Buying a property in Mexico City: a complete guide

All sources have been thoroughly verified for credibility. Furthermore, a local real estate expert has reviewed and approved the final article.

Yes, the analysis of Mexico City's property market is included in our pack

Thinking of investing in real estate in Mexico City? You're not alone!

Many people are captivated by Mexico City's historical richness and dream of owning a colonial house or a modern apartment there.

Would it be a good investment, though? Are property prices increasing in Mexico City? How much does it cost? Is it more profitable to invest in Roma or La Condesa? What about the taxes? Which place will give me the best yields?

We've figured it out for you.

At TheLatinvestor, we've extensively researched this market; As a matter of fact, we've gathered all our findings in a pack. Get it now.

In the lines below, we'll share useful information and some practical tips.

How's the property market in Mexico City?

Is the property market showing growth or decline? Let's analyze the latest data and statistics.

Types of properties

In Mexico City, you can find various types of properties for sale, including apartments, houses, condominiums, and townhouses.

These properties come in different sizes, ranging from cozy studios to spacious multi-bedroom homes. They can be located in diverse neighborhoods, each with its own unique character and amenities.

Whether you're looking for a modern urban apartment or a traditional house with a courtyard, Mexico City offers a wide range of options to suit different preferences and budgets.

Better to buy or rent?

(If you want to live there yourself and not rent it to others)

Whether you've already made Mexico City your home or are contemplating it for the future, you might be considering whether to buy or rent a property in this bustling Mexican capital.

Without a doubt, you should buy if you want to acquire equity and have more control over the property.

Actually, decisions become clearer with the property price-to-rent ratio in mind. This helps you understand the connection between rental income and the property's current price in terms of years.

According to Numbeo, the property price-to-rent ratio in Mexico City is around 15.84, which is below the world average.

In simple terms, it would typically require 16 years of rental payments, on average, to buy a property in Mexico City. If you plan to stay that much (or even less, since you can re-sell), it's better to buy.

Property prices in Mexico City

On average, according to the last data from National Institute of Statistics and Geography (INEGI), purchasing a property in Mexico City would cost you around $3,990 per square meter.

Obviously, there is a huge spread. An apartment in Condesa might have a different price per square meter than a house in Polanco. We actually give you a more detailed breakdown in our pack for buying property in Mexico City and in Mexico.

To put things in perspective, it means that, instead of buying an apartment in New York, you can get 3 properties in Mexico City.

However, housing prices in Mexico City are higher (61%) than in Buenos Aires.

The most expensive neighbourhoods in Mexico City are probably Polanco, Lomas de Chapultepec, and Las Lomas, while the cheapest neighbourhoods are likely to be Iztapalapa, Gustavo A. Madero, and Venustiano Carranza.

Trends

First and foremost, we have to acknowledge that Mexico is, today, a relatively stable country. The last Fragile State Index that has been reported for this place is 70.3.

This is important to remember when wondering if it's a good investment to buy a property in Mexico City.

Also, according to the International Monetary Fund (IMF), Mexico's economy is expected to soar by 8.3% in the coming 5 years, resulting in an average GDP growth rate of 1.7%.

If you want to invest in real estate in Mexico City it's a good thing because, when people experience an increase in wealth, it typically translates to a surge in housing costs.

Also, in Mexico, the average GDP per capita has changed by -3.6% over the last 5 years. It's not a good number.

Looking for more updated data? We've done a big-picture study to find out if it's a good idea to purchase property in Mexico right now.

Buying property in Mexico City

Buying real estate in Mexico City can be challenging due to the lack of reliable and up-to-date information available. That's why we have created the pack to buy property in Mexico City and in Mexico.

Buying process

Inside our pack, we've outlined the complete buying process, including a detailed breakdown of prices and yields per area, tips for negotiating the price, and information about mortgage options.

Here, we're presenting you with a more straightforward version.

This is the step-by-step process to purchase a property in Mexico City:

1. Research property market and desired neighborhoods in Mexico City.
2. Engage a certified Mexican real estate agent familiar with local regulations.
3. Visit potential properties, considering proximity to amenities and public services.
4. Negotiate the purchase price and terms, including the "Arras" (earnest money) deposit.
5. Sign a Letter of Intent (LOI) and formalize the "Contrato de Arras" (earnest money contract).
6. Conduct a due diligence investigation, verifying property title and liens.
7. Sign the Promise of Sale (POS) agreement, outlining all details and conditions.
8. Hire a notary public ("Notario") to oversee the transaction and prepare the "Escritura" (deed).
9. Pay the remaining balance and transfer funds through a Mexican bank.
10. Sign the final deed ("Escritura") at the notary's office, in the presence of buyer, seller, and notary.
11. Register the property with the Public Property Registry ("Registro Público de la Propiedad").
12. Pay the necessary taxes and fees, including the acquisition tax ("Impuesto sobre Adquisición de Inmuebles") to finalize the purchase in Mexico City.

