How to Buy Investment Property in Mexico as a Foreigner
One of the first questions many people ask when considering buying real estate in Mexico is whether foreign ownership is even allowed.
YES - Foreigners are allowed to own property in Mexico, but certain restrictions apply to properties located within the "Restricted Zone."
This zone encompasses areas within 100 kilometers (62 miles) of the border or 50 kilometers (31 miles) from the coastline. Within this zone, foreigners cannot directly own land.
Instead, they can acquire property through a "fideicomiso," a trust agreement established with a Mexican bank. Under this arrangement, the bank holds the title to the property, but the foreign buyer retains full rights to use, lease, sell or bequeath it. Another option is to create a local LLC (S. de R.L.) and own the land/property through the company.
Outside the Restricted Zone, foreigners can own property outright without any additional legal structures, holding the title in their own name, similar to Mexican citizens. This process is simpler and provides direct ownership rights.
Investing in Mexico’s Real Estate Market
Investing in Mexico's real estate is an attractive option due to the country's thriving tourism industry, affordable property prices (compared to Europe and North America) and demand for vacation homes and rental properties.
Mexico's diverse landscapes, from beautiful beaches in places like Cancun, Tulum and Los Cabos to charming colonial cities such as San Miguel de Allende, appeal to both domestic and international buyers. These areas also attract millions of visitors each year, which makes both long-term and short-term renting attainable.
Furthermore, the growing middle class and steady economic development can further drive demand for residential and commercial properties.
Mexico’s proximity to the United States, along with frequent direct flights from North America and Europe, and a relatively low cost of living, has made it a popular choice for foreign investors and retirees. The fideicomiso (trust) system allows foreigners to own property in coastal and border areas through a legal framework designed to ensure secure transactions.
Property values have shown steady appreciation over time and the market presents opportunities for rental income within an environment that has generally been accommodating to foreign buyers.
Rental Yields
Gross rental yields in Mexico for long-term tenants hover around 6%. The real NET yields are likely somewhere around 4.5% - 5.5%.
- Monterrey apartments earn a rental yield between 5.43% to 6.75% with an average of 5.94%
- Cancún apartments yield between 4.56% to 6.83% with an average of 5.8%.
- Acapulco apartments can yield you between 4.21% to 5.53% with an average of 4.75%.
- Puebla apartments yield a stay between 4.72% and 7.44% with an average of 6.43%.
- Guadalajara apartments earn a yield between 5.75% and 6.74% with an average of 6.23%.
- Naucalpan de Juárez apartments have a yield between 4.03% and 6.07% with an average of 4.91%.
Short-term rental gross yields are higher, especially in tourist hotspots like Cabo and Tulum.
Successful short-term rental can earn up to 15% gross yields which can result 8% - 10% NET yields (after tax).
Popular investment destinations in Mexico (2025):
Mexico City – As Mexico’s capital and economic center, Mexico City offers diverse real estate opportunities. Neighborhoods like Polanco, Condesa, and Roma Norte are well-known for their modern amenities, cultural landmarks, and vibrant atmosphere. Residential apartments, commercial properties, and luxury homes are common investment options in these areas.
Cancún – Famous for its Caribbean coastline and strong tourism sector, Cancún offers potential for vacation homes and rental properties. The Hotel Zone and Playa Mujeres are notable areas, appealing to those interested in resort-style living or short-term rental income.
Playa del Carmen – Located on the Riviera Maya, Playa del Carmen is a growing coastal city with a relaxed atmosphere and international appeal. Investment opportunities include luxury condominiums, beachfront villas, and boutique developments, particularly attractive to those focused on rental income and lifestyle properties.
Puerto Vallarta – Situated on Mexico’s Pacific coast, Puerto Vallarta blends historic charm with modern comforts. The Romantic Zone and Marina Vallarta are popular among investors for beachfront condos, villas, and properties with consistent rental demand, especially from North American visitors and retirees.
Tulum – Known for its bohemian atmosphere and eco-friendly developments, Tulum attracts buyers interested in sustainable luxury properties, boutique hotels, and vacation rentals. Areas such as Aldea Zama and La Veleta are notable, with the city’s new airport (opened in 2024) and natural surroundings enhancing its appeal.
