The Impact of Trump Tariffs on Mexican Real Estate *English*

 

 

Video Transcript - (with Alex, Jason & Vanessa)

Jason:

Well, I want us to have a very casual and fun conversation. It's very interesting that we chose this topic, really even knowing we knew that there was an anticipation of potentially some tariffs as we knew they were thrown around, but today being the day that it was actually announced, just the coincidence around that. It's going to be a very timely conversation.

Certainly, a lot that's going to be unknown, but I think overall, we know that Mexico remains a very positive investment, especially for US citizens and residents that are looking to come into the marketplace. This is an ever-changing landscape in the real estate market here in Mexico, but we've seen tremendous growth. I'd love to start with just your personal stories and how you got into this, because you certainly probably saw an opportunity, right, in order to just kind of maybe change where you were living, or even the profession you had before that.

I'd love to get a little bit of backstory onto this, because it just doesn't happen all the time that people are just saying, "Oh, yeah, I work with Americans that purchase in Mexico, or that's my clientele, or in the luxury space." Vanessa, tell us about your story, how you got to Cabo and how you got into real estate. We'd love to hear that.

Vanessa:

Okay. Well, it's really very simple. I came here on vacation, and basically never left. I fell in love. It was so easy. I actually held a senior position for a global business travel management company, and my background is actually technology, product management, and product selling. I was in front of your top tier C-level people, as well as the owners of Accenture, Paramount Pictures, et cetera. Then my teams would gather all of the travel data for their employees from around the world.

The Citibank would spend nearly half a billion dollars in T&E every year, for example. We needed to manage and analyze that data through business intelligence platforms in order for them to be able to negotiate with their providers. It took me all around the world. I was also part of their mergers and acquisitions team, so that ended up being really a fun adjunct to my job. Through that, also acquired or helped acquire 65 other corporate business travel agencies.

My part was rolling in their financial and accounting systems and personnel. I loved it. I did it for 16 years. I traveled all over around the world, but when I came to Cabo, and actually, Cabo was my first place even in Mexico, because I used to live in the northeast and northwest. I would always travel to the Caribbean for vacation, or Europe. I'd never been to Mexico. I came to Mexico on vacation, and it's hard to explain.

There are millions of beautiful places in the world, but until you actually feel it's so true. I see Alex, you're nodding your head. It's so true. When somebody looks at you and they say, "Como estas," and it's how are you? They actually are waiting and looking, and want to know how you are. There's amazing food, and culture, and art, and nature, sports. I became an avid golfer. I'm not great. My handicap shows you how much I work, because it's really bad, but I absolutely love it.

It's an amazing place to live and to also work. Came here on vacation, didn't want to travel like I was traveling for business, and looked to see what made sense in terms of business. Basically, you have tourism and real estate. Saw that Snell Real Estate was the number one luxury brokerage. Met with Chris Snell, and purchased the brokerage, signed the papers the beginning of 2012, and it's been nonstop ever since.

Then brought in the brand of Engel & Völkers, which has been an amazing partnership with them. Their locations, their network, their commitment to culture really aligned with what our culture is here in terms of business and people. Then started a magazine maybe a year or two after that, Ocean Blue. It's a completely separate venture, lifestyle magazine, but it ends up allowing me connection to many other people, and companies, and businesses from around the world that I wouldn't normally have access to. It keeps me all very busy.

Jason:

Just overnight, you just became the number one in volume in the region?

Vanessa:

Just overnight.

Jason:

Just overnight, right?

Vanessa:

Just overnight. People don't even know what it takes behind the scenes. Snell Real Estate was the launching pad. Chris has done an amazing job creating a brand here, and then bringing in Engel & Völkers. I really do get the best of both worlds. Snell was started in 1997, so it's over 28 years worth of history, and then a strong brand with Engel & Völkers. Then we are working with you guys. You're bringing in a level of professionalism to financing here in Cabo.

Honestly, that has, MoXi in particular, has changed the game in my personal opinion, in terms of some of the other opportunities for purchasers of real estate here, because we are typically an all cash market. Typically, your wealthy or ultra-high net worth, they're also looking to make their money work for them, and may not necessarily want to be this liquid and put all of their, be it full cash commitment, in terms of a property.

I think that some of your offerings really give them the benefit to allow their money to bring on an even higher investment and return on investment.

Jason:

It's very good. Vanessa, we didn't even rehearse any of this and you're already...

Vanessa:

You're welcome, by the way, but it's true. It's true.

Jason:

Thank you. Well, that's a great segue, I guess to bring up Alex and your story. I know that you'd been visiting Mexico for a long time, even as you were younger as well from what I remember you telling me about your story. How did you end up in this role, and maybe a little evolution about the company itself, because it has evolved over the past few years.