Also, if you're not from the country, you might want to check our article on how to buy property as a foreigner in Mexico.

Make a profitable investment in Mexico City

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Where to find a property

Discover properties in Mexico City using these websites:

• Mexico Real Estate Group - A multilingual brokerage specializing in luxury properties across Mexico for international buyers and investors.
• Top Mexico Real Estate - A professional agency helping American and Canadian buyers find their ideal homes in Mexico.
• Bay Realty Mexico - A local real estate agency with 15+ years of experience in the Puerto Vallarta and Riviera Nayarit markets.
• Green Realty Mexico - A boutique agency focusing on assisting buyers and sellers in Jalisco and Nayarit, Mexico.

Also, know that we have included contacts of real estate agencies, property lawyers, moving companies, expats communities and more in our pack for buying property in Mexico.

Which properties for which budget?

As mentioned before, the average price per sqm in Mexico City is $3,990. A 1-bedroom property with an area of 60 square meters would cost approximately $239,000, and a 2-bedroom with an area of 85 square meters would cost around $339,000.

However, the amount you pay for a property can be different based on its characteristics and where it's found.

Housing prices in the top areas of Mexico City are usually at a premium. A villa in Polanco might be priced at around $970,000, while a residence in Condesa could cost you $900,000.

Still, some spots are more wallet-friendly. You may find a condominium in Iztapalapa for $130,000, or one in Coyoacán priced only at $110,000.

We give a more detailed pricing list in our full pack for buying property in Mexico.

Common mistakes

Here are the main pitfalls when buying a property in Mexico City:

• Ejido land concerns: Some properties may have unresolved ejido land claims, leading to ownership disputes.
• Fideicomiso complications: Foreigners may require a trust (fideicomiso) to buy property near coastlines, affecting control and costs.
• Legal documentation: Ensure all permits, building codes, and property papers comply with Mexico's regulations.
• Water scarcity: Verify water availability and rights, as shortages can affect property value and daily living.
• Mexican notary system: Rely on a trustworthy notary for accurate property transfers and legal processes.
• Infrastructure issues: Assess the condition of roads, sewage systems, and public services near the property.
• Property condition: Dilapidated buildings may require extensive renovations, impacting overall expenses.
• Cultural nuances: Embrace local customs, language, and negotiation styles for smoother property transactions.

We don't want this to happen to you, so we have included a full checklist for your property investment in our pack of documents. Avoid these mistakes and save a lot of money.

Everything you need to know is included in our Mexico Property Pack

Living in Mexico City

Mexico City is a vibrant, diverse city with a unique culture and a wide range of activities and attractions, making it an ideal place to buy property.

Cost of living

The cost of living in Mexico City is generally low compared to other large cities in the world. However, the cost of living can vary greatly depending on the area and lifestyle of the individual.

Here are some examples to better understand the cost of living in Mexico City, Mexico:

• Mezcal margarita at a trendy bar in Condesa: $8.
• Rent for a one-bedroom apartment in Roma Norte: $900/month.
• Tacos al pastor for two at a local taqueria: $12.
• 1.5-liter bottle of Jarritos (Mexican soda): $1 at a supermarket.
• Electricity bill for an 85m² apartment using CFE (Federal Electricity Commission): $70/month.
• Monthly membership at SmartFit gym: $30.
• Ticket to a Mexican film at Cinépolis: $5.
• Cup of freshly brewed Mexican coffee at a local café: $3.

Neighbourhoods

We like to give information in an easy-to-understand way. So, we made a table that shows the different areas in Mexico City. For yields, prices and rents, check our property pack.

Life in Mexico City

Mexico City is the largest city and the financial and economic hub of Mexico. It has a diverse and vibrant economy, with a wide variety of sectors such as tourism, finance, manufacturing, retail, and technology.

