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AZ John
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Posted: Wed Oct 10th, 2007 08:17 pm |
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I wish to retire in San Carlos 10 years from now and am considering purchasing either a rental property or a lot so that 10 years from now I'll already have a place in San Carlos.
My question: Do you think it would be better to acquire a rental property that provides rental income but requires a large investment or a lot, requiring a smaller investment but lacks rental income.
John@AzRecruiting.com
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Hook
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Posted: Wed Oct 10th, 2007 09:56 pm |
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This question is too heady for anything but an independent, fee-only financial planner who will take into account ALL aspects of your life, assets, liabilities and income. What's a few hundred for professional advice that will affect the rest of your life?
On a message board, you run a greater risk of getting advice worth exactly what you paid for it.
And, no, I am NOT a financial planner.............I'm a working stiff.
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JZ
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Posted: Wed Oct 10th, 2007 10:42 pm |
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I would buy a lot, build a custom house, rent it as a vacation house, and use it when you come down. Buy as close to the water as you can afford. That is what will appreciate the most, rent the best, and it's the view you want anyway.
Whatever you decide, I would do it now. 10 years from now will be too late. But I think you have figured that out already.
Last edited on Thu Oct 11th, 2007 04:18 am by JZ
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beegees2
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Posted: Thu Oct 11th, 2007 02:12 am |
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| I think those are both good answers.
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Wy Ynot
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Posted: Thu Oct 11th, 2007 02:49 am |
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| Beegees, again, worth what you pay for it and I also am not a financial planner, much less Mexico, much less 10 years from now. Just an observation, but three years ago, a 1000 meter lot in Ranchitos, grown over, was 6,000. to 8,000. average, maybe 10,000 tops. Today, 20,000 to 50,000. The one for 50,000. was cleared, fenced and had a septica, don't know exactly what it would take to buy it, but there it is. I would loved to have bought a little unimproved forest just North of Edmonton about 10 or 15 years ago. WHUDATHUNK? I'm like you, too many years the hard way to do the wrong thing. San Carlos still looks good now. If you wait on either choice??? Only an observed opinion. Ron
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AZKLMSR
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Posted: Fri Oct 12th, 2007 04:50 am |
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Population and the desire to be in San Carlos are going up a lot faster than God is making new land at the moment. 10 years is a crap shoot, but I doubt you would find a 10 year period in the last 50 years when the investment in SC did not beat the heck out of a savings account.
As for me, I've got the same question and decided to jump in. My lovely better half is a realtor and tells me it's a no brainer, but then again, I have to make the payments, not her.
Good Luck
Kurt
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GP
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Posted: Fri Oct 12th, 2007 02:19 pm |
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| Somebody on this board recently posted a comment about real estate dropping in San Carlos over the last year or so. Does anyone know if that's true? Is it still dropping and why, is it following the US home market?
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Hook
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Posted: Fri Oct 12th, 2007 05:25 pm |
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Most of the info I have read from financial planners regarding when to buy a retirement home, they have a few caveats about it. The issues they usually bring up are:
1-how significantly will it affect your current financial situation? Will you be in a hole, paying for it? Will that adversely affect your lifesytle or can you live with it?
2-how predictable is your health in 10 years? Your lifestyle? Your significant other's lifestyle?
3-how easily can you use the property in the mean time? How often? Can you easily monitor the progress of work that you can't do (that's a big question mark in Mexico)?
4-what happens if it turns out not to be a good investment? How quickly can you then sell it? What tax consequences will it incurr and will you be in a position to absorb it; gain or loss?
There are other issues but generally, unless you are quite well off financially, most recommend waiting till you are closer to your retirement date than 10 years. That's just what I've read.
As to the question of RE values in SC, it's tough to get empirical evidence in either direction. I think you can tell that properties in certain price ranges are moving REALLY SLOW. Properties stay on the market for many months and you'd have to assume that when they do sell, it's likely at a significant discount to the original asking price. That, alone, doesnt mean prices are going down. But generally, slow sales means depressing prices; quick sales means inflating prices.
I am going the route that JZ suggests, but I am not looking down the road 10 years. My timeline is WAY shorter; like 3 months-2 years, max. But I'm not investing more than I can afford to lose.
I also want to limit my investment to be able to re-locate quickly if I find an area in another part of the world that becomes more appealing to me. Mexico's political, financial and safety environment is becoming less stable. Her oil output may have already peaked. Major unions and lack of competition in industries are strangling her. She may not have an easy outlet for her disgruntled workforce in the US any longer. Crime has increased dramatically. A serious leftist, who has major land reform in mind, almost won the last presidential election. If conditions worsen over the next 5 years, that party will be a shoo-in. "Conservatives" will be routed both north and south of the border, it would seem.
Of course, value all these mumblings at what you paid for it..........
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Inde
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Posted: Fri Oct 12th, 2007 06:00 pm |
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| Great post Hook, thank you.
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TC
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Posted: Fri Oct 12th, 2007 07:31 pm |
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It's a tough call, and lots of sound reasoning has been expressed in response. I just wanted to put in an "on the other hand" opinion from somewhat analogous experience, regarding the purchase long before retiring.
I made a similar purchase, but in Green Valley, not SC (yet! ). And with more like 12-14 years before retirement. So far it's worked out very nicely. We have a getaway that we use 3-4 weeks in the winter, more in the summer, and snowbird rentals pay taxes, upkeep, and more. Timing of having bought in 2000 before the sudden crazy runup in prices was sheer luck -- it's doubled in value, even considering a slight pullback lately -- but presumably it would have appreciated some even in more normal times. I'm very happy we bought long before retirement, wish we had bought earlier, and more ambitiously, i.e. a more spacious place.
