Friday, April 10, 2009

Guanajuato, Mexico - Real Estate

Americans can be some of the most amusing people when it comes to listening to their understanding of Mexico. So many of our fellow American believe that English is widely spoken in Mexico. Some will walk into banks and scream, "I know someone here speaks English and I want to talk to them right now." This happened in a Central Mexican town not too far from us. Gringos will tell us they "just know English is spoken here but the Mexicans are pretending they don't speak it".

Here is a revelation: English is not widely spoken in Mexico. No matter what you've grown up believing, English is not a second language in Mexico. American gringos, with panic in their faces, have stopped us on the street to ask for help. They came as tourists to Guanajuato, expecting the city's population would speak the King's English.

This probably comes from Americans’ usual experiences in the resort areas of Mexico. In cities like Puerto Vallarta, there is a significant portion of the population, mainly associated with the tourism industry, which do speak English. We have friends who tell us you could live in Puerto Vallarta and never have to speak one word of Spanish. This is not so in the Central Mexican towns where there are still affordable real estate prices.

You will, in fact, have to factor that into your decision to buy property in these areas. Spanish is the language, like it or not, and the Mexicans here are not pretending they do not speak English. No matter how much you want to cling to that false American stereotype, you will have to know Spanish if you buy a house in these affordable areas. The Spanish Speaking Factor is something to consider for many reasons.

1. If you pop into Guanajuato, for example, and find a house you really love and just have to buy it, how are you going to handle the language issue when negotiating the real estate deal?

2. If you do not speak the language, how will you handle the repairs and remodeling you want to do on the house?

3. If you have absolutely no skill in the language, how will you know the person you are forced to hire to do your Spanish bidding is honest? How do you know if he is in cahoots with the contractors, the workers, the suppliers, and so on? This happens all the time, by the way.

4. If you survive the housing issues, how will you go to the doctor or dentist? To our knowledge, there may be only about half a dozen Mexican doctors in this town who are bilingual enough to help English-speaking patients.

5. How will you handle anything complicated that comes up where a fluent knowledge of the language is required?

I cannot risk overstating the importance of The Spanish Speaking Factor. Will you spend the rest of your life hiring others to speak the language for you? Is that what you want to do? The Real Estate Consultancy person I mentioned earlier in this report will do it for you, right now, for $15.00 an hour.

I know of some expats in Guanajuato who are so handicapped in the language they are forced to hire someone to translate and interpret every time something complicated arises. They've lived here for years and cannot string enough Spanish words together to get along.

Do you want to live like that?

And yet, in the areas where real estate is still affordable, you will have to consider The Spanish Speaking Factor in your desire to buy a house in Mexico. All the more reason for renting first and testing the waters before buying.

What’s The Big Deal with Spanish Anyway?

One of the many reasons I make a big deal about the fact that so few Americans who move here and simply will not learn Spanish is the Let’s Rip Off the Gringo Factor.

When Americans breeze into town, and buy a house on a lark, their impulsivity ends up buying them more than a house. They end up buying a “world of hurt”.

The Presta Nombre or “to borrow a name” is a real estate deal where a Mexican acts as a front man. He holds the title in his name so the gringo can avoid certain laws.

Even with what looks like legitimate documentation that seems to assure payment to the gringo if there is a loss of some sort, this is an extraordinarily risky deal. Gringos who enter something like this are breaking the law. They are trying to avoid laws governing foreign real estate investors. Therefore, if the guy whose “name you borrowed” ends up violating the terms of the “Presta Nombre” and takes your house, you have no recourse because you are a lawbreaker. This still goes on today.

How do you know, if you cannot speak two words of Spanish without choking, whether your so-called pal whose “name you borrowed” is not in cahoots with everyone involved in the real estate transaction?

If your pal turns out not to be the chum you thought he was, he could take your house. Because you entered an illegal act with him, you have no protection. What if he dies and his kids are not interested in your “name borrowing” deal with their daddy? Or, what if he turns out to be a rat to the bank in some other deal and the bank takes all properties that are in his name to cover its losses? This still happens.

This was a common scam in which gringos engaged in the early seventies. However, it still goes on. I know of a gringo who did this. And why? He could not speak Spanish.

Because of his linguistic inability, he was forced to enter a deal as I have described above. He is now beginning to question whether the guy whose “name he borrowed” is trustworthy. He had to make this deal because he could not speak the language.

Now do you see why I am so insistent on learning Spanish? Do you see why I insist you rent first before you buy?

Another issue is, thousands of gringos have invested in what they think are thirty-year property leases. They want to build houses on the land they lease. Because of Americans’ inability to understand Spanish, people enter what they think is a legal transaction. The Mexican law says residential leases are valid for no more than ten years. The only exceptions are the Ejidos (Farming Cooperatives).

But, Americans in the hundreds of thousands have entered, unknowingly, into invalid leases. Why? Because they cannot handle the language. They can neither speak it nor read it.

“Ignorance of the language may have been a partial cause of “the Punta Banda debacle, just south of Ensenada, in which numerous Americans were evicted from their luxury beach homes…”

As a foreigner buying real estate in Mexico, you are at great risk. I cannot begin to tell you of those gringos who have been ripped off when buying a house in Mexico. In the Punta Banda scandal, 200 Americans lost more than 80 million dollars.

Here are a few reasons Americans get ripped off when buying real estate in Mexico:

1. American real estate buyers cannot speak or read Spanish. They have to trust others who may be crooks.

2. Americans do not do their homework before getting to the point of thinking about buying a house in Mexico. They impulse buy—a lot.

3. A garbage man in Mexico can begin calling himself a real estate agent and hang his shingle. There are no laws regulating who can or who cannot be a real estate agent.
4. Americans trust go-betweens who don’t speak Spanish to negotiate the Mexican real estate deal—again the language issue.