Alex:

Yep. Great, great point. I didn't know until just now, Vanessa and I have Citi in common, and we'll get there in a second, but I'll talk to you about that. Great question, Jason. Back in high school, actually, I did a study abroad program in San Miguel de Allende. I came back, that was just a couple of years ago, I was in high school. No, just kidding. I came back totally fluent in Spanish with this great appreciation for Mexican culture.

When I was in college, I took a doing business in Mexico course, like a summer school course. I had no idea it would eventually lead me to this, but I think the universe has a way of preparing you for things that are going to come later in your life, which is great. My background's really largely in financial services, and I spent a lot of time at Citi most recently before I joined the predecessor for MoXi before we created MoXi.

At Citi, I had an opportunity to be a co-founder for a mortgage startup that ended up launching inside of the private bank. What it really taught me was we could take credit in the mortgage construct such as it's been for a hundred or more years, and we could turn it outside and solve new problems. That was really exciting to me. We launched that startup inside of Citi, and I was like, "Gosh, I should really look and see how I can apply these skills to solve world problems outside of Citi," which ultimately led me here.

I think what we're focused on at MoXi is democratizing access to global homeownership. When you think about the communities that we serve today across Mexico, financing is the key to unlock the accessibility, or democratizing the global real estate space. You have to be able to have financing in these markets, in these communities in order to be able to really propel the real estate business forward. For many of us in the United States, that seems obvious, right?

I think most recently, I saw a statistic, it's approximately 90% of people that buy their first home use a mortgage to do it in the United States. To Vanessa's earlier point, almost five, 10 years ago, almost 0% of people, foreigners in Mexico purchasing used a mortgage to do it. We saw a huge opportunity to change the world literally, and make financing ubiquitous in this space, and provide reasonable and responsibly originated mortgage loans without foreign exchange risk, without prepayment penalties, without adjustable interest rates, or complex and kind of schemes.

Marrying that with sort of our experience in the institutional capital markets in the US, and being able to provide that in Los Cabos in particular to high net worth and ultra-high net worth families really has helped change the game. I'm looking forward to continuing to broaden the spectrum, so that we can serve anyone and everyone, which is really true to our mission. There's just a brief little bit, but this is exciting to be here.

Excited, very interesting day, Jason, to have this webinar. I don't think any of us when we set this date new that this morning would be this morning, as it relates to tariffs. Excited to be here. Thanks for having me.

Jason:

No, thank you. Thank you, both. Yeah, just as you mentioned that, I think, so now that we have the introductions out of the way here, why don't we just jump into the business side? I know we have a lot of people interested in try to figure out what their next steps are, whether they're trying to figure out maybe from an investment standpoint, or where to live, or just a general sentiment overall is that we know that regardless of whoever's in office, whenever you have a change in administration, there's certainly uncertainty, and people just stand at the sidelines to see how things play out.

I'm sure we saw that in the marketplace in November and December, but now that we're almost unbelievably already about to wrap up maybe Q1, Vanessa, I'd love to know your general sentiment from the time as you look at 2025, now that we have that behind us. Then going into this year, what does your big picture look like for 2025 in Los Cabos?

Vanessa:

Well, first, I will say is that we haven't wrapped up Q1. We still have a good strong month left, and it's really important to say that, because even though I like to say that we are less seasonal here in Los Cabos, we do have a stronger season. March actually is a really big month for us in terms of tourism, and of course, real estate purchases.

To give you a little bit of insight as to what I think that's going to happen in 2025, I wanted to actually take a look back at over the past five years. In the past five years, we've had over $7 billion worth of sales in the market. Your average listing price has increased 8.9% over this amount of time. What's interesting also is over the past five years, the different segments have performed differently.

For instance, your 10 million plus market have increased in terms of number of listings over the past five years, 25%, five to 10 million, an increase of 33%. The sweet spot, the big performer is the 3-5 million, and that's the number of listings have increased about 50%. The market has really shifted dramatically in a variety of ways over the past several years. I think part of that is because of the nature of where we are. It is Mexico, it is also Los Cabos, which can, for all purposes, be considered southern California almost.

That makes it attractive to buyers. It really does, because you are in a foreign country, you get all the benefits of the language, of the culture, of everything, but it feels a little bit easier. In terms of real estate purchases, purchasing outside of a country can be a little bit daunting. When we are using or have the opportunity to use a US-based escrow or a Mexican based escrow, having the opportunity to use a US-based financial lending arm versus something else, where they may need to get their money, it really does lend a level of credibility.

For me, I think also, which I'm sure everybody's tired of hearing COVID, that has since passed, but it did take some leveling out. Obviously, real estate in general skyrocketed around the world. What's been great for us is that although we've had a bit of skyrocketing around the world, and then some places actually coming down, so sometimes when you go so high, you can only go really down, in terms of what's happened in Los Cabos, we have really, I feel like, settled into higher list prices than ever before.

