approval because the market here in mexico believe it or not is just as hot and moving just as fast right now i think it's moving faster than the us so coming down here finding something putting an offer in contingent on financing you'll lose it that that's just a reality i've seen it happen way too many times here by contingent on financing you mean without a pre-approval letter submitted right yeah well i found it i love it but i want to see if i can get financing yeah and then i always recommend to people in all my videos get pre-approved before you even start looking because it doesn't make sense otherwise you'd be shocked at how many people i talked to still come down and get themselves in that situation and it's even worse because if you're going to fly out there right and pay all that money for airbnb or hotel or whatever right it's a lot of money to spend to just screw the waste at all um okay uh pablo um uh i i i i asked mary this about the cartel and i wanted to ask you this because uh i just wanted a different perspective my uber driver or taxi driver in cancun i asked him because that that was also a few comments was yeah then the cartel's just gonna come and take your house um do you have any experience or have heard of anything like that or do you think it's a fair fear that people might have that in mexico the cartel can come do something to take control of their house or you know use their house in a way that they don't want to be used or that a drug cartel yeah the drug cartel uh well you know that's a very sensitive topic in mexico and um there are certain areas that are very unsecure and we have uh security issues or violence issues in in some areas in mexico in my experience my personal experience i have been in cancun i've been living in los cabos for 17 years now and i have never seen anything like a drug cartel will will come to a touristic place and take your house to do something else i i haven't seen that in los cabos puerto vallarta or cancun there are other areas in mexico that i haven't heard that as well but there are some other areas in mexico that are more complicated than others and there's of course there are areas that are more unsecure but for what i've seen in areas where there's very so the more tourists the more secure it is i'm assuming yes yes so basically a way for someone to hedge that fear about investing in an area with a cartel would be to invest in a more touristy area the more touristy the area the less likely you're going to have a problem because there's a higher police presence or anything like that yeah well there's police there is police presence everywhere in mexico but the conditions are different uh i would say that if i'm an investor and i'm i'm a foreign investor i would look for those communities where there are other foreign investors so and and in mexico in general foreign investors are in touristic places of course and depends the kind of investment you want to do is this a commercial investment there are some areas in mexico that are very profitable like the center of mexico the bajillo area the north mexico monterrey [Music] tijuana but those are more for commercial property so for interest industry purposes but if you're looking for an investor or investor or your investors are more focused like in residential areas or touristic places i would say looking for those markets where foreign investors are buying and those are the the beach the beach from areas or the beach from places like los cabos puerto vallarta some areas in tijuana those are the touristic places and there's there's some specific communities in the center of mexico like san miguel de allende where there's no beach but there is a community of almost 20 000 foreigners living full-time in san miguel allende or another place like ajijic which is in guadalajara in jalisco which is not beachfront and there are almost 15 000 americans living full-time in there so if your investors are looking for this uh kind of of investments like residential look for those markets where they're foreigners living in it okay all right look for areas where there's foreigners investing and touristy areas and me tell you that's it's becoming areas of mexico are becoming more and more uh i guess flooded with foreigners i it's amazing how many americans and canadians are coming here and purchasing and they just they want the hell out of dodge like everybody wants out yeah so yeah for example i know there is there is an area in oaxaca in oaxaca i think it's established in guatemala which is i haven't i have talked to like three or four developers over there who are saying you know i've been having conversations with a lot of investors coming from the uf and they want to invest here so that there's their other areas are emerging besides like the normal ones like los cabos vallarta cancun so there are other areas in mexico but i i will say that it's recommendable to do some research about the area where you're planning on going and to see if there is any other communities or foreign communities are living there and they have investors there i do you know where where i could find that information about foreign and foreign investment but just like google you're assuming yeah i i'll say well i i had that information but it was last year i don't have the last one so let me see if i can get you some information but i would say yeah let's let's google that first to make sure which communities or which areas are more recommendable for foreigners in mexico something like that but i i will try to get that information for you i'm not i i don't have access to it right now but i can i have some connection that will allow me to have that information okay um the other thing i would suggest to antonio is i i myself visited cabo for five years before i made the decision to move here and i've been here five years now and i was coming three four sometimes five times a year spending a little more time each time venturing out to different areas and getting to know people so we if they're looking to invest a lot of people we talk to are looking to invest but eventually move into that home on a permanent basis they really should go visit and and spend some time there and get to know areas and people tons if they're looking a particular area in mexico uh go to facebook and look for expats groups for those areas there's going to be an expat community on facebook and instagram for every area no matter where you are in the world there's going to be an expat community yes that is correct so basically go to these facebook groups ask expats and ask them how they feel about the area basically absolutely join those expat groups oh my gosh there's countless expat groups just for cabo alone but yeah