If you’ve ever dreamed of building your retirement home in Mexico, there’s no better way to learn the specifics than by following the progress of someone who’s doing just that. With construction permit in hand, Greg Gunter and his wife Robbie are beginning that process in San Miguel de Allende, Mexico.
In this article, the first installment of a three-part series, Greg explains how and why they chose their retirement destination, as well as the intricacies of construction contracts, ownership details, and the general nitty-gritty you’ll need to realize your Mexican dream.
In upcoming issues, we’ll follow the couple’s progress, finishing with a look at the final product. Greg and Robbie provide an unvarnished, opinionated perspective of their move to San Miguel. If you’re looking for a bland resource of every available retirement option in Mexico, Amazon.com offers them by the dozen.
Let me say up front, we’re not some Beverly Hills power couple building a hilltop mansion as our fourth home. My wife and I are overworked professionals, without children, who agreed, at age 50, to make the transition to life at a gentler pace. Not retirement, exactly, but a life extolling forbidden siestas, midday art exhibits, and long lunches.
This is the year our dreaded AARP cards arrive. We’ve been doing our homework for a decade, preparing for this transition, and, like many of you, we’ve traveled the world, learning what we truly enjoy and what we really need in a retirement destination. We’ve made notes, asked friends, and built an entire retirement library from our research.
Our retirement wish list
After adult lives in San Diego and Colorado, we sought to affordably replicate that environment—climatically and culturally—in a place from which we could easily return to visit aging parents and close-knit family. This is why we chose Mexico. Also, as semi-retirees, job assignments are a direct flight from most Mexican cities, a key point for us, since Americans are prohibited from taking Mexican jobs a qualified native might fill.
With an eye on that long-term retirement goal, we’ve spent a decade visiting most of the expat communities in Mexico: Rosarita, Ensenada, Cabo san Lucas, Mazatlan, Puerto Vallarta, Ajijic, Lake Chapala…
The parameters for our new home were clearly defined: temperate, year-round, indoor-outdoor livability, with no humidity or bugs; a cultural and historically rich environment, reflecting the true Mexico; and a charming, village-like atmosphere, reminiscent of those we so dearly love in Europe—vibrant plazas, sidewalk cafés, bougainvillea-draped bell towers chiming out the hours. In San Miguel de Allende we found it all.
Given that we’re investing a large chunk of our nest egg on this new home and want to ensure that its value grows, the presence of—and popularity with—gringos was not a detriment to us. However, we also wanted a locale where the restaurant staff doesn’t approach us with, “Hi, I’m John and I’ll be your waiter tonight.” We love the Mexican culture and its language—my wife is fluent—and wanted to immerse ourselves, not retain our American veneer.
Charming in small doses
We fell in love with San Miguel de Allende on our first visit in 2000. What was meant as a relaxing week became a seven-day real estate quest, primarily searching for the perfect vacant lot where we’d build—not buy—our hacienda just steps from the main plaza. We returned in 2006 for multiple visits, looking for a home that was both stylish and affordable.
We rented three different abodes: a small old house, a modernized apartment, and a room within a grand hacienda—all in different neighborhoods. We spoke with the owners of each, visited with other expats, and questioned the locals, all with a homeowner’s perspective. At night, we listened: the yelping rooftop dogs, the delivery trucks at dawn, the 4 a.m. festival fireworks. San Miguel enjoys 75 festivals a year—almost all celebrated with fireworks—and while we love the charming traditions as visitors, we grew tired of being woken pre-dawn on three out of ten mornings during our 10-day stay in May.
We learned that many first-timers to San Miguel buy in the centro—the central historical district—only later regretting their proximity to all those Mexican traditions that are charming in small doses. Many then move to the outskirts of town, enjoying the country solitude at night and popping into town—a 10-minute drive—for dinner, the theater, the newest art exhibit. San Miguel recently completed a two-story parking garage on the edge of town, allowing easy parking and a comfortable walk to the centro.
However, we were skeptical. The reason those European villages hold such charm for us is that we never need get behind the wheel of a car. Taxis, while costing only pocket change in San Miguel’s centro, would soon eat into our budget if we traveled regularly into town for dinner.
Fortunately, San Miguel’s popularity has spawned several housing developments just outside of town, many catering to residents like us who wish to avoid keeping a car. These communities now offer, or plan to offer, a shuttle service into town. One provides an on-site coffee shop and is building an opera house. Another plans a large clubhouse with an integrative-medicine spa. Others simply provide a gatehouse and walled community, more for a sense of exclusivity, perhaps, than security—violent crime is nearly nonexistent here.
It’s all about trust
Home options in these gated communities vary widely, from vacant, find-your-own-builder lots to a limited menu of slightly semi-customizable floor plans to completed, turnkey condos—just bring your toothbrush.
