BAJA CALIFORNIA, MEXICO - Imagine beautiful oceanfront Real Estate for 50-80% off U.S. prices, 40% off U.S. cost of living, tax benefits, the best weather on the planet, a large English speaking population, huge ex-pat community, tourism and a lively arts scene all within 30 MINUTES of the United States – you must be dreaming! Or, you just found yourself in Rosarito Beach in Baja California, Mexico. I visited Rosarito several times in 2008 and 2009 in the hopes of buying oceanfront property during a period of heavily discounted real estate values. For the first time in over a decade the area has experienced a major dip in prices and I believe now is the time to buy. However, getting a steal and all the benefits that come with owning in Rosarito has its pros and cons.
Life in Paradise
Aside from San Diego-like weather and beautiful oceanfront properties, Rosarito offers great surfing, picturesque beaches, golf, whale watching, fishing and exceptional nightlife. Downtown becomes a lively party at night and a great shopping and tourist area during the day. It is also the home to the Baja 1000. It is just a short 30 minute drive to the San Diego border and forty minutes from the city of Ensenada with Mexico’s largest port and an internationally renowned wine country. The vineyards make for a great daytrip. Five minutes south of Rosarito is Puerto Nuevo, a world famous lobster village loaded with great restaurants, shopping and night life. In Rosarito there is Fox Studios where they filmed Titantic and are set to film the Chronicles of Narnia 3. This is a great trip for the whole family.
The area is on the rise, bringing in Home Depot and a super Walmart that just opened to accommodate the growth. A growing community of artists produce local crafts such as pottery, blown glass, metal and wood work. In downtown Rosarito the streets are lined with gorgeous hand made fountains and local products for sale at bargain prices. Food is very diverse with eclectic restaurants mixed with old fashioned Mexican style food that range from gourmet to some of the best taco stands in the world. In Puerto Nuevo a 3 pound spiny tail lobster can cost as little as $14 and shrimp burritos the size of a football will only sap your wallet for around $3. You can run the gamut from a Japanese restaurant to an oceanfront Mexican organic steakhouse with live music.
If you cannot find what you want in Rosarito you can just drive over the border to San Diego and pickup whatever you need or spend the night out on the town. A sentri pass makes traveling over the border fast and easy and is basically the equivalent to a fast-pass you might get for highway tolls. Any American with a vehicle and a residence in Mexico can apply for one. It turns a normal 90 minute plus border crossing into a 10-15 minute process.
The Good, the Bad, the Future
In late 2007 new mayors for both Tijuana and Rosarito took office with a newfound dedication to cleaning up the police corruption, violence and drug trade that has run rampant in the area for decades. The Mexican military has backed up the initiative by deploying troops to the area to help in creating a police presence. However, over the past 18 months there have been numerous news stories about violence in the area that has prompted the U.S. State Department to issue a warning to U.S. tourists crossing the boarder into Tijuana.
The gross mischaracterizations in the press are far from the reality of everyday life in the area. Visitors and residents enjoy a peaceful relaxing environment with no signs of the apocalyptic depiction of the news services. While this press barrage has decimated the Rosarito Beach tourism industry that has averaged hundreds of thousands of visitors a year the area still maintains it’s welcoming charm, fantastic food and spectacular shopping. Lobster, carne asada and margaritas are still served up with chips and charm.
Californians, who make up a large percentage of ex-pats in the area, have been hit hard by the implosion of the Californian housing market. Many of those owners have seen their cash evaporate and have liquidated their Mexican holdings to free up capital. Those that had the capital to keep their property have been spooked by the recent collapse of the tourism industry and seen a once spectacular rental market fall apart. With declining prices, cash shortages and little rental income, many owners are holding a fire sale on their Rosarito properties. Those with a keen eye on opportunity and willing to take risk can jump on this opportunity to get a true bargain.
The reality is that the collapse of the tourism industry has helped to create a 180 degree turn in the mentality of locals. For as long as I can remember Northern Baja meant police shakedowns and not wanting to be out alone at night. Now police stop to ask you if you need directions or help changing your tire if your car breaks down and locals work double time to please foreigners in the hopes of them coming back to an area starving for tourists. The near doubling of the police force has helped to create an entirely new feeling in Northern Baja. The area is safer then it has ever been and they have already seen a massive reduction in crimes just in the last six months. When I am there I feel safer than I do in my home in the U.S. The face of Northern Baa is changing for the better and the time to buy is now.
Buying a Bargain
In Mexico, foreigners cannot own real estate near the ocean but can purchase it through a trust and the title can be insured through a U.S. title insurance company. The advent of U.S. funded mortgages in the early 90s has helped to make Mexican real estate affordable without having to make a cash purchase. This has also helped to keep demand high for property and makes buying a much more standard process. Because of Rosarito’s proximity to the U.S. border a smart accountant will help you get incredible tax benefits through the NAFTA agreement and other Federal tax credits. Additionally the federal tax rate in Mexico is a flat tax of 15%.
Rosarito offers one of the best positive rental cash flow investments around with great tax benefits to boot! Direct oceanfront condos in the two thousand square foot arena can be scooped up in the low 200s. There are mega-resorts and condo community that have brought a wave of high end resort-like oceanfront developments that can be had in the high 300s. Equivalent properties just 30 minutes north in San Diego are going for 10-15 times those prices! I purchased a 4,000 square foot penthouse condo with two stories in a 24-hour guard gated community with a two car garage and double oceanfront balconies for just over $600k. There are no real property taxes to speak of, but there are some annual costs that will run you about $800 a year if buying oceanfront. The property rents for about $500 a night with a long history of 180 days a year rental rate. This equates to $90,000 a year in rental income on a $500,000 property. Top shelf maintenance and security comes out to about $300 a month in dues, but there are many communities with dues under $100. Nearby is an oceanfront golf community with incredible views and a golf course accurately described as the Pebble Beach of Mexico. Oceanfront condos start there in the 300s. Gas prices and general cost of living expenses are about 40% off U.S. prices.
I chose to renovate some of the condo I bought, mainly because it is so inexpensive to do whatever your mind can imagine. A full kitchen remodel with custom hand made maple kitchen cabinets and granite countertops cost me $8,000 installed, while 4,000 square feet of ¾ inch thick travertine floors with marble inlays ran me $5 a square foot installed. For other renovations my crew cost $25 per person per day and all spoke perfect English! Part time top quality housekeeping help will cost you about $3 an hour while an experienced massage therapist will cost you about $35 for a two hour massage. Everything here is top quality and dirt cheap.
My realtor, Larry French of The Baja Real Estate Group, took service and knowledge to another level over any experience I have ever had in the states. He helped me bargain shop, completely oversaw the entire process, and set up some great contacts for my renovations and for getting myself settled in the area. We researched properties on his Baja MLS website and he preformed all the due dilligence. He set up meetings with accountants, plumbers, furniture makers, mail delivery services, and much more. Moving to a foreign place can be overwhelming but having the right realtor, or in this case a great new found friend, can make all the difference in the world. If you are interested in renting or buying in Rosarito you can contact Larry on his website at www.oceanfrontbaja.com. His knowledge, integrity and service will be a unique experience
that will culminate in a very successful lifestyle investment.
Low cost of living, perhaps the best weather in the world and the proximity to the U.S. all help to make Rosarito Beach a great ex-pat location. There are definitely places in the world that offer less expansive real estate opportunities but none with the proximity that Rosarito has to the U.S. For those in the know this is a great time to buy a bargain oceanfront property in an area set to grow at an incredible rate for years to come.
J M. - Florida