However, not unreasonable. They are at market value. We are typically an all cash market, but we are seeing more and more purchasers wanting to leverage their dollars for a better use for better return on income. Taking an opportunity and seeing what they can do in terms of possible financing is going to be key for us in 2025. It's going to be, I think, really important for your ultra-high net worth clients, so ultra-high net worth, where purchases of even last year, the 10 million plus, that was the only segment to increase in terms of transactions and volume.

All the other segments under 10 million, there was a lower transaction volume. To me, what that's going to give us a little bit of hopefully a microscope into what's happening in 2025, is that your buyers that are typically under 10 million might be more affected by a tariff, where their dollar may not go as far in the US, and they may be looking outside the US to see what makes more sense in terms of their dollar spend. They can't purchase a wholly-owned asset here in Mexico and here in Los Cabos. Their dollar will go further in general.

I think that these tariffs can make 2025 by perception and reality feel more attractive in terms of dollar spend. Then you get all of the benefits of living in Los Cabos. You get to enjoy the weather, and the golfing, and the whales that migrate here, and the culture, and the art, and the food, and all that Los Cabos has to offer, and the ease of getting here. When people are looking at investing, they're not just looking at obviously, how far is my dollar going to go? What is my quality of life going to be like? How is that going to change in terms of my family and friends, but how much can I actually enjoy it?

It does make it more attractive to want to purchase in Los Cabos because of the ease of getting here. We have nonstop lift, nonstop flights from so many areas around the US and Canada. Canada is going to certainly be, I think that with all of the tariffs as well, one of our biggest, if not our biggest ally. I was looking at some stats, and Canada had invested almost 6 billion in the US as far as real estate last year. They were the top foreign buyers in real estate, or that was in 2023.

I am envisioning that there will be a very attractive and lucrative in terms of the stretch of the dollar and the Canadian dollar, a lucrative opportunity for our Canadian purchasers. I see that they're already looking.

Jason:

Those great insights. Positive momentum, especially having the strength of the dollar. When you look at the financing side of things then, Alex, how does that look like? Do you see that the sentiment is positive overall?

Alex:

Yeah.

Jason:

What are your thoughts?

Alex:

I'll just give some more specificity for those. I see in some of the comments, some of our listeners or watchers today are in the midst of an escrow now, are looking to purchase now. I think this topic's really relevant. I'll touch just briefly on one aspect of the tariff, and how that's supporting what Vanessa's saying. Just dive into a few more of the details.

Really, it comes back to quarter four, 2024, specifically their US presidential election, just because there's so much to digest and ingest with respect to tariffs right now. I would just encourage anyone watching to think about just one thing in particular, in the greater scheme of the overall, and that is look at what one US dollar bought you in October or early November, 2024. It was about 16 and a half or 17 Mexican pesos, compared to today, or even after November 5th, 2024, where it buys you 20 and a half or almost 21 Mexican pesos.

From the standpoint of your dollar going further, that is a pretty big increase. As the Mexican peso devalues with the tariff, your dollar goes further. If you earn your money or hold your assets in US dollars, purchasing property in Mexico just got less expensive, or you get more value for your dollar. Your property expenses like your fideicomiso annually, or your hazard insurance, or your property tax, albeit it's already low and a great value relative to the US, but all of those things just got less expensive.

If you couple that or marry that with US dollar financing that doesn't have foreign exchange risk, it really sets you up really well from a hedge perspective. I wouldn't encourage anyone to go buy property in a foreign country solely just to hedge their portfolio, but I think that's not necessarily our audience today. People are already thinking about buying or refinancing their holdings in Mexico.

Just overall, that puts a finer point on this conversation around tariffs. Just like with everything in life, there's always sort of a silver lining to anything. I think for those of us in this market and really across Mexico, these tariffs can have a ton of positive impact and a really good buying opportunity, no matter which segment of the market you're in. If you're in the over 10 million space, if you're watching this and you're thinking about buying a $200,000 pre-construction condo in Playa del Carmen, that also applies to you.

I think it's really just a powerful opportunity right now. It's a great time. I think that yeah, there's nowhere to go but up. I think when we look even historic, well, I won't geek out on it too much, but even when we look historically at other data points in the last five, 10 years, when we've had changes to currency or devaluation of the Mexican peso, we see a big spike in the real estate market in Mexico.

It's usually a 90 to 180 day lag, which we're hitting that point at this point from November now. I think we'll continue to see, I'm very bullish on it, I guess is the best way to sum it up.

Jason:

Vanessa, let me hit on this a little further, because right now, we're obviously taking advantage of the headline which is out there, but Mexico is much more than a headline. We know it's a long-term trend, and the stability that we've seen time over time, it's a smart investment. Walk us through why it has been financially healthy and supported.

It's a great place for foreign purchasers, whether it's because of the investment that they're making, also the government, and all that combination. Why is it such an attractive marketplace that is not just a short-term trend?

