Saturday, February 24, 2024

The insider’s guide to investing in real estate in Puerto Vallarta, Mexico

Have you ever gone on a vacation so good that you never wanted to go home? It’s certainly happened to me. That’s how I ended up living in Puerto Vallarta. A first visit in 2013 sparked a gnawing desire to pack up my New York life and relocate. While it took a few years to turn that wish into reality, moving to Puerto Vallarta has been the best life choice — and a transition that was quite easy to make. 

It may be a beach town, but over the past decade, Puerto Vallarta has seen enormous growth and is now an extremely convenient city to live in. From great restaurants and nightlife to spectacular beaches, dozens of grocery stores and markets, strong connectivity with the U.S. and the rest of Mexico, and even great healthcare, living in Puerto Vallarta has never been easier than it is right now. 

The only problem is how much everyone else also loves it. The Puerto Vallarta real estate market is one of the hottest real estate markets in Mexico — long gone are the days of the incredible Puerto Vallarta real estate deal. I got lucky because my husband already owned real estate here when we first met, but for those of you who are looking to buy a home in Puerto Vallarta, there can be quite a bit to consider, especially for the price you are inevitably going to pay. Still, the investment is worth it for the ROI, which can be up to 8 percent these days. 

So where to begin when looking for real estate in Puerto Vallarta? We’ve broken it all down right here in our guide to buying a house in Mexico’s best oceanside city.

What are the best neighborhoods for Puerto Vallarta real estate?

“The difference in price points all comes down to location,” said Christian Bernardino, a realtor with The Agency in Puerto Vallarta. “You can break it down further than that, but mostly it’s location.”

He added, “The newest trendy area is Fluvial and Versalles. The younger crowd is buying there because it’s a newer area and considerably less expensive. It’s very up and coming.”

Even in Puerto Vallarta, where the cost of real estate has skyrocketed, you can still be surprised by great deals in even the trendiest neighborhoods, especially if you’re comfortable buying a fixer-upper or one without luxury amenities. Puerto Vallarta is still a relatively small city so even if your budget does not allow for your first-choice area, you’re never more than 10 to 15 minutes away from most neighborhoods in the city.

Zona Romántica: The first place most people visit (and fall in love with) in Puerto Vallarta is Zona Romántica. It’s hard not to fall in love with the cobblestone streets, charming historic homes, and brilliant purple blossoms from the bougainvillea trees. The oldest and most historic part of the city, Zona (as the locals call it) is chock-full of restaurants, and bars, and has one of the prime sections of beachfront. It can also be the loudest neighborhood depending on the time of year, since it sees the most tourists. 

Luxury penthouse in Puerto Vallarta’s Romantic Zone. (Berkshire Hathaway)

Seeing as it’s the most famous neighborhood in Puerto Vallarta, real estate can be quite expensive. This Zona Romántica condo, for example, is listed at US $ 2.5 million. The luxury penthouse has three bedrooms, three bathrooms, a wraparound terrace, and a private pool.

By contrast, this penthouse condo is listed for US $860,000 and features two bedrooms, two bathrooms, and a pool for the building.

Neither is cheap, but you can see there is quite a range of what is on offer.

Conchas Chinas: Just around the mountain ridge from Zona Romántica is another hot neighborhood for real estate in Puerto Vallarta. Conchas Chinas is less walkable than Zona Romantica thanks to the hilly terrain, but the beachfront location, ocean views, and spacious villas and condos are what make it one of the most expensive and desirable in the city.

This four-bedroom, four-bathroom villa in Conchas Chinas is listed for US $2.19 million. It features a private pool and ocean views.

Casa TALISMAN is located in Conchas Chinas. (MLS Vallarta)

This three-bedroom, three-bathroom house is listed at US $1.2 million. It also has a private pool, as well as an elevator, vaulted ceilings, and multiple fireplaces.

Centro: Just over the Rio Cuale from Zona Romántica is Centro. This bustling neighborhood boasts the Malecón as one of its main features and all of its restaurants and nightlife entertainment. Scruffy historic homes with terracotta-tiled roofs creep up the jungle mountains, while the crown of the Nuestra Señora Guadalupe Church creates quite the skyline view. Prices tend to be high in Centro, as well, given its location and access to the water. Still, you’ll start to see a bit more bang for your buck here, as well as a broader price range.

