| Attention all baby boomers; are you starting to think | | | | electricity for your residence will cost about the same |
| about retirement but your cash is tied up in | | | | as in the US. Car prices are roughly 20% higher in |
| 401k´s, IRA's, pension programs, retirement | | | | Vallarta so bring your own car! Auto insurance is |
| funds, stock options, or your residence and you're | | | | about the same and although house and condo |
| not quite ready to liquidate any of these assets? | | | | insurance is available, very few people seem to have |
| Have you been watching retirement properties | | | | it. |
| continue to escalate in price and are concerned that | | | | Health insurance is the same, however healthcare, in |
| the cost of your retirement dreams might be beyond | | | | any of the three new and modern high-tech hospitals |
| your reach when you're ready? Well, perhaps you'll | | | | in PV, is substantially less expensive. It would be safe |
| find the following information quite enlightening and | | | | to assume that health and dental care costs are one |
| hopefully it will alleviate some of your concerns. We | | | | half to one third of the same medical services in the |
| discovered an affordable virtual Paradise when we | | | | States. Fees associated with hobbies such as golf, |
| made Puerto Vallarta, Mexico our permanent | | | | tennis, fishing, etc. are about the same as in the |
| residence ten years ago and are sharing its features | | | | States. Labor for house work, gardening, handyman, |
| and benefits with you. | | | | etc. is a third of such costs in the US. Skilled |
| In 1997, prices for real estate, land, labor, and | | | | tradesmen such as electricians, plumbers, air-condition |
| construction materials were about a third of prices | | | | repairmen, etc. charge about the same rates as in |
| today in Puerto Vallarta, known otherwise as Vallarta | | | | the States. You can find self proclaimed skilled |
| or PV. Ten years ago, prices for food, clothing, | | | | tradesmen for a third the price, but you'll get what |
| household goods, etc. were quite reasonable in | | | | you pay for! |
| Vallarta but selection was poor. Ten years ago, | | | | Next, let's assume that you're retiring and going to |
| virtually all financial transactions in PV were cash, | | | | spend the "high season" in Paradise where it almost |
| including the purchase of house and land. Although | | | | never rains, the sky is blue, and the average daily |
| the real estate prices were a half to a third of those | | | | temperature is 73°F. You've purchased your |
| with comparable amenities in the US or Canada, in | | | | million dollar condo for $400,000, drove your SUV |
| the absence of mortgages, one needed total financial | | | | loaded with clothing, personal belongings, and dog |
| resources in order to purchase a retirement property | | | | with it's proper immunizations to Vallarta, and you're |
| here. North American banks were reluctant to | | | | ready to begin enjoying life. Your food, energy, |
| provide mortgages in Mexico and Mexican banks | | | | furniture, insurance, hobby related expenses, |
| lacked the available capital. | | | | property maintenance expenses, etc. will be about |
| During the past ten years with the Mexican economy | | | | what you're accustomed to back home. Property |
| booming, the peso stable, and Vallarta exploding with | | | | taxes will be an insignificant fraction of what they |
| growth, the situation has changed dramatically. | | | | would be in the States, medical and dental care will |
| Today, mortgage capital from a number of American | | | | be a half to a third, labor around your residence will |
| mortgage firms is readily available in PV. Interest | | | | be a half to a third, and most all other service related |
| rates are generally 2% to 3% above the prevailing | | | | expenses no more than one half of those in the US |
| US rates. Mortgage insurance is also now available as | | | | or Canada. |
| is title insurance. Because the economy is so stable, | | | | Finally, for the kicker! During the past ten years, |
| strong, and growing, the mortgage companies are | | | | we've seen property values triple in Vallarta. The |
| offering financing up to 70% of the appraised value, | | | | tourism boom is only beginning at this time with a ten |
| thus opening the market to a flood of new baby | | | | year building plan that borders on being incredible. The |
| boomers about to retire. | | | | Mexican government in conjunction with global |
| Now that North Americans can acquire their dream | | | | developers and a handful of Billionaires, yes with a |