Vanessa:

Well, I love that you say Mexico is more than a headline. It's so true. It is so true. We are very fortunate here in Los Cabos, because obviously, we are part of Mexico, but we are in this very unique geographical area as far as Mexico. We are very fortunate to be [inaudible 00:24:26] and really landlocked with the US, and with the tip at the arches. We get all of the great things that Mexico has to offer, but with, I think, a sense of credibility already built in for our foreign buyers.

There is a sense that it feels "safer" to purchase, and I touched on it a little bit earlier, and also using the tools that we use when people are purchasing. Big brand also makes a big difference. When they Engel & Völkers Snell Real Estate, when they see Engel & Völkers and our long-time [inaudible 00:25:11], Snell Real Estate, that also lends a major sense of credibility in terms of buying real estate here in Mexico.

With all of the tools, all of the support that this area gets, as you touched on a little bit from the government and tourism board, there's heavy investment to make this continue to be the top number one resort area in Mexico. As far as buying, you're buying an all-cash market, even back when the recession hit, here, it wasn't turned upside down. Basically, you had a stop as far as new developments and new build, but the world wasn't turned upside down because it is a very financially healthy market.

People have seen that, they've seen their return on investment over the years. It's all fact-based. They see that they've actually made great investments, and at the same time, have been able to enjoy with their friends and family. The majority, I would say, not majority, probably 25 to 45% of our clients are also buying up, are multiple home buyers just in this area. Even though this is your second, third, fourth, fifth home area for purchasers, we have homeowners that are owning multiple properties here.

That to me is a statement of also their trust, their confidence, and an actual factual return on their investment for their, I'll call it their primary home or their secondary home here, but also buying and renting, buying and flipping. It's been a great financially sound location in which we see that there's also the short-term play, but also the long-term play.

We have people that have been here for 30 years and have seen the growth, and have been able to kind of get in on the inside, and are excited to see the growth of Los Cabos, but also how the government regulations and the community also maintains this amazing Baja in Los Cabos and Mexico aesthetic. It's a very, very, very special place. You can live, you can work, you can have great investments, you can increase your financial portfolio very safely.

We use US escrow, Mexican escrow, we have obviously financial corporations that are lending safe and secure money very soundly. I really liked, Alex, how you were mentioning how MoXi does it. I think that's very important, considering some peoples' experience with other mortgages around the world. To feel like you can do that and really make your money work for you here, in addition to just expanding your portfolio, has really been attractive to buyers.

I see that as only a further growth in 2025 and beyond. I too am very bullish on the market in general, and being in the business, you do see a lot of opportunities. I might be calling you for some [inaudible 00:28:38].

Alex:

Hey, you touched on a couple of things, Vanessa, and sorry, Jason, I just wanted to emphasize them. You talked about transaction security, and I think the Engel & Völkers brand is important to your point, as is the MoXi brand. We have a lot of people on the line right now, and so I wanted to spell one myth that this is probably the question I hear the most. When I'm out and about, even at my kids' basketball game, someone asks me what I do, and I tell them, and the first thing I hear is, "Oh, can't you only own property in Mexico with a 99-year land lease?"

I don't know who made that up or why it's so pervasive, but no, you can own property fee simple. In a restricted zone like Los Cabos, you do so via fideicomiso de garantia. Having great real estate representation will ensure that you have a good transaction security. Working with MoXi will also ensure the same. I think that's just an important point to emphasize. I really like that you brought it up. Working with a competent professional when you are... There are so many benefits of Los Cabos, it does feel like California.

There are two hour direct flights from, I think, I'm seeing in the comments here, 30 different US cities. It is still a foreign country, and you do want to make sure that you're being represented really well. I think that's an important point to emphasize. For anyone watching that's in process of doing this or thinking about doing this, make sure that you are working with a competent professional that you can really trust and has a good track record, such as yourself, Vanessa, and your team, such as MoXi and our team. Thought I would just emphasize that for a moment. Jason, back to you.

Jason:

Yeah, no. Go ahead.

Vanessa:

Can I just interrupt just quickly?

Jason:

Yeah.

Vanessa:

I just wanted to say, thank you for saying that, because working with a competent professional is an understatement. I think that that is, it cannot be emphasized enough just in general in whichever industry you're in.

In particular, I think when you're buying in a foreign country, and then the fideicomiso where there are, what people also don't talk about are the inherent benefits of having your already decided beneficiaries in your fideicomiso, in your trust. When you have a global portfolio, it also can make it very easy to manage that portfolio by using that as an instrument to own property.

Alex:

Yeah. Many of our clients, I don't know if we want to get, we probably don't want to get too technical in this conversation, but we do work with sophisticated clients that, in their global real estate holdings portfolio and within that fideicomiso, they'll hold their interest in the fideicomiso through their US LLC, their US trust, a corporation domiciled in the United States. There's all sorts of strategies.

