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Should we Build or Buy our Home


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I am in my house almost 13 years. When I came the lake was a small mud puddle and there were many houses on the market. The infux of foreigners from NOB had not yet started. This was a rather rural, laid back area. There were few stores, few restaurants and few services.

My house was built to last. It has had very few problems and the upgrades I added have been well done and added value.

My house is large and sits on a quiet street in Ajijic(except when the lone tapatio owner shows up) and is walking distance to the center of town.

I recently figured out that when my 13th anniversary in the house hits in a couple of months I will have amoritzed to less than $800 a month. I included the price of the house, complete furnishing, taxes, water, upgrades, repairs and maintenance.

I am a nester. I could not have dealt with landlords and the need to move from time to time because I was living in someone else's house.

Even if times are bad and my children have to sell the house it can be priced to sell and they will still come out way ahead of the original price and cost of upkeep over the years.

The people who came after 2003 and are trying to sell now are reaping the harvest of not understanding the economics of Mexico and raising the cost of living;ie:maid and gardener salaries, and the cost of houses and everything else. They compared here to there and were willing to pay the price because it was less than what they would pay wherever they were from even when told it was not the way to go.

I believe the market will turn again as the economy in the US continues to grow and the boomers can sell their homes. There will be an adjustment in home pricing before that gets off the ground.

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Well put, Shira. We are, of course, in that group that bought near the top of the market. But we also sold NOB near the top of the market. Our house has probably lost $150K here but the one we sold has easily lost twice that.

We expect this is the last house we will own. We will live in it until we are no longer able to do so. We didn't scrimp or compromise on it. It is a joy to live in, like living in a lovely resort, and we are grateful for every day in this beautiful home and village. I just walked out, got myself some paint brushes, chatted with a few folks as I walked, got a few small tags (I carry my little graffit bag for scrawlies whenever I go out), picked up some milk and steak and walked home. It's getting warm but still a gorgeous day under a crystal blue sky.

The car is sitting in the garage since Thursday when I walked over and picked it up from Fernando's body shop on Thursday. It likely won't move for some days yet.

This house wasn't an investment. It is a special place to live and we don't regret buying it a minute. In the five years we've lived here, several of our renting friends have moved one or more times.

Death, divorce and moving are the three most traumatic things in life, or so I've read. I'm not worried about the first, it will happen when it does. I'm not worried about the second because if I tried that I would probably experience the first a lot sooner than expected. :)

And I'm not doing the third until and unless I have to go live in the old folks home.

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Right on Shira. If we rented our house (and that's what it would go for here) at $ 1,200 US for the 11 years we've been here, it would have cost $ 158,400 US. If we rented it at $ 1,400 US, we would have wasted $ 184,000 US with nothing to show for it. Add on top of that utilities, electric, gas, internet, etc. Wow, that's a lot of cash.

Renting only makes sense if you're coming here to check out the area, not long term. Otherwise you're wasting you're money.

There is nothing like owning and furnishing and decorating your home the way you want it to be. I wouldn't want someone elses lousy furniture.

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The lake has been mentioned in this context adressing "buy or build"

Guadalajara Reporter this week: "Grim panorama for lake"

The water commission "chalks up the low water level to below average rainfall over the past several water seasons, combined with a more rapid rate of evaporation this year. However, data suggests that water retained in upstream dams throughout the Lerma-Chapala watershed may be a contributing factor."

Bring on the rain.

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Back in the days when you could buy U.S. Treasury Bonds yielding 8-10%, the math worked for putting your money out at interest as opposed to buying. Renting unfurnished allows you avoid the horror of "someone elses lousy furniture".

Since the interest rates on anything reasonably secure are now hovering at zip, buying when you find a good deal makes more sense.

We won't know where the bottom of the housing market here is until it starts to reverse course in an upward direction; however, as cited above, there are bargains out there for those who are patient, and who remember the most important thing about buying: L, L, and location. As a wise realtor once told me: Buy a well located lot with or without a house on it, and go from there.

