Authored by the expert who managed and guided the team behind the Mexico Property Pack
Everything you need to know before buying real estate is included in our Mexico Property Pack
As of June 2025, Mexico's property market offers compelling opportunities for foreign investors seeking strong rental yields and long-term appreciation.
With property prices rising 8-9% annually, severe supply shortages, and booming tourism driving demand, the Mexican real estate market presents attractive returns of 6-14% annually depending on location and property type. Foreign buyers can legally own property through the fideicomiso trust system, making Mexico one of the most accessible Latin American markets for international investors.
If you want to go deeper, you can check our pack of documents related to the real estate market in Mexico, based on reliable facts and data, not opinions or rumors.
Mexico's property market in 2025 offers strong investment potential with annual returns of 6-14%, driven by tourism growth, supply shortages, and government initiatives to build one million new homes.
Foreign investors can legally own property through bank trusts (fideicomiso), with the best opportunities in short-term rentals in tourist areas and multi-family properties in urban centers.
| Investment Type | Expected Annual ROI | Best Locations |
|---|---|---|
| Short-term rentals (tourist areas) | 8-14% | Tulum, Playa del Carmen, Cancun |
| Long-term rentals (urban) | 5-7% | Mexico City, Monterrey, Guadalajara |
| Multi-family properties | 6-8% | Major urban centers |
| Beachfront luxury | 10-14% | Riviera Maya, Los Cabos |
| Fixer-uppers | Variable | Gentrifying neighborhoods |
| Average price appreciation | 6% (2025 forecast) | Nationwide |
| Average price per m² | $2,200-3,000 USD | National average |
What types of properties make the best investments in Mexico right now?
Short-term rental properties and multi-family units are your best bets for investment in Mexico as we reach mid-2025.
Short-term rentals in tourist hotspots like Tulum, Playa del Carmen, and Cancun are generating annual returns of 8-14%, with well-managed Airbnb properties in Mexico City pulling in $900-3,000 monthly. The tourism boom continues to drive demand, with occupancy rates often exceeding 80% in prime locations.
Multi-family properties in urban centers are increasingly attractive due to Mexico's severe housing shortage. With only 200,000 new homes built annually against demand for 400,000, apartment buildings and duplexes in cities like Mexico City, Monterrey, and Guadalajara offer stable yields of 5-7% with excellent long-term appreciation potential.
Fixer-uppers have become less attractive in the current market. Construction costs have risen significantly, and regulatory delays can stretch projects by months. However, they can still offer upside in gentrifying neighborhoods like Doctores and Portales in Mexico City, where infrastructure improvements are driving rapid transformation.
Beach condos remain popular, especially pre-construction units from reputable developers offering 20-30% discounts. Focus on established tourist areas with proven rental demand rather than emerging destinations that may take years to develop infrastructure.
How have property prices changed and where are they heading?
Mexican property prices have shown remarkable growth over the past decade and continue rising steadily in 2025.
Back in 2014, average home prices in cities like Puebla were around 665,000 MXN ($35,000 USD). By 2019, these had nearly doubled to 1,150,000 MXN ($60,000 USD). As of June 2025, the national average home price stands at 1,734,535 MXN (approximately $87,000-90,000 USD).
Price per square meter varies significantly between new and resale properties. New developments average 60,839 MXN/m² ($3,000 USD/m²), while second-hand homes average 44,396 MXN/m² ($2,200 USD/m²). In Mexico City's prime areas like Polanco and Roma Norte, expect to pay 60,000-80,000 MXN/m².
The growth outlook remains positive. After recording 8.7-9.7% price increases in 2024, forecasts suggest another 6% rise through 2025. Coastal and luxury markets are outperforming, with some Riviera Maya properties seeing 10-15% annual appreciation.
It's something we develop in our Mexico property pack.
What's driving Mexico's property market dynamics in 2025?
Four key factors are shaping Mexico's real estate market as of June 2025.
First, severe supply shortages dominate the landscape. Mexico faces a deficit of 200,000 homes annually, with construction hampered by high material costs, labor shortages, and lengthy permitting processes. This supply-demand imbalance continues pushing prices upward, particularly in major cities.