That in and of itself, plus the benefits you sort of get from holding the interest in the property in the fideicomiso with the contingent beneficiaries and all of that, and having that recorded in the deed with the public registry, it's important. If we thoroughly confuse you, I'm sorry, to our audience, but I think it is an important point that you really want to have competent representation. You really want to work with a company such as yours, Vanessa, or such as MoXi, or both, to make sure that you're well represented and well protected in the transaction.

Jason:

Before we get too much into the buyer profile and everything, I think we'd love to dive a little bit more into that, but Alex, can you hear me okay?

Alex:

Yep.

Jason:

Okay. Which is to say, walk us through a little bit more around some of the myths around financing, because I'm sure there are folks that there are some myths around that, they've heard things about Mexico maybe in the past or 10 years ago. A lot has a change. What does MoXi bring from that level to clear up any types of negative perceptions around financing?

Alex:

Yeah. Thanks, Jason. Thanks for asking that. I think MoXi, the concept of US dollar financing in a foreign country is a relatively new concept. It is an important one for the overall growth of global communities in the real estate space, which is why we're here and what we're committed to doing. I think across various different markets in Mexico, and to a varying degree, 24, 36 months ago, if you took a poll of real estate agents in the area and said, "What are the mortgage options?"

They would tell you, "This is a cash market," and that conversation is changing because it's not, and MoXi is changing it from a cash only market to no, there are reasonable mortgage options. I think some of the biggest nuances or differences, despite the fact that MoXi's aligned its process to look and feel a lot like a US mortgage origination process, and we work really closely with our real estate partners, keep them informed systemically through our system of record throughout the transaction in the various milestones.

Despite that, I think it's important to note that there are key differences in these markets. One of the biggest is probably closing costs, whereas in the United States, and I think to a certain degree Canada as well, you might expect closing costs around 1%. Now, whether you're paying cash or whether you're financing, if you're doing it the right way in Mexico, your closing costs are going to be closer to five, six, 7% depending on the purchase price. There are fixed costs.

Again, if you're doing it the right way for your fiduciary, for your notary, notario publico, for recording charges at the public registry, for your appraisal, your tax appraisal, and for government transfer tax in Los Cabos, that's 3% of the purchase price. That's usually a big surprise. In MoXi, well-qualified clients can finance those closing costs.

I would say if anyone's watching this and is being told, "Oh, no, you don't have any closing costs," or, "Oh, you can just execute this real estate transaction via DocuSign entirely," that means you're probably not working with a professional. You're not working with the right team. I think that's just one item to sort of touch on there, Jason.

Jason:

Well, thanks for sharing that. While we have you hitting on this subject, we have a couple questions from the audience. I think one of them might be related to you, [inaudible 00:35:43] question about it, is this being recorded? It is. After this, you're going to be able to see this on our respective channels. We'll have them up on our MoXi YouTube page, so it is recorded.

This next one comes from Adam Ament, I'll pull it up here so that you can see the question from Adam is do you anticipate interest rates associated with the mortgage increasing with tariffs?

Alex:

Yeah, great question, Andrew. It's interesting, the opposite is actually occurring. In the last seven days or so, the treasuries, the yields on treasuries have actually come down 35, 40 basis points, pretty considerably. MoXi's rates today are about 40 basis points, 0.4%, I should say. Not everybody uses the basis point terminology, 0.4% lower than they were a week ago. MoXi interest rates are going to look relatively similar.

They're price based on a similar index as US interest rates would be on a mortgage rate in the United States. That's actually coming down, surprisingly. There's a whole host of factors connected to treasury yields, but nevertheless, short story is rates are actually coming down. The dollar is worth more in Mexican pesos than it was a couple of months ago. Interest rates today are lower than they were even a week ago. Lots of good tailwinds that help you out.

Jason:

Excellent. Now, Vanessa, let's switch gears here and focus now on the typical, the profile of the buyer, and maybe the properties for those that are really interested in terms of some of what we're seeing in your marketplace. Tell us about the luxury buyer and their priorities. What are their preferences right now? What are they looking for either in developments, or maybe in the resale market? If you can give us a variety there, that'd be great.

Vanessa:

Sure. Our clients range, I'm glad you mentioned it. For our viewers and listeners that are purchasing, we are helping provide service to clients purchasing at all price points. From a $200,000, $250,000 home site, or condominium perhaps, up to, we have $90 million parcels where people can invest. We have a real variety for your kind of people wanting to dip their toe, versus somebody kind of in that sweet spot, mid-range that I was mentioning, that three to 5 million.

Then also, we have a lot of commercial investors. The investor opportunity here in Cabo has grown and grown. For anybody that's local here or owns here, you've seen a lot of growth happening in terms of developers. Our typical buyer happens to be one that is a, it's little Hollywood, it's Silicon Valley, they're captains of their industries, and at whichever price point that is, the main objective typically initially is always the experience.

