The Rent First or Buy Dilemma Part 1

The to rent or to buy dilemma hasn't been an issue for American gringos in Mexico for quite a while. The standard regions where Gringos usually flock; San Miguel de Allende, Puerto Vallarta, Lake Chapala, have seen Gringos breezing in and buying on a whim for decades. I've heard the stories too often. These gringos come into town with a slight desire to expatriate to Mexico. Before you know it, even before they return to the U.S., they’ve bought a house.

Someone told me a story of a couple that came to San Miguel de Allende for a week—just for a visit—and bought a house. Can you even begin to fathom that?

In the city of Guanajuato, more potential expats are just beginning to show an interest in buying real estate. One of the top five questions potential expats to the city of Guanajuato ask us is, "Can we buy a house?" If you've ever been here or have seen pictures, you understand the charm and attraction of this Central Mexican mountain town. We get why gringos want to live here.

"Guanajuato (Gua-nah-hoo-ah-toh) is a Colonial Gem sitting in a valley around 220 miles northwest of Mexico City. If Mexico's Colonial Cities were a crown, Guanajuato would without doubt be its prime jewel. The town has been named as a World Heritage Site by UNESCO.

The great architecture of this gorgeous city was built with the enormous wealth generated from the Silver mines that enjoyed their heyday during the 17th and 18th centuries. At this time, Guanajuato was the source for one-third of the world's silver supply.

Today, you can see Guanajuato in its unspoiled, perfectly preserved splendor. It's like stepping back in time here; the city is incredibly picturesque; make sure you bring a camera with you.

Guanajuato is clean, tidy, and very safe. Its cobbled streets twist and turn, just walking around is an adventure with new things to discover and explore with every new corner. People often get lost in this city - and have hours of fun discovering things they had never planned to see, but are glad they did.

This city has a genuine Spanish colonial look, style, feel and atmosphere. Cobbled streets, churches, asymmetrical buildings, an amazing tapestry of color, vibrancy and sheer historical splendor await all who travel to this stunning colonial gem - regarded by many as the finest colonial city in Mexico.

Guanajuato is still largely an undiscovered treasure amongst the foreign tourists to Mexico."

That about says it all. The charm is certainly its appeal as well as its temptation.

Rent or Buy Dilemma

The old dilemma is back. Historically, American expats have shown up with a slight desire to live in Mexico. They came merely to check it out or to test the waters. They became possessed by its appeal and bought a house on impulse. Soon, the infatuation with Mexico wore off, and they were saddled with a house they had to unload, often at a considerable loss.

When people ask us if an American can buy a house in Guanajuato, here is what we say:

"Foreigners can buy or invest in real estate in Mexico without any restriction, except in the coastal and border areas. There, foreign individuals and branches of foreign corporations can have 100% control of property through a real estate bank trust."

So, you can buy a house. But what most of the books and web site articles that deal with expatriation issues do not caution you about is the temptation to buy first and ask questions later.

Mexico is the most charming and delightful place my wife and I have ever visited. When we first visited Guanajuato in 2003, we, too, were possessed by its charm. We both agreed that we had to live in Guanajuato. In fact, we went back to Kansas, made a six-month plan to move here, and did just that. But what we did not yield to was the temptation to buy a house right off the bat. We are still renting three years later.

You need time to let the infatuation wear off. You will be so enchanted by Guanajuato that you will simply have to live here. Some of you will make that burning desire to move here actually happen, as we did. But this bears repeating: you have to have time to let the reality of living in Mexico in general, and Guanajuato in particular, settle in.

Reality Checks

As charming, as delightful, and as enchanting as Guanajuato is, there are peccadilloes with which I am convinced every American expat will have to contend. I know we did. Those whom we have interviewed have told us the following also were wake-up calls for them.

The Noise Factor

I believe this is the most underestimated issue, and is one potential American expats simply "do not get". Mexico has got to be the noisiest place on earth. Try to imagine living in American cities where "noise ordinances" reign supreme. Then try to imagine moving to Mexico where noise levels, magnified to the power of infinity and beyond, are the norm. Where we used to live, Overland Park, Kansas, one would swear the city was full of dead people compared with living in Mexico.

There are seemingly no noise ordinances in this country. That fact is being demonstrated even as I write this article. Our neighbor, whom we have dubbed Violin-boy (because he practices the violin, quite badly, with his door and window open), is taking a small respite from his violin practice to play Marilyn Manson at earsplitting decibels. It is loud enough for people ten miles away to hear.

It is normal for this to happen all the time and everywhere in this city. Mexicans simply do not regard noise the same way as Americans do. I cannot emphasize this enough. I fear you will think I am exaggerating. I swear to you, if you buy a house on impulse, The Noise Factor will come screaming at your door like a wild beast wanting in to devour you.

I have an expat friend who actually took his Mexican neighbor to a legally binding arbitration judge over the neighbor's insipid, always-barking, yippy dogs. These dogs were (and still are.) terrors who will not stop barking—ever. And what do you think my friend's Mexican neighbor said to the judge?