uh there's expats in mexico that's another facebook group and there's tons of expat communities on facebook that they can go to and ask that's right and i think i think that's another opportunity for you and like creating a blog to explain all the i know you're doing this six of videos but also creating a blog or creating a community where you can explain these situations to if you wanted to do to invest in certain areas of mexico you have my blog or you well this is something for you to to see it as a future or a potential activity but yeah i mean they're like mary was saying there's some expert group already in facebook in areas where where we just mentioned like there are several aspects group that will have a lot of information for all those who want to come here okay all right yeah thank you yeah i think uh i think the world of i live in the us and i want to invest in other cheaper countries is going to start expanding as homeownership gets harder and harder in the u.s and people can work remotely so now they're like i want to try all these different areas so i'm you know i i'm starting to look at it for myself too because the prices are cheaper and there's a high demand for tourism so why not diversify too if things are going you know things are going bad um okay uh i i'm i think i i know the answer to this question i just want to clarify do i need a mexican bank account to buy with you guys i'm assuming no because we're buying in u.s dollars that's correct okay correct i also sent to you an expat group on it's pulled on the road in mexico it has over 60 000 expats um it's a combination of canadians and americans okay 60k good um all right so uh answer does the mexican government own it the liens okay someone mentioned in one of the comments they said do mexican uh they said that the mexican laws protect tenants more than they protect the owner um and especially if you don't live there is have you heard of this kind of stuff i know i could speak to a lawyer but just from your experience have you heard about laws or bad scenarios that people have had with tenants uh because the laws in mexico were very lenient towards the tenant i am a tenant and i don't have any unfortunately i haven't had any reason to speak any legal recourse for anything so i think that that that question needs to be uh drilled down some with what particularly are they yeah and and it's always recommendable to have a contra lease contract and a very well written release contract with your tenants so yeah but that no i'm not familiar with that particular law if it's through airbnb do you need to do anything specific to uh like in mexico to rent it out in mexico like for example if i wanted to do airbnb in italy i need to notify the police of the person's contact information every time someone comes uh no no i i don't know the whole criteria for and listing a property as an airbnb here but it's not that complicated uh you need to have your like cellular fiscal or your tax id in mexico and then you that's that's that's all you need to list it you need a tax id in mexico yeah they could go to airbnb mexico and i'm sure airbnb um has the guidelines yeah requirements but but it is not that complicated and of course there is some uh the law that will apply for all those tenants it will be there but yeah that question will be for more for a lawyer who will be familiar with that particular law okay um in terms of areas i know mary you mentioned that there's certain areas where they don't have uh title insurance right so you have to put more 50 down and minimum 300 000 loan um are there any areas that you guys just straight up don't lend to there are and it's just you know it's hard to say what all those are and so is it better to say what areas you guys do lend to i think it's easier yeah for us to say where we do land rather than where we don't i mean i know right here in los cabos we have some it's right in the area i'm in we have some developments in which we can't lend because we can't get title insurance um there's some areas up on the east cape where we can't lend either because we can't get title insurance we can't even seek a legal opinion um but i think it would be easier to say where we can rather than where we can't okay all right so it's is it like a list on your i saw you guys have a map at the bottom of your website on one of them yeah i would say we can land anywhere as long as we have a positive as long as they have access to title insurance and if there's no title insurance and possibly a positive title opinion that's what is required title insurance or a positive legal opinion correct uh yes that's that's what it's required because we can we can we it could be an area where there's no title insurance but the time opinion is positive so we will do the move there but or there could be an area where there is tile insurance but for the positive the legal opinion is not a positive then we won't blend in that particular unit so depends on the on the on the legal opinion and it is uh available uh there's available tile insurance over there so we can land anywhere but those conditions needs to be met okay um you uh you mentioned some timelines earlier but how long does it take to close like from start to finish do you have a high level on that well the closing timeline starts from the time we receive an executed sales contract okay um so and then of course everyone involved with the loan has a part to play sellers realtor buyers realtor uh lawyers natarios you know so depending on how quickly everyone gets their things done um their part done so we tell anyone everybody 30 to 60 days 30 to 60 days okay of course under 60 days but you can't always get people moving the nice thing is we have implemented rate locks um but we can't lock the rate until 10 days prior so it's kind of motivation to get people to get their part done because his rates are going up yes um okay and then are there any differences in rates between llc and individual or a company versus individual do you know that answer to that pablo if there's any difference between a uh a company or having the loaning of the company or personal yeah or interest rates yeah no there's no difference between if you're buying us an individual or a company now there is no rate increase or something like that okay i just want to quickly thank mary and pablo for making this video happen without them this whole series would have been really difficult to make now if you want to learn more about investing in mexico click the video on screen right now where i interview susan rapini she's a tax specialist an accountant who will help answer all the questions you have about getting and paying taxes in mexico especially if you live out of the country