5. Americans do not want to be bothered with learning the language to figure out the ins and outs of buying property in Mexico.

The-all-too-typical history of American gringos who go into a Mexican city and begin converting it into an American colony is they refuse to learn the language. They will find bilingual Mexicans to do their bidding for them. In this process, they never know if someone is ripping them off or not.

When someone does rip them off, they go back to the U.S. and tell everyone how evil Mexicans are. They never will acknowledge their own responsibility in the fiasco. This is the American way.

The truth is there are unsavory types in Mexico just like there are in America. But it is the “it’s-not-my-fault” Americans, you know, the “I-am-not-responsible” Gringo Americans, who will not take any of the blame.

If they had learned the language, then they could have possibly figured the scam before losing their shirts.
Americans so typically want to have their cake and eat it too, but never want to learn how to bake the cake.

The Climate and Topography Factor

You come into one of the cities that still has affordable housing, like Guanajuato, and fall head-over-heels in love with a house. You have to have it, so you buy it on impulse. How will you know if you will like the climate and the actual physical layout of the city?

If ever there was a factor to consider when deciding whether to rent before you buy, this one is it. The climate and topography in Mexico is as diverse as anywhere on earth. You have to consider whether you will love, for the long haul, the climate and topography you will have to endure daily.

For example, if you popped into Puerto Vallarta in December for a Christmas vacation on the beach, you might fall in love with it. You might really get off on the warm weather and your ability to go into the water to watch the dolphins frolicking close to shore. You might love the great weather so much you buy a house in December—while on vacation.

Then summer comes. You never have felt such heat and humidity in your life. Little did you know in your house- buying frenzy that it is so insufferably hot during the summers, many of Puerto Vallarta's expats come to San Miguel or Guanajuato to escape the heat. Or, they go back to the U.S. for the summer.

But, there you would be with a house and be forced to leave it during the summers because of the heat you knew nothing about. Renting first, trying out the lay of the land, would have prevented that mistake.

In Guanajuato, the weather is so lovely year-round you do not have to worry about vacating during any cold or hot season. You can live here year-round in wonderful Eternal Spring. This is one of the major attractions of living in Guanajuato. However, the weather is so dry most of the year you might want to think twice. Also, the topography is a consideration.

An antinomy of living in Guanajuato is that it is a place where you never need a car. You could live here the rest of your life and never have to have a car. And yet, there are cars everywhere you walk. Mexicans have cars and lots of them. Why, I do not know. I strongly suspect it is the effect of Americanization. You are not a "real" person if you do not own an automobile. Yet, we see cars parked on the street that haven't been moved in years.

This insane desire to own an automobile has caused an insane problem with traffic congestion. There is an inappropriate number of Guanajuatenses who own and drive cars in a city that simply wasn't built to accommodate so many cars. Therefore, the streets are congested (unnecessarily so), the pollution is getting terrible (people are always sick), and there is no place to park all the cars.

Perhaps another reason so many Guanajuatenses own and drive cars is the topography is rugged. It is one sloping hill or mountain after another around here. We used to live on top of a street that was really a small mountain. Walking down was a cinch. However, when we walked up, we felt we needed oxygen tanks and climbing gear. The streets are ancient cobblestones, which makes walking a bit of a chore.

Living in Guanajuato is not for the faint of heart or the infirm. It is hard going and you have to be able to hike, hike, and then hike some more.

When you first see Guanajuato, you might fall in love with it. However, when you have to walk the streets to pop off to store, to the symphony, or to church, you might begin wondering just what you were thinking when you impulsively bought your house.

The Climate and Topography might be just right for you but how will you know unless you rent first, for a considerable time, before buying?

The Recreation Factor

We have some good friends, Alan and Mickey, who are running around in Argentina and Chile even as I type these words. Before they went there, they were here in Guanajuato. They came to Guanajuato about two years after we did and did one of the smartest things any expat could do. They did exactly as we suggest in our book, The Plain Truth about Living in Mexico (available on THEY RENTED FIRST.

During their year in Guanajuato, they rented and resisted buying a house. They tried out the city. They tested the waters. They made no sudden rush to own real estate. They tried it and DID NOT like living here.

Now, can you begin to imagine if they had purchased a house "right off the bat"? Right now, they would be a couple of very unhappy people. But, they were smart. They were VERY smart and rented first.

Alan and Mickey did not like Guanajuato because there "was nothing to do", at least according to them. They could not find enough Recreational Activities to meet their need for fun. They are very healthy and active retirees who enjoy engaging in water and snow skiing, boating, camping, golfing, tennis, and all manner of outdoor sports.

Though housing was most certainly affordable for them in Guanajuato, because they rented first, they were able to learn this region of Mexico did not meet an important need in their lives.

So, Alan and Mickey went off in search of somewhere else to spend the rest of their days. Good for them. I commend them for their choice. I use them as an example of why The Recreation Factor is something you should think about before buying property in Mexico.

If you rent first, you can do as Alan and Mickey did. You can see if the area where you have landed in Mexico is going to be stimulating enough for you. If you are like my friends and need something more than the area of Mexico you are considering can offer in terms of recreation, do not buy.

Let The Recreation Factor guide you. Do not make the mistake of impulsively buying a place in an area where you cannot have fun.

Our Final Advice

When the charm and enchantment of Guanajuato, or any area of Mexico, possess you, get yourself down here. However, resist, for all you are worth, the impulse to buy a house. Rent first. Learn a lot of Spanish. Establish ties and contacts with the community. Find out whom you can and whom you cannot trust. See if you can have fun here. Then, look into buying a house, if you ever decide to buy, here in Mexico's Colonial Gem—Guanajuato.


A Walk Through Mexico's Crown Jewel: A Guanajuato Travelogue

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