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Sales this year by Person/ Country, is approx 30% for Americans, Canadians and Mexican, with slight % in favor of USA..what does this say??

I tried to puzzle it out, but don't have a good answer. Does that mean 70% of sales were to another group? What do you see this as saying?

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We fixed up our home in the US seven years ago to get the best price. At that time anything you put into, you got out, plus. The nice couple who bought it had some bad luck and resold ot two years ago for 100,000 more than they paid. It was a working class neighborhood when we moved there, but over time all my new neighbors were lawyers, doctors. It was miserable trying to keep up with the new standards.

I bought my house here off the Internet, sight unseen, completely furnished right down to the dishes, pots, pans, everything. I had planned to replace furniture but it turned out to be too comfortable the way it was. This is Mexico, forget the "Jones" and trying to keep up. It's not necessary. Keep it simple.

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I tried to puzzle it out, but don't have a good answer. Does that mean 70% of sales were to another group? What do you see this as saying?

I thought they meant 30 % were Canadians, 30%+ were Americans, and 30 % were Mexicans and 10 & other.

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To get back to the original question, which was "build or buy ?" ....

My response is that it doesn't have to be one or the other . You could do both.

As a happy homeowner, I would recommend a new person come down for a while, rent in several places to get a "feel" for the different areas, and spend as much time as possible looking at properties. Talk to a lot of people, and keep a list of pros and cons for each area and property.

Do not feel as if you are in a rush. There are lots of lovely places to live, and once you spend some time here, you may find that your needs, wishes and priorities change.

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Another factor to consider is the safety of your net worth. "Parking " your money in banks, stock market, etc has its

vulnerabilities. ie, Look at what is happening in the world today. All gov'ts are looking to confiscate more of an

indivduals wealth. I feel that wealth in real estate is much safer from the "Gov't vultures lurking"

I would respectfully disagree. The myth that money invested in real estate is safer than that in stocks, bonds, etc. is just that: a myth. Anyone who watched the crash of the last few years should know that. Very few of the properties that lost 20%, 30%, or even 50% or more in the US have rebounded to the level they were at when the market crashed. Most are still far below those levels. By contrast, the Dow, the S&P 500, and my own portfolio (which saw a decline of more than 30%) have all regained everything they lost during that period and then some.

Even prior to the 2008 crash this was true. I owned a house in L.A. in 1990 when the market went flat. I was asking $237 K for my house and didn't get a single offer, even after discounting my price. I then rented it out for 10 years before being able to sell it at $180 K, and I was glad to take the offer. Real estate is very illiquid (and especially so in the Lake Chapala area) in normal times and can be dangerously so in times when the market is crashing, whereas stocks, bonds, and other securities can be sold immediately, or usually in no more than a few days. In addition, if they are held, they historically bounce back much more quickly than real estate.

There are some good reasons to buy real estate. Using it as a safe place to park your money is not one of them. And once again, that is particularly true in the Lake Chapala area.

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Sales this year by Person/ Country, is approx 30% for Americans, Canadians and Mexican, with slight % in favor of USA..what does this say??

Are you referring to 2013 because I think you're wrong, but I'll check with my Realtor.

Sales in 2012, for the entire year, was about 95% foreigners (Americans and Canadians) and 5% Mexicans. My info from a printout by my Realtor. The Mexicans are looking to steal houses. They usually don't pay anywhere near as much as foreigners. My info from my Realtor.

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Are you referring to 2013 because I think you're wrong, but I'll check with my Realtor.

Sales in 2012, for the entire year, was about 95% foreigners (Americans and Canadians) and 5% Mexicans. My info from a printout by my Realtor. The Mexicans are looking to steal houses. They usually don't pay anywhere near as much as foreigners. My info from my Realtor.

I guess we are reading from different hymn sheets

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My response to investing in Real estate vs Stock market. History does not give any indication of the future in stocks. The world's financial situation, especially the USA is much more precarious now, and appears to be even moreso in the future. Look at the Euro countries, USA, South America,Japan, etc. All deep in debt and many facing a possible overthrow of their gov't.

