Common Mistakes & Securing Your Property Investment
In this interview:
- Avoiding shortcuts that can rob you of property ownership
- Ensuring that a seller actually owns their property
- Using a fully audited and regulated SOFOM
- How MoXi tracks your property taxes & discounts
Video Transcript - (Speaker: Alex Koper, CEO)
We often hear about situations and circumstances where foreign buyers will come into a foreign country and begin a real estate purchase transaction, and really work with or assume advice from maybe an attorney that they don't know or from a real estate broker who doesn't have proper licenses. If you talk to one of our MoXi (Global Mortgage) advisors who interact with clients and prospective clients on a daily basis, you'll hear those prospective clients often ask them, "Well, why do I need an appraisal, title search, title insurance?" Right?
What we often say back to that prospective client is, "Would you ever consider purchasing a home in the United States without a title search, without title insurance, or without a commercial appraisal?" Unfortunately, a large majority of real estate transactions that close, by foreigners in Mexico, without the assistance of MoXi (Global Mortgage) are done without some of these very basic no-brainers.
What's really interesting is that in nearly 40% of the transactions that we are a part of, we find that there are issues with the title, meaning the seller who is selling the property to the buyer that Global is representing doesn't have the legal capacity to actually sell that asset that they thought that they owned because it wasn't done properly before.
In nearly 33% of the transactions we do, and we've done tens of millions of dollars of transactions, we have an issue with either transfer tax, reverse capital gains tax, or capital gains tax on behalf of the seller, and these are not small amounts. Tens of thousands of dollars are assessed at settlement, and these are just a couple of areas where if a foreign buyer is not represented by somebody that knows what they're doing, they're going to end up having some very expensive mistakes.
One of the most powerful examples I want to share with anyone watching this video right now is that we often see an act of transactions, sellers of property who don't really own it because they didn't buy it in the right way, and they tried to save a buck or a peso in closing their transaction. Then we see buyers who choose to forgo buying title insurance or having a legal title search done, or having their property appraised. MoXi (Global Mortgage) and its team take our responsibility to educate and provide thoughtful guidance around secure ownership.
We take that very, very seriously and we're committed to it. One of the most powerful legal entities that are in MoXi (Global Mortgage)'s structure is what's called a SOFOM, which is truly a non-bank financial institution. It's regulated and audited. That's really important for a foreign buyer of Mexico real estate in particular because it means that you have the safety, the security, the backing of the Mexican government behind your transaction.
You have capable people who pass background checks, who have a specified number of years of work experience before they're allowed to work in SOFOM who are regularly audited, and that is a level of peace of mind that does not exist for other cross border lenders in Mexico or in Latin America across the board. If you're buying a home in the United States and getting a mortgage, you might interact with your mortgage company on and off, consistently throughout the process of your escrow.
Then you might never interact with them again other than receiving a statement in the mail or setting up an automatic payment, and that's very different for MoXi (Global Mortgage) and its clients. Not only does this SOFOM require that MoXi (Global Mortgage) maintain a connection with their client for the life of that transaction, we're also our client's partners in helping them navigate some of the nuances of homeownership in Mexico.
For example, municipalities often don't send out paper or electronic property tax bills. Property tax rates are announced at random times, usually in the fourth quarter of each year. Discounts are offered for early payment. We track all of those things for our clients. We collect through the monthly mortgage coupon and service some of those property taxes and make sure they're paid on time.
The use of a Fideicomiso to own property as a foreigner and a restricted zone in Mexico comes with an annual fee through a fiduciary bank, and that fiduciary bank also doesn't send out a paper bill or a notification. MoXi (Global Mortgage) ensures that we're collecting those funds from our clients on a monthly basis, make sure those bills get paid on time and that the property ownership remains with the client, with the buyer, and is never threatened.
Did you know that MoXi funds & services loans in USD, is regulated and audited in the US & Mexico, and ensures compliance throughout the term of your loan?