Los Cabos – Located at the southern tip of the Baja California Peninsula, Los Cabos includes Cabo San Lucas and San José del Cabo. The area is recognized for its luxury resorts, beaches, and golf courses, offering high-end real estate options such as beachfront villas, condominiums, and vacation rentals, catering to affluent buyers and investors.
Finding Properties for Sale
Here are the three most popular property portals in Mexico:
If you’re serious about buying or investing in Mexico, be sure to contact local brokers and visit the properties in person. This will give you a better understanding of the market and help you decide whether to move forward with a purchase or determine that it’s not the right fit for you.
Due Diligence and Sales Contract
Due diligence in Mexico involves a thorough review of the legal and regulatory aspects of a property transaction to ensure a secure investment.
The main goal is to find any problems, like liens, disputes, or restrictions, and to confirm that the seller owns the property and has the legal right to sell it.
This process includes verifying the property's title, reviewing zoning regulations, and ensuring compliance with any restrictions, particularly for properties within the Restricted Zone.
In Mexico, a property purchase agreement is referred to as a "Contrato de Compraventa."
This agreement outlines essential details, including the property's description, sale price, payment terms, and any specific conditions agreed upon by both the buyer and seller. For properties within the Restricted Zone—areas near the coast or borders—foreigners usually acquire property through a fideicomiso (bank trust) or by setting up a Mexican corporation, depending on the intended use of the property.
The Contrato de Compraventa is typically signed once both parties have finalized the terms, serving as a precursor to the final deed (Escritura Pública), which formalizes the transaction.
The finalization process involves a Notario Público, a specialized legal official who ensures the transaction complies with Mexican law and oversees the registration of the property with the Public Registry.
Financing for Non-Residents
Foreigners can obtain mortgage loans in Mexico, though the process and terms may vary depending on the lender and the applicant's nationality or residency status.
Many Mexican banks and financial institutions offer mortgage options to foreigners, but these often come with specific requirements. Borrowers are typically required to provide proof of income, credit history, and legal residency status, although some institutions cater to non-residents as well. Mortgage rates are already around 10% in Mexico and interest rates for foreigners can be slightly higher than for Mexican citizens. Loan-to-value ratios may range from 50% to 70% of the property’s value.
Additionally, foreign buyers may need to make a larger down payment, usually around 30%, and provide documentation translated into Spanish where necessary. Working with local financial advisors or mortgage brokers experienced in cross-border transactions can simplify the process and help identify the best loan options.
Property Buying Costs and Taxes in Mexico
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Buying and Selling Costs |
||
| % from Final Price | Who Pays? | |
| Property Transfer Tax | 2.00% - 5.00% | buyer |
| Notary Fees | 0.50% - 1.00% | buyer |
| Legal Fees | 1.00% - 1.50% | buyer |
| Real Estate Agent fee (optional) | 3.00% - 6.00% (+ 16% VAT) | seller |
| Costs paid by buyer | 3.50% - 7.50% | |
| Costs paid by seller | 3.00% - 6.00% | |
| Roundtrip Transaction Cost | 6.50% - 13.50% | |
| Source: Global Property Guide, PWC. Last revised: February, 2025 | ||
Common Taxes and Fees Explained
Acquisition Tax (Impuesto sobre Adquisiciones o Transmisión de Dominio)
Acquisition tax is levied at progressive rates set in the tax code of the federal district. The buyer is liable to pay the acquisition tax. Rates are approximately 2.00% to 5.00%
Notary Fee
Services of a notary public (notario publico) are required in a real estate transaction. Based on the law, the Notary Public must ensure that all documents are in order and that all legal procedures have been adhered to. Notary fees are set by the federal district but generally fall between 0.50% and 1.50%
Other Fees
Foreign buyers should allot an additional 0.50% to 1.50% for setting up a bank trust, foreign office permit, and legal fees.
Set-up fees for a bank trust range from US$450 to US$1,000, with an annual service charge of around the same amount. The permit from the Mexican foreign affairs office is around US$1,100.
Most foreign buyers hire Spanish-speaking lawyers to deal with the notary public and to check the contract.
Title Insurance (optional)
Since there is no State guarantee of title, title insurance is highly recommended. Several US companies offer insurance for Mexican real estate at around 0.50% to 0.70% of property value.
Further reading: Guide to Property Taxes in Mexico