My statement is that it is much easier for these Gov'ts to confiscate monies(Taxation, inflation, etc) than land If I have a house, i can live in it. There are ideas in the uSA to borrow (receive an IOU, the same as the Social Security) citizens IRA's. Social Security payments can be reduced or halted. I feel more secure here with property to rent & to live in, rather than feeling vulnerable with monies "parked" that the overspending, money grabbing Gov't can know about.

To each his own comfort level, that is where we live!

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I would respectfully disagree. The myth that money invested in real estate is safer than that in stocks, bonds, etc. is just that: a myth. Anyone who watched the crash of the last few years should know that. Very few of the properties that lost 20%, 30%, or even 50% or more in the US have rebounded to the level they were at when the market crashed. Most are still far below those levels. By contrast, the Dow, the S&P 500, and my own portfolio (which saw a decline of more than 30%) have all regained everything they lost during that period and then some.

Even prior to the 2008 crash this was true. I owned a house in L.A. in 1990 when the market went flat. I was asking $237 K for my house and didn't get a single offer, even after discounting my price. I then rented it out for 10 years before being able to sell it at $180 K, and I was glad to take the offer. Real estate is very illiquid (and especially so in the Lake Chapala area) in normal times and can be dangerously so in times when the market is crashing, whereas stocks, bonds, and other securities can be sold immediately, or usually in no more than a few days. In addition, if they are held, they historically bounce back much more quickly than real estate.

There are some good reasons to buy real estate. Using it as a safe place to path our money is not one of them. And once again, that is particularly true in the Lake Chapala area.

and on top of all that I would like to know how people who invested in Cuba and Venezuela (many moons ago) feel about their investments today. Or the people who built on x-ejido lands? Like the situation in Tlachichilco. ....."Things happen."

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My response to investing in Real estate vs Stock market. History does not give any indication of the future in stocks. The world's financial situation, especially the USA is much more precarious now, and appears to be even moreso in the future. Look at the Euro countries, USA, South America,Japan, etc. All deep in debt and many facing a possible overthrow of their gov't.

My statement is that it is much easier for these Gov'ts to confiscate monies(Taxation, inflation, etc) than land If I have a house, i can live in it. There are ideas in the uSA to borrow (receive an IOU, the same as the Social Security) citizens IRA's. Social Security payments can be reduced or halted. I feel more secure here with property to rent & to live in, rather than feeling vulnerable with monies "parked" that the overspending, money grabbing Gov't can know about.

To each his own comfort level, that is where we live!

Bad logic. Governments can tax homes and property at confiscatory rates. What would stop them in a financial crisis? Your argument is specious.

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I would think twice about building. There are very few good, honest, quality builders here. Construction is very different from constuction NOB It is very easy for corners to be cut and you will not know until the contractor has long completed your job.

When the building boom began here masons and carpenters suddenly became contractors. People with money hired a group of guys to build houses on land they bought and then flipped them at mucho dinero.

Even a few contractors who were here previously and had good reputations suddenly found it easy to make a quick buck to the detriment of the client.

My house is 60 years old. My walls are 9 inches thick. I know who built it and it was built to be here for a long time. The builder took great pride in his work as do his children.

I would not expect that from most of the homes built since 2003 0r 4. The only pride many of the contractors have is the huge bulge in their wallets.

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I would think twice about building. There are very few good, honest, quality builders here. Construction is very different from constuction NOB It is very easy for corners to be cut and you will not know until the contractor has long completed your job.

When the building boom began here masons and carpenters suddenly became contractors. People with money hired a group of guys to build houses on land they bought and then flipped them at mucho dinero.

Even a few contractors who were here previously and had good reputations suddenly found it easy to make a quick buck to the detriment of the client.

My house is 60 years old. My walls are 9 inches thick. I know who built it and it was built to be here for a long time. The builder took great pride in his work as do his children.

