Buying Real Estate in Puerto Escondido, Mexico

My wife and I got married a few years ago in a town called Puerto Escondido, Mexico. Historically, it was a small fishing village, but over the last 30 years or so it has become a go-to destination for surfers and, now, retirees who are looking for a more authentic Mexico. It was our second trip to Puerto Escondido, and we'll definitely be going back.

The first time we went to Puerto Escondido we kept bumping into a guy and his wife who were from Chicago. This guy was in his mid-50's and had been coming to Puerto Escondido for the past ten years. He's a union plumber in Chicago, and would spend about four months a year in sunny Puerto to get away from the cold Chicago winter. Around 2001 he bought a plot of land with a view of the water. The real estate was right across the street from a very scenic rocky cliff that jutted out into the Pacific Ocean. Over the next year he built a house. All in all, it ended up costing him about $75,000.

Today that piece of real estate is worth about $400,000. He hadn't bought it as an investment, but he ended up making more profit from that house than he did from actually working over the same amount of time. Plus, he got to enjoy four months out of the year in a place that he designed., in sunny Puerto Escondido He also made some income from renting the real estate out the rest of the year as well.

There are quite a few people like this guy, who have profited from buying land and building a house in an inexpensive, yet beautiful location like Puerto Escondido. In fact, one of the reasons why we decided to visit Puerto, and then get married there, was because it was listed as one of the best bargains in Mexico. A cab that will take you anywhere in town is $2. Hotel rooms are regularly less than $35 a night. You can get a great dinner, with cocktails, juice just squeezed from the tree in back, and dessert, all for about $10. You can imagine that buying real estate is cheap. It's a bargain now, but it won't be for long.

In Mexico the government historically has designated areas for tourism. Think of Cancun, Puerto Vallerto and places where buying real estate can be very expensive. They have become very Americanized. If you take a two hour bus ride from Puerto Escondido, you'll come to a city called Huatulco, which is designated by the Mexican government to be developed for tourists. It does get its fair share of tourists, but its development has also been hampered by storms and earthquakes. Free market forces are starting to take hold more in Mexico, and more tourists are venturing away from designated tourist zones to find beautiful beaches, cliffs, and mountainside view villages like Puerto Escondido.

For real estate purposes, now would be just as good a time to buy in Puerto Escondido as when the Chicago plumber did six years ago. Why? One, demographically speaking, America has a ton of baby boomers retiring soon. Many of them have accumulated enough money to vacation, or even spend a portion of the year in a destination outside of the U.S. They're also more adventurous than previous generations because of the internet and the ability to stay connected to family and friends while overseas. Many of them don't want to stay in planned tourist destinations. Many will migrate to places like Puerto Escondido. Beyond the supply of new tourists, there is a new superhighway connecting Huatulco and Oaxaca, the capital of the state. This will help provide much-needed supplies to Puerto and will allow hotel owners and restaurants to begin providing more luxury items. This is really going to help the area.

The next five years will be a good time to buy real estate in Puerto Escondido. How do you do it, though? You can certainly find a lot of Realtors down there, some that are American, who will want to sell you a house or a plot of land. You don't want to find your palace on the internet. Much of the prime land is still owned by locals, and $10,000 is a lot of money to them. You want to scout out the area, do some research, connect with some of the locals, whether Americans living there or Mexicans, and find a plot of land that you can buy cheaply. After that, you'll have to deal with building the house, which is easier now than it has been in the past. There's even an American builder down there. When buying real estate now, financing may be trickier, but you can get a loan through a Mexican bank that has branches in the U.S., whereas before this wasn't possible.

Is buying real estate in Puerto Escondido for everyone? Of course not, but if you're adventurous, there is a great opportunity to make a great deal of money while relaxing in a beach house in a small Mexican village overlooking a cliff.