They want to create memories with their families and friends. They might've come here on vacation, and they're enjoying it, and then they're always wanting to come back, always wanting to tell their friends. What they're looking for is a place that they can enjoy with their friends and families. Oftentimes, and more often than not, we're just seeing the growth of exclusive communities, branded residences. You've got your family and your buyer that's really buying for the family.

What are they going to do here? They're buying not just for the house. The house is going to give them the ROI, and they might choose to borrow some of it in order to purchase, but really they're buying here for the experience. They're looking to see, does this community or does this location offer me golf, access to a beach club, access to the beach? Can I surf? Can I hike? Can I walk? Can I bring my dogs? Is there a spa? What does my family want to do, and how can we enjoy ourselves?

Buying here is really more, it typically starts as more of the emotional buy, and then people start to realize what an amazing financially sound investment this is. That's why, as I mentioned before, you have buyers that are typically owning multiple properties. I personally do. I'm heavily loaded into the real estate market here in Cabo. I see and have realized great returns, and then I also have an amazing life. I'm watching the whales right off of my terrace. I pretend to play golf.

It's really, I love it. I absolutely love it. Then you can go down to San Jose and go enjoy the art scene, but more and more families. When you have also, we have different demographics, but on our older demographic where they're wanting to spend time, all they want to do is spend time with their grandkids. If the grandkids say they're going to come, that means the parents are coming. Then the grandparents get to spend time with their grandkids and their kids.

I say this in a way that sounds like a more aged community, but these are people that are very active. We're golfing together all the time, we're playing golf. Just in general, in terms of even wellness, this area offers so much in terms of being in nature, the food, and just enjoying a sense of community. The wellness factor can't be, I think, undersold as far as what families also want to enjoy. The area has to offer everything from the grandkids to the grandparents, and it does.

You've got people that are buying here for the emotion, spending a certain amount of money. Sometimes they're dipping their toes in at maybe the 250, but more often than not, in the 500 to a million dollar range. Then they're always buying up, always buying up. Whenever I'm asked to list a home, I always say, "Why?" I always want to know why are you going to sell? The good news is that probably 90% of the time, it is because they're buying something else. It gives the next person, that next buyer, the opportunity to enjoy that original home.

These buyers are buying bigger, buying maybe in a different community. Now that they've had the experience here, maybe they want something that's a little bit higher end. Maybe they want something a little bit more remote and off the grid, like the East Cape, really up and coming area. Maybe they want to be more artsy in the great, another great and up and coming area is Todos Santos in La Paz. We actually have a nonstop from La Paz, and we didn't have that for several years.

The whole area of the Baja just continues to grow, but financially and economically from the outside in, having the lift, having the suppliers, having the construction companies, and the builders, and the architects, and the real estate advisors, and real estate companies, and notaries, and lawyers, it is a very, very professionally sound location, even though we're overlooking the Sea of Cortez. It really is this most unique area I've ever been at and had the privilege to live in.

Jason:

Sign us up, right? How can you say no to that?

Alex:

I'll add anecdotally, we see a lot, we call them a two pack in mortgage speak, because we'll see often those kinds of clients, Vanessa, who decide not to list, and instead, it's a two pack because they want to cash out, refinance the property they already own, and then they want to purchase money loan.

They're going to use that cash out as the down payment on the purchase money loan that they're going to get on the second unit they're buying, because they're so in love with the area, or now that they bought one property, now all their friends and family want to come as well, or the family's growing. Some list and are move-up buyers, but some are also leveraging the equity they already have to buy a second unit or a more luxurious unit.

You touched on branded residences. We've seen a big uptick there. I know just in the Los Cabos area alone, we now have two Four Seasonses, one on the East Cape, one on the corridor, both with residences. There's St. Regis residences in Quivira, Ritz Carlton residences in Puerto Los Cabos, and we continue to see that across Mexico, in the Riviera Maya, and so on and so forth. Anyway, just thought I would touch on that briefly. Jason-

Vanessa:

I think that's a really good point, and because residences also create a level, again, of global credibility. Las Ventanas al Paraiso, it's a Rosewood property, and so we sold out the 30 properties by Ty Warner, but it's a Rosewood property in no time. We were selling, I sold the highest price condo for over list. It was really, really a sound, sound, sound investment. We've sold out Waldorf Astoria, Solaz, which is in-

Alex:

We've worked on a lot of deals with you guys in Waldorf Astoria, I know. Yeah.

Vanessa:

Solaz, which is a Marriott Bonvoy branded. We also have coming, which people may not know our viewers and listeners may not know, we have a Conrad branded coming with the development OLEADA, and that's over on the Pacific side. It's pretty incredible. Even Tiger Wood, even though it's doing his own stamp on some legacy estates in Diamante. Those are on the market now. The legacy club, legacy estates, and of course, a tie-in to golf that I love. We've had, now two years in a row, the PGA tournament here. That was a big get for us in Los Cabos.

