When it comes to buying a condo in Mexico, there are two main options: preconstruction and existing properties. Both have their advantages and disadvantages, and it’s essential to consider all of these factors before making a decision. Especially important to have a read through considering how many Canadians are moving to Mexico.
Pros of Buying Preconstruction Condos
Affordability of Preconstruction
Preconstruction condos are often sold at lower prices than existing properties, which can make them more affordable for buyers. The lower price is due to the fact that the buyer is investing in the property before construction is complete. Often prices escalate as individual properties are sold. Additionally, developers often offer further price discounts for higher deposits made.
Customization
Preconstruction condos often offer buyers the opportunity to customize their units to a certain extent. For example, buyers can choose the flooring, cabinets, and other finishes.
Location
Preconstruction condos are often built in up and coming areas that are undergoing development, which can make them more attractive to buyers. For example, preconstruction condos may be located in areas that are close to shopping, dining, and entertainment options.
Appreciation
Preconstruction condos have the potential to appreciate in value once they are completed and available for occupancy. This is because the area surrounding the property may become more desirable as it develops and grows. This growth area is often referred as the “path of progress” and can be quite lucrative for those buyers.
Builder Warranties
Preconstruction condos typically come with builder warranties, which can give buyers peace of mind and provide protection against construction defects and other issues.
Investment Opportunity
Buying preconstruction condos can also be seen as an investment opportunity, as the buyer can sell the property once it has been completed and potentially make a profit. Some developers will also permit assigning the contract before completion, and there is usually a fee for that. Please refer to the contact clauses for assignment.
Cons of Buying Preconstruction Condos
Risk In Preconstruction Condos
Preconstruction condos are a riskier investment than existing properties because there is a chance that the developer may not complete the construction of the property. If this happens, the buyer could lose their investment. Always go with a reputable and experienced developer.
Delays In Preconstruction
Preconstruction condos are often delayed for a variety of reasons, such as changes in construction plans, budget constraints, or issues with permits and licenses. This can lead to frustration for buyers who are eager to move into their new property.
Hidden Costs
Preconstruction condos can come with hidden costs, such as additional fees for upgrades, higher HOA fees, and property taxes. Not all these costs can be determined at the time of purchase, so it is prudent to consider a contingency fund for these potential higher costs.
Quality of Preconstruction
The quality of preconstruction condos may not be as high as existing properties, as the construction process can be rushed to meet deadlines. This can lead to problems with the unit, such as leaks, cracks, and other issues. Again this is why it is important to go with a reputable and experienced developer.
Uncertainty
Preconstruction condos can be difficult to evaluate, as the final product may differ from what was initially promised by the developer. This can make it difficult for buyers to make an informed decision about their investment. Have your Notario (Mexican an experienced lawyer who has been selected and appointed by the Mexican state after practicing law) review the contract clauses for construction alterations and the associated ramifications.
Pros of Buying Existing Condos
Immediate Occupancy
Existing condos are available for immediate occupancy, which is attractive to buyers who are looking to move into a new property quickly.
Quality
Existing condos are already built and occupied, which allows buyers to inspect the quality of the property and see how it has aged over time.
Stable Value
Existing condos are more stable in terms of value than preconstruction condos, as the property has already been built and the value has had time to appreciate.
Established Community
Existing condos are part of an established community, which can provide a sense of community and stability for buyers.
Maintenance History
When buying an existing condo, buyers can review the maintenance history of the property and make an informed decision about the condition of the unit and the financial stability of the homeowner’s association.
Cons of Buying Existing Condos
Lack of Customization
Existing condos do not offer buyers the opportunity to customize their units, as the property has already been built and is ready for occupancy.
Wear and Tear
Existing condos may show signs of wear and tear, such as peeling paint, cracks, and leaks, which can be costly to repair.
Higher Price
Existing condos are often sold at a higher price than preconstruction condos, which can make them less affordable for some buyers.
Location
Existing condos may not be located in areas that are undergoing development, which can make them less attractive to some buyers who are looking for a more dynamic and exciting environment.
To sum it all up, both preconstruction and existing condos have their advantages and disadvantages. The choice between the two will depend on the individual buyer’s parameters which would include: desired time horizon for occupancy, risk tolerance, availability of funds, and other personal preferences. Also external forces such as: location, product availability, market cycle, and financing capability will play a role in the buyer’s decision. For myself, I recently bought a pre-construction town home in Mexico, because the developer was reputable and we liked the location and community!
If you are considering investing or buying in Mexico, please email me so that I can assist you and share my experience and connections.