I would not expect that from most of the homes built since 2003 0r 4. The only pride many of the contractors have is the huge bulge in their wallets.

Only your point of view which is incorrect. Yes, there are some builders here who take shortcuts that show up later. But if you get a competent, high quality builder/contractor who is recommended to you, you'll be safe. I have used two of these. I know of about 5 in the Ajijic area which I can name and have seen the very high quality standards of their work. And I know quality construction and do's and don'ts. Trouble is most people are too cheap to pay for good work, so they get what they pay for.

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Re: Number of houses for sale. I've lived here for 8 years, on and off, so not new to the area. Have been looking to buy a little bigger home/garden, in the $300K range, in a good area, and have seen everything on the MLS - with no luck. Even though there are many homes for sale, in my opinion, you can really count on one hand the real quality properties available - especially those not priced astronomically high, as they were in 2007 or so.

If you have a home in this range you're thinking of selling, please pm me. Thanks!

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http://www.nydailynews.com/news/crime/u-s-man-killed-mexico-workers-dream-home-cops-article-1.1300152#ixzz2Oz4516kg

Hmmm. Here is one story that may influence the OP. Very sad. I wonder if he was a member of our forum.

No, actually this type of story has no place in this discussion.

Random acts of violence or violent acts committed must be considered statistically, not anecdotally http://en.wikipedia.org/wiki/Anecdotal_evidence . And if that is the deciding factor then people would stay out of Texas and other US states known for their violent cultures, intolerance and gun violence.

Mexico as a country is statistically safer (for violent acts) to the US, however having said that the bathroom and kitchen are the most dangerous places due to their familarity; one lowers their guard so to speak. Yet I still keep going to the bathroom and fixing a sandwich in the kitchen. Please don't discuss safety in this topic. Move that discussion to another topic please. I looked at safety extensively prior to arriving in Mexico.

Do keep up the discussion on builders. I am keeping notes and plan to write up a post of gems on good points.

THANK YOU for all your valid points you are very much appreciated.

Ken

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Only your point of view which is incorrect. Yes, there are some builders here who take shortcuts that show up later. But if you get a competent, high quality builder/contractor who is recommended to you, you'll be safe. I have used two of these. I know of about 5 in the Ajijic area which I can name and have seen the very high quality standards of their work. And I know quality construction and do's and don'ts. Trouble is most people are too cheap to pay for good work, so they get what they pay for

Agreed, My experience in construction NOB (and I believe applies here) is people pay a nickel and want a dollar job. Now this is not always the case but it happens.

Sometimes people just don't know local construction custom (or local practise) and don't undertake a contract so expect the same type of work as they had last time.

imo Both parties are to blame in those cases.

My preferred practice is to purchase the materials and hire the labour to install (framing, plumbing, concrete finishing, flooring etc) . This gives me better control over the finished product.

Do local contractors (tradespeople etc) support this type of work or do they prefer to provide their own materials?

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I would think twice about building. There are very few good, honest, quality builders here. Construction is very different from constuction NOB It is very easy for corners to be cut and you will not know until the contractor has long completed your job.

Shira: I would respectfully disagree here.

It is not very easy to cut corners here (from what I have seen so far). The primary construction is to pour concrete corners, fill with bricks, run power, water, gas services, plaster over everything. Inspections on the quality of materials, placement of rebar and workmanship can easily be undertaken. I see buildings here over 200 years old. Yesterday we visited a beautiful remodel job in Chapala.

NOB especially in BC we saw collusion between the builders and government regulators that produced unprecedented failures. The Leaky Condo fiasco saw innocent people lose personal savings and they were forced to live in mouldy, dangerous homes.

Yes, I would say (and this is just me coming from BC where wood is plentiful and carpenters experienced) Ajijic has a shortage of finish carpenters. That will be a challenge if building here, especially for us who love wood.

Here we need to embrace the local expertise, which outstrips Canadian skills in stone masonry, plaster and concrete placement.

Would you build with an architect and general contractor or are there enough un attached subs around looking for work?

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