Spring 2005 was our first visit to Sayulita and Ashley and I both looked at what this little pueblo was at the time and could become. The town was really starting to be on the radar as a hip, surf destination though opinions differ when this actually began. We saw what was happening and asked ourselves "Why couldn't we have a piece of this"? It reminded me a lot of Park City in the early/mid 90's. Cool town on the rise, easy to get to, great food, vibe and the environment! An international real estate investment? Really? I did not even want to come down here originally to be honest. Ok, let's look into it.
What we learned is that there are basically three classifications of property here for non-Mexican citizens on the coast. No, I will not have all the details exactly correct so please forgive my dumbing down of the specifics and omitting official names. This in NOT an real estate investment lesson after all(disclaimer). The general classifications we dealt with were. Ejido, Ejido titled and Titled land in a Bank Trust.
|Listing photo from 2005|
Ejido land is land without title that only a Mexican national can have in his or her name. Wikipedia defines it as,
"an area of communal land used for agriculture, on which community members individually farm designated parcels and collectively maintain communal holdings."
This is where we started. After a second visit to Sayulita, meeting the right people and looking at some properties we decided to "purchase" a property that was the cheapest ocean view in town. Our investment in a house in Park City, Utah in 2004 had produced some equity and the rates to borrow on it were favorable so our first venture in to Mexican real estate began.
At this time, now 2006, most of the properties in town did not have "title" and were not even eligible to have one. In other words, most of the properties in Sayulita had not been surveyed and documented in an official capacity and recorded. Mostly the downtown area and a sprinkling of other properties actually had an official "title". The rumor mill at that time was circulating that the agency that would do this was moving forward but where exactly and in what part of town this "titling" would begin was anybody's guess.
|Listing photo from 2005 from top of property|
So, most of the property in Sayulita was what was called "Ejido" land that was only available to Mexican nationals to "own" and it didn't even have a title associated with it. (Actually, Ejido property cannot even really be owned since it is communal land but we won't get into that here.) The question is how do you do such a transaction? Well, you make an arrangement with a Mexican national to own/possess the property in your name. This person is called a "Presta Nombre". Since we could not have possession of Ejido property we needed a trusted person to act as the owner in name only and have an arrangement with that person. What kind of arrangement? This person would be the name on the documents and would need to allow us to do what we wanted to do with the land like build a home, sell it or grow corn if we wanted.
This is the core of the nightmare scenarios that you hear about investing in Mexico. People investing in property in someone else's name only to have that trusted person take possession and sell it, occupy it and possibly leave the foreign investor with nothing. Our choice for a "Presta Nombre" was the person already acting in that role for the previous "owner" of the lot plus she was employed by several friends. She agreed, a fee structure per year for her services was set and we did a deal for the property with the owner. At that time, 2006, prices were high and looked to be going higher so we bought at the height of the market. We had our piece of Sayulita.