If we refer to the IMF's data, we can observe that Mexico City's GDP makes up almost 19% of Mexico's GDP. Investing in property in a city with a strong GDP is smart because the city's thriving economy suggests more jobs, higher demand for real estate, and stable property values, making it a favorable investment environment.

What expats usually like the most in Mexico City is the vibrant culture and the numerous historical sites to explore. They also appreciate the delicious and diverse cuisine, from traditional Mexican dishes to international flavors.

However, the crime rate of Mexico City is still very high (with a value of 68, one of the worst scores in the world). The most common crimes in Mexico City are theft, robbery, and drug-related offenses.

Also, you have to know that Mexico City struggles with air pollution and potential seismic activity due to being situated on an active fault zone.

A good point for a property investor - Mexico City has an extensive metro system with over 200 stations.

Access to healthcare in Mexico City is very good, with a Healthcare Index of 66. You probably know that when there's a solid healthcare setup, it makes a location more appealing, which benefits real estate.

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Renting out in Mexico City

This section is for you if you want to buy property solely for renting out and earning income.

Long-term

Tenant Profiles in Mexico City

According to the data reported by Wikipedia, the home ownership rate in Mexico is 80%, which is rather high.

But things are a bit different in Mexico City. There are lots of foreigners and young workers there, so there are plenty of people looking to rent homes.

If you decide to buy and rent out to long-term tenants, you should target young professionals, families, and retirees who are looking for a convenient and affordable place to live in Mexico City. Mexico City is also home to students and expats, who may be more interested in short-term leases.

Here is a little summary table we've made for you.

Rental yields

Nowadays, the rental yields you get in Mexico City are between 5% and 7%. There are some opportunities. For a "good" rental yield, you should aim for 7% or more.

In Mexico City, properties located in the city center tend to have the best rental yields due to their proximity to amenities, transportation, and business centers. Additionally, properties located in rapidly growing neighborhoods such as Centro, Roma, and Condesa are seeing increased demand and therefore higher rental yields.

For further explanation and a more detailed breakdown, you can check the reports and analyses we have made.

Finally, be aware that rental incomes in Mexico City are taxed at 25%, which is average.

Short-term

You could also decide to rent short-term to tourists, business travelers, and students attending universities in Mexico City. Additionally, you could target digital nomads looking for an extended stay in the city.

If you decide to go with that option, look for properties in the Roma and Condesa neighborhoods of Mexico City. These areas are known for their vibrant nightlife, cultural attractions, and high rental demand.

You will have some competition though - there are around 22,000 Airbnb listings in Mexico City. The average daily rate stands around $68.

You have the opportunity to generate a nice additional income stream then. Based on feedback from online testimonials and data analytics platforms such as AirDNA, Guesty, and Inside Airbnb, people who offer short-term rentals in Mexico City can make around $900 per month. Also, the average occupancy rate is estimated at 67%.

Is it worth buying real estate in Mexico City then?

Certainly, buying a property in Mexico City can be a fantastic move if you plan to live there for an extended period, but it might not be the best choice if you're solely looking for a rental income bonanza.

If you're in love with Mexico City's culture, history, and plan to make it your long-term home, then owning a property makes sense. The property price-to-rent ratio is in your favor, indicating that it's usually cheaper to buy than rent if you're staying put for a while. Plus, Mexico City's growing economy can potentially drive up property values, adding to the appeal. However, keep in mind that the city's high crime rate, air pollution, and earthquake risks are factors to consider.

On the flip side, if you're purely an investor chasing high rental income, you might want to think twice. Rental yields in Mexico City hover around 5% to 7%, which is decent but not extraordinary. Factor in the 25% income tax on rental incomes, and the allure of quick profits may fade. Additionally, navigating the Mexican property market can be tricky, with potential land disputes and legal complexities to contend with.

So, while Mexico City offers a rich tapestry of opportunities, whether it's a real estate treasure chest or a financial pitfall largely depends on your specific circumstances and objectives.

Make sure you understand the real estate market in Mexico City

Don't rush into buying the wrong property in Mexico. Sit, relax and read our guide to avoid costly mistakes and make the best investment possible.

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The content provided here is for informational purposes only and does not imply endorsement or advice. While we strive for accuracy, we do not guarantee the completeness or reliability of the information, including text, images, links, or other elements in this material. Following the content and analyses presented here does not assure specific outcomes. For guidance tailored to your individual circumstances, it is recommended to consult with a professional, such as a lawyer, accountant, or business advisor.