Tuesday, May 24, 2005

Our Casa in Mexico

I never thought I would live in Mexico. Oh, I have always loved to travel in Mexico and during the last 25 years, we have been to most of the Estados de Mexico. We spent a lot of time in Cancun when it was "new" and Ned thought that we should buy a condo there. Although I loved Cancun back then, I never wanted to live there. We spent lots of time in the States of Puebla, Oaxaca, Yucatan, Quintana Roo, Guanajuato and again I like them all but can't imagine living in one of those places other than San Miguel de Allende in Guanajuato. We first came to San Miguel de Allende along about 1981 or 1982. We stayed for 4 or 5 days and thought it was delightful. So many times when our travels in Mexico were in the central States, we could come back again and stay for a few days before we headed back to Houston.

Eventually San Miguel de Allende became THE destination and we would stay in a hotel for a week or 10 days. The hotel routine gets old and we wanted to stay longer so we decided to rent a house. Sometimes it is very strange how when you make a decision, doors open. I mentioned to a friend that we were looking for a house to rent in San Miguel and she said that Sharon Seligman, another photographer that I didn't know, had a house there and I should call her. I did, she rented us her house and we became good friends. Her house was so lovely and from then on when we came we rented a house. Sharon's house and the other house we rented when her's wasn't available were in Colonia San Antonio. We fell in love with this Colonia. It is a Mexican working class neighborhood with some gringos sprinkled about although lately it seems more and more gingos are discovering it. There are little shops on every street so you can step out your door and get most anything you need close by.

The Robinsons, our dear friends and traveling companions of many years, had sold their condo in Cancun and were looking for a house in San Miguel. While we thought it would be wonderful to have a house to use for several months out of the year and rent it when we weren't here, we had recently retired and weren't sure that we could afford two places and it was beyond our ability at the time to think of living full time in Mexico. But while they were looking we saw a "fixer upper" that had some possibilities and we didn't get that one but it started us thinking seriously about the possibility of buying something in San Miguel. On one of our trips down, we met with Alma Rameriz, a wonderful real estate broker, who took us to see things in what we told her was our price range. After a day of looking at places that I just couldn't see even as "fixer uppers," Alma said that there was one other house she wanted to show us in Colonia San Antonio. It was a little more expensive but we might be interested in it. The minute I walk in the door into a portico and small patio, I LOVED the house. I just knew it was MY HOUSE but it was more than we wanted to pay.

This was in May, we came back again in June to look at it a second time and when we were back in October, it was still for sale and we looked again. I have no idea why the house had not sold and especially now that they had reduced the price but still it was more than we wanted to pay. We mentioned to Alma that it was still at least $20,000 to much for us....we weren't saying that it was to high for what it offered but more than we wanted to spend in Mexico.

We came back to Houston sad because I was sure that someone would snap it up. But this house was meant for us and we were thrilled just before Christmas when Alma called and said that the builders wanted to start another project and wanted to get their money out of the house so if we could close on the house before February 20, they would let us have the house at our price. Oh joy, so we set about figuring out how we would do it and not take a hit in USA taxes for taking money out of some investments. In talking with our financial planner, he started suggesting that it might be better to keep renting houses for several months of the year and asking questions about what we could get for renting it, how much we could rent it, and talking about return on investment. We told him that we had gone through all the numbers and there wasn't anyway that we could truly justify buying the house as an investment so we were thinking of this as a life style decision and what we needed from him was to tell us when we would run out of money and needed to die if we lost all the money in Mexico. He started laughing. But acutally I didn't think we would lose the principal and hopefully we might even make money on the house when we sold it.

Buying real estate in Mexico is different. At the time we bought our house there was no escrow for eanest money, no title insurance, no mortgages. Now some of those things are starting to be used in Mexico. But we very nervously sent our 10% earnest money directly to the seller. Alma assured us that if he backed out, he would have to pay us double the earnest money or he would not be able to sell the house until he did. The attornies who do real estate transactions are called notorios and there are a limited number of them in a city or state. But the attorney does not represent the buyer or the seller. The attorney represents the government. Ned got his FM3, we came down and the transaction went without a hitch except it was a bit startling when the original contract with the actual price was torn up and a new document was produced by the attorney with a much lower sales price. This is standard operating procedure although that is changing since Mexico is actually starting to tax capital gains on the sales of real estate. But this issue is not consistent across the country and there are variations in how the rules are applied to foreigners and immigrants.

We have had the house for a little over three years and we love it. It is really a Mexican kind of house. We think the actual square footage of the house under roof is about 1100 or 1200 square feet, with two bedrooms, 2 1/2 small baths, sala, dining, kitchen area, utility room, patio and two terraces. And now we are adding a studio/office over the living area. Definitely smaller than our house in Houston but it feels spacious.

In the three years we have owned the house our time in Mexico has increased. This year we came in March and plan to stay until Christmas. Now a constant conversation is should we sell the USA house and live here full time.....but that is a blog for another day.

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