That said, SC is a different situation, in obvious ways. Hard to judge how much of the experience outlined above is transferable in time and space, but I agree with those who opine that in terms of investment, SC property is likely to appreciate very nicely in the next 10 years.
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Hook
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Posted: Fri Oct 12th, 2007 07:44 pm |
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TC, that point about how much you use the place is really key, according to many financial planners. They cautioned about places that were too far away to use frequently, especially if it requires significant transportation costs to get there. What often happens is people end up spending money on vacations to other closer spots while they are still paying for the retirement place. If the retirement pad can act as a source of both, that's the best scenario and makes it much more practical.
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luvsancarlos
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Posted: Fri Oct 12th, 2007 08:03 pm |
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| We purchased waterfront property in SC 9 years ago for $150,000.00 ..at this time it is worth over $700,000.00. We are still a few years from retirement but have been able to spend around 6 to 7 weeks a year in SC. It has been a great investment for us and plan to spend more time as soon as we both retire. Our property taxes are less than $300.00 a year!
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Hook
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Posted: Fri Oct 12th, 2007 08:27 pm |
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It is WORTH what someone else will pay for it when you do sell..........as many owners in markets like Florida, Arizona and California are finding out.
Hasn't one of the homes on Mansiones been on the market for 1.9 mil for almost two years now? Does that mean it's WORTH 1.9 mil??? I dont think so. Apparently other potential buyers dont either.
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luvsancarlos
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Posted: Fri Oct 12th, 2007 08:33 pm |
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| WE are fortunate as we have had offers for that much but want to keep it in the family so our children will have a place to take their children and grandchildren.
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TC
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Posted: Sat Oct 13th, 2007 01:53 pm |
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Hook wrote: TC, that point about how much you use the place is really key, according to many financial planners. They cautioned about places that were too far away to use frequently, especially if it requires significant transportation costs to get there. What often happens is people end up spending money on vacations to other closer spots while they are still paying for the retirement place. If the retirement pad can act as a source of both, that's the best scenario and makes it much more practical.
Hook, sure -- that's the scenario I outlined.
To the point of AZ John's original question, raw land could be the answer for someone who wouldn't be using the property until retirement, assuming that it's possible to find a piece that's a plum location for eventual building, and to get it for a good price. If retirement in SC works out, you've got the land at 10-years-ago prices, and if it doesn't work out and the land is to be sold, it's quite likely to have turned out to have been a good investment.
(The catch in that, IMO, is contained in your post about worth -- what's "a good price"? At any time, but especially now, with values melting away at least elsewhere. In the snowbird markets in the U.S. that I'm familiar with, it looks as though a lot of sellers are holding out mostly in vain for last year's prices. Caveat emptor even more than usual, seems to me.)
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Timothy B.
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Posted: Sat Oct 13th, 2007 04:57 pm |
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Good morning all,
I would like to tag on to something Hook mentioned about the political arena and the unions. Yes there is much movement forward but here in Cananea we have had a union strike against the copper mine that is turning this into a ghost town. One of my businesses dropped off 70% because of the stike and I closed it. Others are doing the same.
The problem is the gov't doesn't step in against the unions. The strike is deemed illegal, the gov't is losing millions in taxes, exports of copper to China, and the the company is losing millions daily.
Grupo Mexico is not even talking settlement, robberies are skyrocketing here and it will get worse and this is all the fault of the union. All these workers got a $ 30,000 (dollar) profit sharing bonus two months ago.
As the old saying goes, invest in Mexico only what you can afford to lose.
Unfortunately I think we are in for a swing to the left which won't bode well for tourists or property owners.
Just my thoughts.
Timothy B.
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jackie j
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Posted: Sun Oct 14th, 2007 08:14 pm |
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| Luvsancarlos says that the property taxes on their $700K home amount to about 300 dollars per year. We have a home (not on the water) in San Carlos that is worth much less than that, and we pay over $1100 US dollars per year. How can this be? Our neighbors pay similar amounts as us and are also baffled about how the amounts are chosen by the tax office. Our taxes a couple of years ago were less than $300 per year, but the taxing authorities re-assessed the properties around here about that time and the amounts went way up. It does not seem fair that some pay so little for similarly valued properties and others pay much more. After spending much time and effort at the tax office in Guaymas, the main rationale offered to me for the increase was that Guaymas needed new roads and water service and the money had to come from somewhere, so San Carlos, which is a part of Guaymas, was the logical choice. That makes some sense, however, the tax people only raised the taxes of some homes that they randomly targeted for re-evaluation, and none that I know of were owned by Mexicans. We pay about the same rate here as in the US, but we don't get similar services for the money. I guess the old saying is true: nothing is certain but death and taxes!
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PK
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Posted: Mon Oct 15th, 2007 10:37 am |
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Yes, the tax system seems to be uneven.
Last edited on Mon Oct 15th, 2007 02:01 pm by PK
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Hook
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Posted: Mon Oct 15th, 2007 03:52 pm |
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There was a recent post on this or the other board that a reassessment team was working in the San Carlos area. Maybe they havent gotten to luvsancarlos' house yet.
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AZ John
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Posted: Tue Oct 16th, 2007 04:31 pm |
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| I wish to thank those that replied. Thanks for the insights and emails.
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