Reason #1: Mexico, a Warm and Accepting Country

by Enrique (Henry) Saldana  (September 2012)

The warm and accepting ways of the Mexican people, in addition to the beauty of its beaches, diversity and richness of its culture, and ancient ruins and more, are an important part of Mexico's tourist attractions, which draw a big number of tourists each year.

The number of people visiting Mexico in 2011 was 22.67 million, growing 2% from the previous year. Mexico is ranked as the 10th most-visited country in the world, according to the World Tourism Organization.

This creates, in spite of the bad publicity resulting from the drug lord wars, an important part of Mexicos Gross National Income, since it permits Mexicans to participate in the economic impact provided by the tourism industry in the country. In addition there are increasing numbers of foreigners investing in real estate in Mexico year after year.

Unfortunately the lack of established laws and legislation, at all governmental levels, that could provide legal protection and guarantees to foreign investors, continues to hamper and overshadow any opportunities for growth, primarily in the real estate industry which is what we are concerned with in this series of articles.

And here is an example of one such unfortunate experience by foreign real estate investors in Mexico:

The Peñasco Fiasco
At the end of this dusty, dirt road, half-built casitas bake in the sun a few miles from the beaches of Puerto Peñasco, Mexico, better known as Rocky Point to the tens of thousands of Arizona tourists who visit here each year. Paint peels from two of the vacant models, surrounded by nothing but sand dunes. A nearby "golf course"—void of any fairways or greens—is identifiable only by a rusty sign in the desert sand.

Across from the casitas, a weather-worn billboard advertises the luxurious amenities of a planned Mexican country club and golf resort. It's one of the few remnants of the seductive deals that enticed hundreds of Arizonans to invest millions in these now-defunct Mexican condos, casitas and hotels.

Seven years ago, throngs of Mexican politicians, developers and American investors stood on this same spot celebrating the groundbreaking of the casitas, which were to be part of North Beach—then touted as Rocky Point's largest master-planned development.

The group cheered as a project designer ceremoniously teed off for the first time on the partially completed 11th hole of the golf course. A brass band played as developers distributed promotional materials painting a picture of paradise.

Among the crowd, Ahwatukee seniors Howard and Madeline Israel sipped margaritas and dreamed of watching sunsets from the patio of what would be their private seaside casita.

"They made a big deal of the groundbreaking," Howard Israel recalls. "They passed out T-shirts and hats. They wined us and dined us."

"We said, 'Wow. This is great; weren't we smart?'" says Madeline Israel. "Then the lies began."

The Israels and other investors were told models would be completed in a few months and that the condos would be move-in ready by the end of the year.

Seven years later there's been virtually no progress on the projects at North Beach, and investors who put down large cash deposits have yet to see any kind of a refund. North Beach project officials say a series of lawsuits and land disputes have halted construction indefinitely. Many investors, however, say after years of battling for refunds and answers, they now believe developers never really intended to build North Beach in the first place, and the models, brochures, billboards and groundbreaking ceremonies were nothing more than props in a scheme concocted to bilk American investors out of millions of dollars.

"It ain’t going to happen," says Howard Israel, who invested tens of thousands from his retirement fund into North Beach projects. "There’s no way, no way that this is ever going to work out."

Beyond North Beach, condo projects in central Rocky Point and well-known Sandy Beach are also being stalled by the economic downturn, with many investors unable to get refunds on their deposits. Other Rocky Point property owners are battling Mexican developers who have threatened to bulldoze their beachfront homes and use the land for high-rise projects.

The real estate debacle in Rocky Point is severe, experts say, damaging buyer confidence and having the potential to severely compromise any future growth plans in Arizona's beach town.

This and other unfortunate real estate cases, to be presented through the Seven Reasons articles, that have occurred or are in peril of occurring to foreign investors in Mexico, must be addressed and used as a means to improve the practice of real estate in Mexico. Here is where a nationwide organization such as AMPI (Asociacion Mexicana de Profesionales Inmobiliarios, Mexico's analogous National Association of Realtors) should act and get involved and lobby for laws and legislation to protect foreign investment in Mexico. Nevertheless, that remains to be seen.

Therefore, the fact that Mexicans are a warm and accepting people should not be used as a means of evaluating the security of a real estate investment in Mexico. That fact is also a myth.

This report courtesy of Enrique (Henry) Saldana
Mexico Realty Solutions
Cel: (984) 111-8743

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