Government policy has become more proactive. President Sheinbaum's administration launched an ambitious plan to build one million new homes, with 55,000 projects already started in 2025. The government is also issuing 120,000 property deeds to formalize ownership, creating more market liquidity.
Foreign investment hit record levels, with $36.1 billion in foreign direct investment flowing into Mexico in 2023, primarily from the US and Canada. Nearshoring trends are driving demand for both industrial and residential property, especially in northern border states and major manufacturing hubs.
Tourism pressure remains intense. International arrivals continue breaking records, with beach destinations seeing unprecedented demand for vacation rentals. This tourism boom is transforming entire coastal regions, pushing local prices beyond what many Mexican families can afford.
How do foreign investors buy property in Mexico?
The process for foreign property ownership in Mexico is straightforward but requires understanding the fideicomiso system.
Within the restricted zone (50km from coastlines, 100km from borders), foreigners cannot directly own land. Instead, you'll use a fideicomiso - a bank trust where a Mexican bank holds the title while you maintain all ownership rights including the ability to sell, rent, or pass the property to heirs. The trust lasts 50 years and is renewable indefinitely.
Outside the restricted zone, foreigners can own property directly through simple title transfer. Many investors also opt to purchase through a Mexican corporation, which allows direct ownership even in restricted zones and can offer tax advantages for multiple properties.
Required documents include your passport, tourist visa or residence permit, an SRE (Ministry of Foreign Affairs) permit, proof of funds, and tax identification number. The entire process typically takes 45-60 days and involves a notary public who handles title searches, contract preparation, and registration.
Closing costs run 4-7% of the purchase price, including notary fees, registration, appraisal, and fideicomiso setup (0.5-1.5% of property value). Annual trust maintenance fees average $400-600 USD.
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Where can I find the best property investment opportunities?
Finding quality investment properties in Mexico requires leveraging multiple channels and local expertise.
Reputable real estate agencies like Mexlife, Lomelin Hermanos, and Pulso Inmobiliario have extensive networks and understand foreign buyer needs. These agencies typically speak English and can guide you through the legal process. Always verify their credentials with AMPI (Mexican Association of Real Estate Professionals).
Developer presales offer significant advantages, particularly in hot markets like Riviera Maya and Puerto Vallarta. Buying directly from developers during pre-construction phases can save 20-30%, and many offer attractive payment plans. Focus on established developers with completed projects you can visit.
The distressed property market exists but isn't as developed as in the US. Bank foreclosures (remates bancarios) occasionally appear, but the process is complex and often requires cash purchases. Better opportunities come from motivated individual sellers facing financial pressure.
Online platforms like Vivanuncios, Inmuebles24, and Lamudi list thousands of properties, but exercise caution. Many listings are outdated or overpriced. Use these sites for market research, then work with local agents to negotiate.
Auction opportunities are limited but growing. Some municipalities hold tax lien auctions, though these require Spanish fluency and deep local knowledge to navigate successfully.
What returns can I expect from different investment budgets?
| Budget Range | Property Options | Best Locations | Expected Annual ROI |
|---|---|---|---|
| Under $150,000 | Studio/1-bed condos, inland properties, fixer-uppers | Merida, Puerto Escondido, Mazatlan, Mexico City outskirts | 6-10% (STR), 4-6% (long-term) |
| $150,000-$350,000 | 2-3 bed condos, townhouses, small homes | Playa del Carmen, Cancun, Puerto Vallarta, Guadalajara | 8-12% (STR), 5-7% (long-term) |
| $350,000-$500,000 | Beachfront condos, luxury units, small multi-family | Tulum, Cozumel, San Miguel de Allende, Polanco | 10-14% (STR), 6-8% (long-term) |
| $500,000+ | Luxury beachfront, apartment buildings, development land | Los Cabos, Punta Mita, Mexico City prime areas | 12-15% (STR), 7-9% (long-term) |
What are typical long-term rental returns across Mexico?
Long-term rentals in Mexico offer stable, predictable returns with less management intensity than short-term rentals.
In Mexico City, a typical 2-bedroom apartment rents for 19,319 MXN ($950 USD) monthly, generating yields of 5-6% annually. Prime neighborhoods like Polanco and Roma Norte command premium rents but offer lower yields due to high purchase prices. Working-class areas like Iztapalapa or Gustavo A. Madero provide higher yields of 7-8% but require more careful tenant screening.