We found a wide disparity in how these projects are marketed. There is no Multiple Listing Service for the local real estate market, so it’s hit-and-miss whether a given realtor will know about a particular project or listing. Some projects simply advertise to the general public, dealing directly with buyers. As a real estate professional myself, I initially felt confident taking that independent path on a particular project, dealing directly with the seller, negotiating my own contract, working hard to achieve exactly what we wanted. But Mexican real estate transactions and contracts bear little resemblance to my multiple real estate transactions in the U.S. After wrangling for weeks with a confusing Spanish-only language contract, we sadly walked away from our first deal.
Ultimately, we found that real estate transactions in San Miguel—indeed, perhaps in all of Mexico—simply boil down to this: a trusting relationship. Do your homework and ask the locals which realtors they respect. That’s how we found our real estate saviour.
The local Re/Max Colonial office boasts an astounding location in a centuries-old building immediately facing the jardin in the center of town. For a reason, we learned. Re/Max managing broker Lane Simmons, an Austin native who moved to San Miguel 19 years ago, was offered the premium space by the local landlord—a longstanding San Miguel family—because of his considerable involvement with the local community. When we also learned that accounting firm Ernst & Young had hired him for due diligence work on a proposed golf course development north of town, we knew his modesty was clearly unwarranted.
After showing us several projects, Lane introduced us to Gianfranco Cané Manzi, a champion Formula driver, better known in Mexico as a racer than a developer. Having built projects in Cabo san Lucas, San Diego, and Puerto Peñasco, Gianfranco and his development team, Tramo, are building their first San Miguel venture: a 16-lot development called Caserio de Allende just outside the entrance to San Miguel’s only golf course, a mile from town. With two homes already completed—ours will be the third—all reflecting the indigenous building methods and historically accurate Spanish colonial courtyard-style architecture so prevalent among the town’s multi-million dollar homes. All at a price of less than half that of a tiny two-bedroom condo in Scottsdale, Arizona. In 10-months time, according to our contract, we’ll be moving in, and you’ll follow our progress in these pages.
Did we meet all our home-shopping goals? Almost. The three-bedroom, three-bathroom home will bear the strong thumbprint of my architectural desires. And, it’s within walking distance to the centro, yet far enough away from the fireworks.
Naturally, we have concerns. Caserio de Allende doesn’t currently have the CC&R’s we prefer and are accustomed to requiring in the U.S. Also, the development is far from complete, with the road to be finished, gates to be installed, and a succulent garden to be created. In Mexico, the lasting—perhaps overriding—piece of advice is to “buy what you see,” meaning any promises by a developer are just that—promises, not guarantees. But that’s where those trusting relationships come into play—the gut instinct that guides your intuition. We’ve not only met our developer on several occasions, we joined him at his birthday dinner, met his children, spoke Italian with his mother…and felt as warmly received as age-old friends. Our gut says it’s all going to be good, and in a year, you’ll read if we were right.
Our progress so far looks promising. Copper, concrete, and steel have been ordered, and shovels are being turned as I write. Meantime, we’ll follow the progress via digital photos, reading the 1974 Mexican home-building classic from Jack Smith, God and Mr. Gomez for pointers and grins.
Don’t sign anything until you read this!
Don’t do it alone. Build a relationship with a local realtor you trust, who’ll guide you through the unique intricacies of Mexican customs and requirements, from contract law to residency requirements. Your realtor will also recommend a qualified attorney who, for $800, will do the independent title search that the title insurance company requires from a third party attorney, unlike in the U.S. Run your title search before paying a deposit. Title insurance is available throughout Mexico. We invested $1,000 with First American Title Insurance (website: www.firstam.com) for a policy.
For $550, that same title company will handle escrow services. Make sure your seller agrees to use escrow for those not-so-clearly defined deposits or incremental-payment terms.
Few locations in San Miguel are hooked up to municipal water, a consideration we gringos take for granted. Before offering a deposit, verify the property you’re potentially buying has water rights. One project in town has been selling condos to unsuspecting gringos for two years and still has not secured water rights.
Your contract, in plain English
Remember that you’ll be dealing with Spanish-language contracts, so be sure you have someone to represent you. Also, you’ll potentially be dealing with two different contracts: one for the purchase of the lot or home site, and another for the actual construction. The latter is most open to negotiation, making it also the most difficult to complete. If your seller offers only a Spanish-language version and you’re dealing directly with the seller, be prepared to shell out thousands of dollars to attorneys and translators—as we did on our first, failed deal—to negotiate and translate the contract.
The single, combined contract we eventually signed—translated as a “Contract of Service and Promise to Purchase-Sell Real Estate”—is split down the middle, one column in Spanish, as required by Mexican law, and the other column translated into English. Be sure to spell out when incremental construction payments will be made, and under what construction-milestone conditions. Finally, require a drop-dead date when construction will be completed. A good contractor will agree to include a penalty clause if the construction isn’t completed by that date—ask for it.