To me personally, I think it's fun, but also for us globally, it is a global event that just continues to put this location on the map, and helps continue to stamp that financial credibility for people when they're here. They want to come back. The ease of coming back, they can purchase here, they can continue to own. It's easy to purchase. We will help them through that transaction, and then it's easy to sell and buy up, buy out, buy and expand their financial portfolio here and around the world.

Alex:

Yep. I'll note on that, we're probably 85% of the loans we write are second home, and we know that 100% of those 85 also usually are in the rental pool, particularly on the branded side. It's interesting you mentioned Ty Warner. I'm a member of one of his clubs in California. Anything he builds literally looks perfect all the time. He's like, one of those incredible property managers, owners.

Yeah, you've just listed some really big names that lend a lot of credibility to this. When you look at it through that lens, there's just so much incredible value, particularly in light of this great period of time where we have kind of low interest rates and your dollar goes really far as it relates to Mexican peso. Jason, back to you.

Jason:

No, thank you. No, and I want to point out, because I know we have listeners from all over the area, and certainly, Cabo is the flagship when you think of Mexican markets, but this kind of trend is not unique just to Cabo. We can name so many things, especially when we talk about branded residence. Certainly, you know you've made it when you have two, Four Seasons developments in your town, but Four Seasons is opening up all around the Pacific coast as well.

We just opened up an office in Puerto Vallarta. We know the traditionals, like you mentioned even early on, San Miguel de Allende still become very attractive, Mexico City in itself. When you look at branded residents, what's happening there? So many people from LA moving to Mexico City, such an attractive location. Of course, when you think of Quintana Roo and everything there, so certainly we have limited time, but we were so fortunate to have Vanessa join us and talk about really the opportunities there.

A lot of what we're talking about here can be replicated in all these different markets across Mexico, not just on the coastlines, but the interior and what we're seeing. There's so much demand on that standpoint. I do want to close out, I do have a couple questions, just another question for both of you, because I want to get purview. As you're looking at the rest of the year, Vanessa, what are your goals for your company and all the different areas that surround real estate, right?

There's so many ancillary types of businesses and efforts that go alongside of it. You want to share with us a little bit about your goals and how you want to make sure that you're lined up to capture the growth in this market?

Vanessa:

Sorry, you were cutting out. Is that for me?

Jason:

Yes. Yes. Share with us-

Vanessa:

Is that for me? Okay, great. Actually, great, and actually, it does touch on the rest of Mexico as well, because like you opening up different offices, offices around Mexico, Engel & Völkers is open. We have Playa, we have San Miguel, Merida's coming, Monterrey, so this really does apply to all of Mexico. We have a vested interest. We have clients that are purchasing all over Mexico.

One of my goals for 2025 is to be able to capitalize on that and be able to show all of Mexico in that same light that we've been able to do right here in Cabo. We have our US buyers, we have our Canadian buyers that are looking for perhaps investment alternatives than the US because of the tariffs that are being imposed. Although the tariffs do create an economic headwind, the byproduct of that is going to be, I believe, an increase in terms of the real estate sales, real estate market all across Mexico.

I'm very much looking forward to working with our fellow colleagues in and out of the Engel & Völkers network in those other areas. They're very strong. I see other, like you mentioned, branded residences being built there, large developments being built all around Mexico. There's a tremendous amount of opportunity for, I would consider, our foreign buyers to be purchasing in all areas of Mexico.

Jason:

Excellent. Well, I know we're excited to be a part of that, and like you said, the partnership that we have, a very strong, and it's great that we're able to share this opportunity in this stage. I'm sure we're going to have many more in the coming months.

Alex, I want to throw some to you, because we seem to have a flurry of similar types of questions, and it revolves around the most commonly asked question that we get around financing, which is tell us about interest rates when financing.

Alex:

Sure. Happy to touch on that. I want to address some of the questions in the chat specific to tariffs and whether or not that impacts real estate in Mexico. The questions are, there's a lot of great questions. It was, I don't know, 10 or 15 minutes ago, I want to touch on it. I want to make sure everyone's aware. As of now, of course, I'm not sitting in the Oval Office, but as of now, the tariffs are on goods, they're not on services. Mexico has not announced any sort of changes to this.

What that really means is there is no tariff on Mexican government transfer tax when you're buying a house. There's a 3% transfer tax in place that hasn't changed. The tariffs that are being assessed on Mexico by the United States are things like automobiles and auto parts, electronics and appliances, agricultural products, avocados, tomatoes, manufactured goods like tequila and beer, and building materials is another one.