Secondary cities often outperform the capital for rental yields. Monterrey and Puebla average 6.43% returns, while Guadalajara delivers 5.75%. These markets benefit from strong local economies, growing populations, and lower property prices relative to rents.
Tenant profiles vary by location. Urban areas attract young professionals, students, and families seeking proximity to work and schools. Expect 12-24 month lease terms with 1-2 months deposit. Mexican tenants typically prefer unfurnished units for long-term rentals, unlike the furnished preferences common with expats.
Beach towns present a different dynamic. Cities like Cancun (5.68% yields) and Playa del Carmen see demand from hospitality workers, expatriates, and digital nomads. These tenants often accept higher rents but may have shorter tenure.
It's something we develop in our Mexico property pack.
How do short-term rental regulations and returns work?
Short-term rentals remain highly profitable in Mexico, though regulations are tightening in major cities.
Well-located properties in tourist areas generate impressive returns. Beachfront condos in Tulum and Playa del Carmen achieve 8-14% annual ROI, with peak season rates of $200-500 per night. Mexico City properties in trendy neighborhoods average $900-3,000 monthly revenue, with top performers maintaining 89% occupancy at $166+ per night.
Mexico City implemented strict regulations in 2023. Hosts must register for an operating license (valid 2 years), limit rentals to 180 days annually, and maintain 50% occupancy caps. The city also restricts STRs in certain residential zones. Fines for non-compliance range from $500-5,000 USD.
Tax obligations include 3-5% local lodging tax, 16% VAT, and income tax on rental earnings. Platforms like Airbnb withhold some taxes automatically, but property owners remain responsible for full compliance. Many investors establish Mexican corporations to optimize tax treatment.
Outside Mexico City, regulations remain minimal. Beach destinations like Cancun, Puerto Vallarta, and the Riviera Maya have few restrictions, making them ideal for STR investments. However, this could change as local governments seek to balance tourism growth with resident concerns.
We did some research and made this infographic to help you quickly compare rental yields of the major cities in Mexico versus those in neighboring countries. It provides a clear view of how this country positions itself as a real estate investment destination, which might interest you if you're planning to invest there.
Which neighborhoods offer the best rental demand and resale potential?
Location selection can make or break your Mexican property investment, with certain neighborhoods consistently outperforming.
In Mexico City, Roma Norte and Condesa dominate the rental market despite premium prices. These areas attract expatriates, digital nomads, and affluent locals willing to pay 25,000-40,000 MXN monthly for modern 2-bedroom units. Resale liquidity remains excellent due to limited supply and constant demand.
Emerging neighborhoods offer higher yields with growing appreciation potential. Doctores, San Rafael, and Escandón are gentrifying rapidly, with new restaurants, galleries, and infrastructure improvements. Properties here cost 40-60% less than Roma Norte while achieving similar rents, creating compelling investment math.
Beach markets show clear winners. Playa del Carmen's downtown and beachfront areas maintain year-round demand from tourists and expat residents. Tulum, despite rapid development, continues seeing 10-15% annual appreciation. Puerto Vallarta's Romantic Zone and Marina areas offer stability with established rental markets.
For pure rental yield, consider working-class neighborhoods near major employment centers. Areas around Santa Fe, Polanco's periphery, or near airport zones may lack charm but deliver consistent 7-8% returns from corporate tenants.
Resale liquidity varies dramatically. Prime locations in established expat communities sell within 30-60 days, while properties in local neighborhoods may take 6-12 months. Always consider exit strategy when selecting locations.
How does Mexico compare to other countries for property investment?
Mexico stands out among Latin American markets for its combination of accessibility, returns, and legal protections for foreign investors.
The fideicomiso system provides stronger legal protection than many regional competitors. Unlike some Central American countries with murky property rights, Mexico's trust structure is well-established with decades of precedent. Your ownership rights are constitutionally protected and enforced by Mexican courts.
Property taxes remain remarkably low, typically 0.1-0.3% of assessed value annually - far below US or Canadian rates. This dramatically improves net rental yields. However, capital gains tax can reach 35% for non-residents, though exemptions exist for primary residences held over three years.
