Fractional Home Buying Makes A Splash in Mexico

Posted on Tuesday, April 30, 2019.

 

Mexico’s resort destinations boast some of the world’s most coveted homes and resorts, drawing visitors to their pristine ocean shores, blue-water bays, prime surf breaks and innovative cuisine. Aspiring buyers come from around the globe to put down roots and scoop up their own slice of paradise.

One method of second-home buying, in which a property is purchased and owned collaboratively, continues to gain steam. We caught up with Joni Ross, one of our Los Cabos real estate experts, to learn more about the rhyme and reason behind fractional ownership—and whether it just might be your ticket to paraíso.

What is fractional ownership? 

The simplest description of Fractional Real Estate Ownership is shared ownership of a deeded property, with usage rights based on time. The purchasers have a stake in an asset without having to pay for the entire property. Because each owner holds an equal part of the Title, the buyer owns partial equity in a valuable asset. As the value of the property appreciates so too, does the purchaser’s equity. Fractional Ownership has grown to become increasingly popular in recent years among people looking to enjoy the benefits of luxurious possessions with shared ownership. Generally, a management company takes care of service and amenities. A popular property for fractional ownership in Los Cabos is Villa La Estancia, a stunning beachfront resort in the heart of Medano Beach, represented by Giovanni Giammarco. The Agency Los Cabos currently represents 11 listings at Villa La Estancia Resort (4-5 of which are fractional ownership).

Can U.S. or Canadian citizens buy real estate in Mexico?

Yes, citizens from other countries are eligible to buy real estate in Mexico, but it must be done through renewable bank trusts known as fideicomisos. A ‘fideicomiso’ is a 50-year, perpetually renewable and transferable Bank Trust which allows foreigners to acquire irrevocable and absolute ownership rights to property in Mexico. This Trust is the legal equivalent of fee-simple ownership and is provided specifically for non-nationals, allowing them to own coastal and border property.

What are the most common types of fractional ownership in Los Cabos?

Fractional ownership properties in Los Cabos tend to be ocean-view homes or villas, many of which are part of private residence clubs offering upscale amenities that are shared with neighboring owners. These amenities often include tennis courts, fitness facilities, business centers and concierge services. The most common and best option is ¼ ownership (25%), where four owners hold equal ownership percentage.

Typically there are three seasons: Winter, Spring and Summer, and each quarter owner would receive one month (30 days) in each season in a rotation each year within a selective lottery process. Each year, each owner will receive a desired month guaranteed. There is also the possibility of trading time with other ¼ fractional owners.

The Agency has offices in Mexico located in Los Cabos, Puerto Vallarta and Punta de Mita. All listings pictured are represented by Giovanni Giammarco of The Agency Los Cabos. View available Fractional homes on his agent page.

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