"I do not know why these Americans cannot be more tolerant of a little noise like we Mexicans are."

Mexicans do not get that we Americans were not reared on the daily noise of hydrogen bombs going off. And if you think that is a bit too hyperbolic, just listen to this:

Mexicans set off what they call fireworks all the time. They will explode them for any reason or for no reason. Is there a new birth in the family? Let's set off some fireworks. Did someone get a new job? Fireworks it is. Holidays (or just any day) are occasions to explode some fireworks at all hours of the day or night. Remember, since there are no noise ordinances, they literally will explode fireworks at all hours.

Here is the deal: what a Mexican calls a firework; we Americans would call a weapon-grade bomb.

When I say "firework", I mean an explosive device so powerful the concussion sets off people's car alarms all over the city. I swear to God this is true. They set these off, using some sort of rocket launcher, and not only do they concuss you out of bed, rattle the windows, cause dogs to faint, make children cry, but they also light the darkened sky.

This is The Noise Factor with which you, the potential American expat, will have to contend.

The "I know You Are a Rich American" Factor

Another issue I think people grossly underestimate has to do with traditional American expat history.

The American expats who traditionally came to Mexico to buy homes were, let's face it, moneyed. An example I often use is what happened in Puerto Vallarta. Decades ago, Richard Burton and Elizabeth Taylor , much to the chagrin of the traditional Catholics of that era, came to Vallarta to engage in some "we are not married" activity. They bought houses across the street from each other in which to do this, and had them connected with a bridge.

The houses were big (I've been in Elizabeth Taylor's bedroom—with my wife, of course.), ostentatious, and rich. Other rich Americans, mostly Hollywood celebrities, followed the Taylor/Burton lead. These people hired locals to staff their houses. This, in my humble opinion, began the Rich American Expatriate stereotype that exists to this day.

In San Miguel de Allende, this also happened. People with money, and lots of it, began buying up real estate. They were willing to pay through the nose for it. The current, artificially inflated real estate prices in San Miguel reflect that.

The rich needed the locals to take care of them, so they hired staff and became the Rich American Patrons. Those who bought or built homes in the traditional Gringo enclaves not only hired locals to staff their estates but also ended up taking care of each employee’s entire family. The rich Americans paid a salary, paid for the staff person's health care, the children's and spouse's health care, baptisms, and so forth.

This is the idea Mexicans all over Mexico have about Americans. If you are an American, you are rich, rich, rich. Today's Mexicans still hold this stereotype, though it is not as common among the educated Mexicans.

In Guanajuato, this stereotype is still alive and well. It is something you will have to consider if you buy a house here. It will affect your house buying in several ways.

When a seller sees you coming, the price is going to go up, up, and then up some more. There will be the automatic assumption that since you are an American, you have money to burn. The seller reasons he should take you for all he can. The potential for bargaining, in my view, is severely hindered because of this stereotype. Here's why:

Now, there are many "working-class", middle-income couples that could afford to buy homes in Mexico with money they make from selling their homes in America. They are not wealthy, but have enough money to buy a house in Mexico, if they can negotiate a decent price. This is certainly true here in Guanajuato. However, the prices have risen dramatically in the three years we've been here. Why? Because the word is out the American Gringos want to buy housing in Guanajuato.

Here is another issue that will affect Americans when buying a house in Guanajuato. Guanajuato is still mostly unaffected by the bilingualism that has occurred in the traditional Gringo Enclaves. For example, in Vallarta and San Miguel, I am convinced that any monolingual American who had the money could waltz into either of those towns and buy real estate, never having to utter one word of Spanish.

Not so in Guanajuato. This situation is changing. Just the other day, I stumbled across a web site where a fellow is offering his interpretive skills in REAL ESTATE CONSULTANCY.

His pitch goes like this:

"Want to Buy a House in Guanajuato City? Don't have any idea how to approach and deal directly with Mexican People? Afraid of being "abused" because you are not familiar with Mexican and Guanajuato Business Culture, Laws, Locations, Neighborhoods, and Language?

Don't worry. We have the solution for you by offering:REAL ESTATE CONSULTANCY (We are NOT a Real Estate Agency, We work FOR You)."

What this guy will do, for a hefty price, is:

·Arrange appointments, directly with Owners.

·Visit the properties with you.

·Simultaneous Interview Translation (English to Spanish and Spanish to English). You can ask about anything that concerns you.

·Assessment on area or neighborhood growth potential, accessibility, communications, and services.

·Assistance in value assessment.

·Price Negotiation assistance and advice.

·Information concerning repairs and remodeling.

·Advise on Security and Safety issues in relation to locations.

·Provide services for coordinating the purchase as well as the legal process.

This is how it began those many years ago in Puerto Vallarta, San Miguel de Allende, and other locations. The gringos had a need and the Mexicans rose to meet that need. If you cannot handle the language, then this guy will do it for you.

But, then, how do you know whom this "consultant" is really working for if you cannot speak the language? Again, I have heard too many horror stories about this very issue.