Condominium in El Centro. (Point2 Puerto Vallarta)

This five-bedroom, five-bathroom villa has wraparound terraces and views over the Bay of Banderas and the Nuestra Señora de Guadalupe Church. It is listed for US $1.3 million. 

Centro is where you’ll start to find a higher inventory of smaller homes, usually at relatively more affordable prices. This one-bedroom condo is a block from the Malecón and is listed for US 295,000. It features an outdoor terrace and a rooftop pool for the building.

5 de Diciembre: Moving north from Centro is Cinco de Diciembre, another historic neighborhood with cobblestone streets and beachfront access. For such a centrally located neighborhood that is still walking distance to Zona Romántica, you’ll find some great deals here.

This four-bedroom, four-and-a-half-bath house, with a private pool and yard, is listed for US $675,000. 

This two-bedroom, two-bathroom has a private balcony and is within walking distance of the beach. The rooftop terrace has a pool and lounge area. The condo is listed at US $375,000.

Casa Maitreya in 5 de Diciembre. (Mexhome)

Versalles/Fluvial: The most up-and-coming neighborhoods in Puerto Vallarta are Versalles and Fluvial. These quiet, predominantly residential neighborhoods are seeing an influx of condo development and renovations of the older homes. A burgeoning restaurant scene and proximity to mega supermarkets like La Comer and Costco, as well as a quick trip to both downtown and the airport, continue to make these neighborhoods attractive. While these neighborhoods are not on the beach, the influx of amenity-rich new constructions is what drives the prices up.

An older three-bedroom, two-bathroom home with more than 2,600 square feet is listed at US $352,000. Meanwhile, a brand-new one-bedroom condo with a rooftop pool and 800 square feet can cost US $289,000. 

Palm Spring. (Point2 Vallarta)

Understanding the real estate process in Mexico

After you’ve decided on the neighborhood you want to live in and have found the perfect place, there are a few crucial steps. The first is to understand the laws of buying real estate as a foreigner in Mexico. You’re free and clear to buy real estate in Mexico as a foreigner but with a few caveats.

It is written in the Mexican constitution that foreigners cannot own property within 100 kilometers (60 miles) of the border and 50 kilometers (30 miles) of the coastline. Still, it is possible to get around this through the use of a trust. 

Three parties are required for a trust:

  • The original owner
  • The trustee (the bank)
  • The beneficiary

The trust does not give direct ownership to the foreign beneficiary (you). What it does is establish that the bank has the legal title to the property and can act on your behalf. The trust gives you all the rights and privileges of ownership, with the trust established for 50 years, renewable at any time, forever. 

After your offer is accepted, the closing process starts. A deposit of 10 percent of the purchase price is typically required and is placed in escrow. The balance is payable after the trust deed is signed at the notary office. Closing costs are paid by you, the buyer, and include a transfer tax, notary fees, registration fees, fees for the tax certificate, title search fees, and property appraisal. There may be other miscellaneous expenses, as well. The seller pays the capital gains tax and real estate fees.

As a buyer, you will be eligible for a one-time exemption from capital gains tax if you establish residency for two years after your purchase. If you do not establish residency and wish to sell your property in the future, you could pay up to 35 percent of the profit in capital gains tax — so if you’re going to invest in property in Mexico, make sure you love the place you’re buying.

You’ll also be responsible for paying property tax every year, which is the same for everyone in Puerto Vallarta regardless of the size or value of your property. 

Resources for buying in Puerto Vallarta

Working with a licensed real estate broker is easy in Puerto Vallarta, with so many to choose from. You’ll even find offices of some of the most recognized names in the U.S. and Canada, like Cochran Real Estate, The Agency, Coldwell Banker, Century 21, and Berkshire Hathaway. Puerto Vallarta has local businesses, as well, like Tropicasa Realty, Homia, and Timothy Real Estate Group.

“The most important part about buying real estate in Puerto Vallarta is to consult a professional,” says Bernardino. “If the deal seems too good to be true, it usually is.”

Meagan Drillinger is a New York native who has spent the past 15 years traveling around and writing about Mexico. While she’s on the road for assignments most of the time, Puerto Vallarta is her home base. Follow her travels on Instagram at @drillinjourneys or through her blog at drillinjourneys.com.

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