I think just thinking about the beginning of our conversation here today, the dollar goes further in markets such as Los Cabos, such as San Miguel de Allende, such as Playa del Carmen, Tulum. Anywhere really where foreigners are buying property, your dollar goes a lot further. Those sales are happening largely in US dollars. Where the rubber meets the road at the Notario's office, the recording is being done in Mexican pesos in accordance with Mexican law.

However, the purchase and sale agreements are being written in US dollars generally in these kinds of markets. What that means is sure, maybe building materials will be more expensive, or electronics like your stove, or dishwasher, or whatever gets put in new construction units, but the cost of labor is significantly lower now on a property that's being sold in US dollars. Just kind of wanting to share that, because I think that was a question people had, is the tariff specific to real estate?

Is there any impact to real estate? Are MoXi's costs or interest rates higher as a result of the tariff? The answer is no to all of those for now. I'll mention, because the interest rate questions coming up, and I think we talked about it a couple of minutes ago, what we're seeing, interest rates for mortgages in the United States and at MoXi are based on treasury yields. What we're seeing in treasuries in the last couple of days, including today, is we're seeing the yields on those treasuries come down, which means mortgage rates are down.

MoXi mortgages, MoXi loans that are closing today are going to have a lower rate than if they had closed last week. I think we are actually signing a couple of closings today. The interest rates are lower than they would've been had they closed last week, which is interesting. The bond yield is lower, and it has a lot to do with the tariffs in the capital markets, but short story is, rates are lower.

I know we had a lot of questions about interest rates, so I'll also just mention this. Generally speaking, MoXi rates are going to be about a percentage point or so higher than a US 30-year owner-occupied interest rate. Whatever that prevailing rate is in the United States today, MoXi's rate is going to start about 1% higher than that. It's a general rule of thumb, it's not exact. However, a majority of the time MoXi loans are not owner-occupied.

If you add on the country risk and the occupancy being second home or investment property, generally speaking, those are going to be on par with US rates, which is good news. All of our rates at MoXi are fixed, all of our loans are issued in US dollars, and looks and feels very similar to a regular mortgage loan in the United States, just secured by collateral in Mexico. All right, Jason, sorry, I think I covered a lot of questions.

Jason:

No, this is all very good timing. I want to say that this was something that I think will be certainly be replayed. We have a lot of important snippets here, so we're going to leverage a lot of this content and repurpose it over the next coming weeks for people that are there. Of course, we have shared everyone's information. I want to make sure that you're all aware of Vanessa's team, and their information is here.

If you want to reach out to the Engel & Völkers Snell Real Estate group here, you have the email right there, and as well as MoXi, if you're looking for any information on financing. Thank you all for being a part of this session. Thank you, Vanessa. Thank you, Alex, for taking time out of your busy weeks. I'm certain that we're going to be able to do this again in the near future. Any parting words?

Alex:

I was just going to ask Vanessa, for folks watching, I'm seeing a lot of the comments, can people reach out to you and your team to explore purchasing property in Los Cabos? What about other markets in Mexico? What would you recommend?

Vanessa:

All of the above, absolutely. I'm happy to help them purchase, but also just give some insight. I think that for me, we're not just... Like my story, I'm not trying to just push people purchasing a piece of property. It is life-changing in the greatest way. I think that being informed also is very important. I'm happy to provide insight to purchases, or just the market in general for Los Cabos and the rest of Mexico.

Alex:

Awesome. That's great. I'll just say, if I was buying a house in Mexico, anywhere in Mexico, you would be my first call as well.

Vanessa:

Thank you.

Alex:

That helps our watchers. Vanessa's contact information is, I think on the left, I don't know what side of the screen it's on. On my screen, it's on the left-hand side of the screen, but make sure to reach out. We're definitely going to record this and share contact information in the recording. Cool. I know there was a question about a comparison chart.

I would say if folks have questions about MoXi financing, and sometimes people come to us first to get pre-qualified before they meet an agent that works on Vanessa's team, for example, please visit our website, www.MoXi.global, it's not dot-com, it's dot-global. We have lots of information on that website. There's a link there to, somebody asked about a fee grid. There's a link there to a disclosure we have that outlines all fees, costs, and charges that might be applicable in a foreign or real estate transaction in Mexico.

It's not a pretty fancy, lots of picture document. It's a dense five-page document, but it's chock-full of information. Then of course, we have a great mortgage advisor team. They love speaking with prospective clients about getting pre-qualified, pre-approved, or if you're already in contract or already owned and want to refinance, getting you started on your application. The link is scrolling across the bottom.

Jason:

I would say if you're a professional real estate professional, we can also partner with you. There's also, on the website, there's links there. If you're a mortgage broker, a real estate professional, we can work with you. There's links there to sign up. All right. Well, we've come to the end. We've got some great interaction from everybody. Thank you so much again, Alex and Vanessa, for being a part of this. Thank you to everyone that joined us today. Have a great rest of your day.