| retirement condo or villa in Paradise prior to full | | | | capital B, are currently in the planning stages and just |
| retirement, let's consider some of the associated | | | | beginning construction of a mega-resort retirement |
| expenses. As a "rule of thumb", $200/ sq. ft. would | | | | destination zone near Vallarta. Prices in PV are sure |
| be an average price for a beautiful ocean or bay | | | | to double in the next five years. The Mexican law |
| front condo and approximately $250/ sq. ft. for a villa | | | | assures all foreigners that they are considered |
| with breathtaking panoramic views of the bay and El | | | | "permanent residents" if they spend more than 50% |
| Centro. Almost all properties have sweeping | | | | of their time in Mexico for at least five years. That |
| 180° views of Banderas Bay, the entire city of | | | | translates into "permanent resident" status if you live |
| Vallarta, and the Sierra Madres and are comparable to | | | | in your dream condo or villa during the "high season" |
| the finest properties in the California seaside areas. | | | | for five years. As a "permanent resident", you are |
| As a typical example, a 2,000 sq. ft. condo might | | | | exempt from Mexican capital gains tax upon the sale |
| cost $400,000 and require a little more than $120,000 | | | | of your property in Vallarta. So, let's say that you |
| initial deposit with the balance being mortgaged at | | | | decide to sell your dream condo after five years and |
| 8% for 15 years. Such a fixed rate mortgage would | | | | return to the hectic pace back home. |
| require payments of approximately $30,000 annually. | | | | While the housing market is softening in Florida and |
| Trust fees are about $500 per year and property | | | | California, the market continues strongly upward in |
| taxes are roughly .12% of the appraised value or | | | | Vallarta and in five years the value of your condo is |
| $500 per year. Condo association fees are usually | | | | estimated to be $800,000. Assuming that you |
| about $4,000 per year bringing the total | | | | financed your purchase and that you paid $120,000 |
| out-of-pocket expenses to approximately $35,000 | | | | initially and another $175,000 in mortgage payments |
| per year. It must be remembered that the equivalent | | | | and condo fees, without any rental income, you |
| property in the States could easily be $1,000,000 | | | | should have around $570,000 equity in your residence |
| with taxes alone of $20,000 per year! In order to | | | | at the time of sale. That $275,000 profit should more |
| reduce the $35,000 per year expense in Vallarta, | | | | than offset all expenses that could possibly be |
| many of the about-to-be-retired condo owners rent | | | | incurred even with the highest standard of living in |
| out their condos during the seven month "high | | | | Paradise. Using this hypothetical scenario, the |
| season" of November through May. Rental income | | | | $275,000 gain over five years equals about $55,000 |
| for a $400,000 condo should average at least $2,500 | | | | per year. It's difficult to spend more than $3,000 per |
| per month. Do the math and you'll understand the | | | | month living like a king in Paradise, therefore the |
| relative ease in owning a property in Paradise prior to | | | | seven month "high season" should not cost much |
| full retirement. | | | | more than $20,000 leaving $35,000 for travel and |
| Now that you have a place to retire, let's consider | | | | living expenses during the five summer months, or |
| the other living expenses and compare them to the | | | | $7,000 per month. If you can't make it on that, it |
| equivalent in the States or Canada. All of the | | | | might be time to go back to work! By the way, your |
| following information is "rule of thumb" and based on | | | | monthly social security checks will be electronically |
| knowledge and experience derived from living full | | | | deposited into your account regardless of where you |
| time in PV for ten years, while owning property here | | | | live. |
| for 23 years. Food purchased in supermarkets and | | | | In summarizing, if you're thinking about retirement |
| meals in restaurants are of the same quality and price | | | | within five years and would like to enjoy your life to |
| as in the US. Clothing, hardware, electronics, and | | | | it's fullest, you can probably buy that million dollar |
| everything else imported will cost about 50% more | | | | retirement dream residence in Vallarta today, even if |
| than in the US. Furniture costs are equivalent to | | | | you're short on cash! |
| those in the States. Fuel for your automobile and | | | | |