Bureaucracy exists but is manageable. Compared to Brazil's complex foreign ownership rules or Argentina's currency controls, Mexico's process is straightforward. Most transactions complete within 45-60 days, faster than many Latin American markets.
Financing options lag behind developed markets. While Mexican banks offer mortgages to foreign residents, terms are less favorable than domestic buyers receive. Expect 20-40% down payments and interest rates 2-4% above US levels. Many investors use US home equity loans or developer financing instead.
Market transparency continues improving. Multiple listing services, standardized contracts, and professional property management create a more mature investment environment than most regional alternatives.
What taxes and fees should I budget for?
Understanding Mexico's tax structure is crucial for accurate investment planning and avoiding surprises.
Acquisition costs total 4-7% of purchase price. Notary fees (1-2%) cover title transfer and registration. The fideicomiso setup adds 0.5-1.5%, plus annual maintenance of $400-600. Transfer taxes vary by state but average 2-3%. Don't forget appraisals, inspections, and legal review.
Annual property taxes (predial) are refreshingly low at 0.1-0.3% of cadastral value. A $300,000 condo might pay just $300-900 yearly. However, cadastral values often lag market prices by 50-70%, creating this tax advantage.
Rental income faces multiple levies. Residents pay progressive rates up to 35%, while non-residents face flat 25% withholding on gross rents. VAT of 16% applies to short-term rentals under 30 days. State lodging taxes add 2-5% for tourism rentals.
Capital gains tax hits hard without planning. Non-residents pay 25-35% on gains, calculated on gross sale price minus documented purchase price and improvements. Residents meeting certain conditions can exclude gains up to 700,000 UDIs (inflation-adjusted units, roughly $250,000 USD).
No specific tax incentives target foreign property investors, though corporations can deduct expenses and depreciation. Plan your ownership structure carefully with Mexican tax advisors to optimize your position.
Is Mexican real estate a smart investment for 2025?
Mexican real estate offers compelling opportunities in 2025, but success requires careful strategy and location selection.
For income-focused investors, short-term rentals in established tourist markets deliver the best returns. Properties in Playa del Carmen, Tulum, and central Mexico City neighborhoods generate 8-14% annual yields with proven demand. The tourism sector shows no signs of slowing, with international arrivals continuing to break records.
Long-term appreciation potential remains strong across multiple markets. Persistent housing shortages, government infrastructure investment, and nearshoring trends support continued price growth of 5-7% annually. Coastal properties and Mexico City's prime neighborhoods should outperform.
Flipping strategies face headwinds in 2025. Rising construction costs, material shortages, and permitting delays extend project timelines and squeeze margins. This strategy only works in rapidly gentrifying neighborhoods with patient capital and strong local connections.
Multi-family properties offer the best risk-adjusted returns for conservative investors. Mexico's demographic trends - smaller households, urban migration, rising divorce rates - ensure steady rental demand. Apartment buildings in secondary cities like Monterrey or Guadalajara provide stable 6-8% yields with less volatility than tourist markets.
The key to success: work with reputable local partners, conduct thorough due diligence, and choose locations with established demand rather than speculative future potential.
It's something we develop in our Mexico property pack.
Conclusion
This article is for informational purposes only and should not be considered financial advice. Readers are advised to consult with a qualified professional before making any investment decisions. We do not assume any liability for actions taken based on the information provided.
As we reach mid-2025, Mexico's property market presents attractive opportunities for foreign investors seeking both rental income and capital appreciation.
Success requires understanding local regulations, choosing the right locations, and working with experienced professionals who can navigate the fideicomiso system and ensure clean title transfer. With proper planning and realistic expectations, Mexican real estate can deliver superior returns compared to many traditional investment markets.
Sources
- Riviera Maya Cozy - Where to Invest in Real Estate Mexico
- MyCasa - Good Time to Buy Property in Mexico 2025
- AirROI - State of Mexico Real Estate Report
- CEIC Data - Average House Price Puebla
- Mudanzas CDMX - Average House Price Mexico 2025
- Global Property Guide - Mexico Home Price Trends
- TheLatinvestor - Mexico Real Estate Trends
- Mexpat Realtors - Mexico Housing Market Supply Shortage
- ARPR Mexico - How to Buy Property as a Foreigner
- Global Property Guide - Mexico Buying Guide