The AmericasThe Americas

ObjectivesObjectives• Introduce:

– Social, economic, political, geographic characteristics

– Laws and real estate practices

– Methods to evaluate investment patterns, investor profiles and opportunities

– Methods to develop a business network

– Promote properties, markets and services

• Networking is key to success• Mix with classmates for next 5 minutes• Find class members who have been to

or done the items in one of the boxes• Have that person sign the box• Move on to someone else• First person getting a BINGO, call out

Interesting FactsInteresting Facts• World’s largest free-trade zone• Largest pocket of poverty in W. Hemisphere• Largest Japanese population outside Japan• 30% of USA immigrants from Mexico• Americas contain over ¼ world’s land mass• USA, Brazil, Canada and Mexico GDP’s are

each 1 trillion dollars plus!

Course GuidelinesCourse Guidelines• Turn OFF cell phones• Periodic breaks• Lunch• Activities • Task groups• Final exam

• Turn OFF cell phones• Periodic breaks• Lunch• Activities • Task groups• Final exam

Chapter 1 Review

Chapter 1 Review

GlobalizationGlobalization• What is it?

• How does it impact real estate?

• What do international investors expect of their agent?

• What is it?

• How does it impact real estate?

• What do international investors expect of their agent?

Capital FlowCapital Flow• Expanding markets require foreign

capital

• Patterns of capital flow

• Supply and demand

• Investment return

• Currency, assets, credits, debt move capital around the world

• Expanding markets require foreign capital

• Patterns of capital flow

• Supply and demand

• Investment return

• Currency, assets, credits, debt move capital around the world

CurrencyCurrency

InvestorsInvestors

Buy real estate because of the favorable trend

of their currency against the foreign currency

Buy real estate because of the favorable trend

of their currency against the foreign currency

Market AssessmentMarket Assessment• Evaluate

– Real estate market

– Cultural influences

– Political influences

– Stability

– Population

– Local real estate practices

• Evaluate– Real estate market

– Cultural influences

– Political influences

– Stability

– Population

– Local real estate practices

Market AssessmentMarket Assessment Free market philosophy Social harmony Democratic institutions Infrastructure Economic strength

Free market philosophy Social harmony Democratic institutions Infrastructure Economic strength

CultureCulture

Build relationships

Do not make assumptions

Cultural elements

Build relationships

Do not make assumptions

Cultural elements

Conducting BusinessConducting Business• Banks with international experience

• Tasks similar to domestic transactions

• Differences

• Rewards

• Banks with international experience

• Tasks similar to domestic transactions

• Differences

• Rewards

Currencies and Measures

Three Conversion StepsThree Conversion Steps

Convert

The

Currency

Convert

The

Area

Convert

The

Time

ReciprocalsReciprocalsIf you are converting:If you are converting: The The EExchange Ratexchange Rate is: is:

USA$ to MXN pesos US$1 = MXN10.6945

MXN pesos to USA$ MXN1 = US$0.0935

If you are converting:If you are converting: The The RReciprocal eciprocal is:is:

US$ to MXN pesos 1 ÷ 10.6945 = .0935

MXN pesos to US$ 1 ÷ .0935 = 10.6945

Sample ProblemsSample Problems

Convert MXN850 to US$

MXN859 X US$ ________ = US$ ________[Currency unit] X [Exchange Rate]

Convert US$250 to MXN

US$250 X MXN ________ = MXN ________

Convert MXN850 to US$

MXN859 X US$ ________ = US$ ________[Currency unit] X [Exchange Rate]

Convert US$250 to MXN

US$250 X MXN ________ = MXN ________

0.09350.0935 79.4879.48

10.694510.69452673.632673.63

Converting AreaConverting Area

Conversion FactorsSquare feet in 1 square meter = 10.7639

Square meters in 1 square foot = .0929

Square Meters to Square FeetSquare Meters to Square Feet

Formula

Meters X 10.7639

[Square Feet in a Meter]

Convert 1250 m² to square feet

1250 m² X _________ = _________ sq.ft.

Formula

Meters X 10.7639

[Square Feet in a Meter]

Convert 1250 m² to square feet

1250 m² X _________ = _________ sq.ft.10.763910.7639 13,45513,455

Square Feet to Square MetersSquare Feet to Square Meters

Formula

Square Feet X .0929

[Meters in 1 square foot]

Convert 20,000 square feet to m²

20,000 sq. ft. X __________ = __________m²

Formula

Square Feet X .0929

[Meters in 1 square foot]

Convert 20,000 square feet to m²

20,000 sq. ft. X __________ = __________m²

.0929.0929 1858 1858

Price to New Area DenominationPrice to New Area Denomination

Formula

Price or Rent X Area Conversion Factor

Problem

Apartment rents for 1000 pesos/m²/month

Rent in square feet would be?

1000 pesos X __________ = __________ pesos/sq.ft./month

Formula

Price or Rent X Area Conversion Factor

Problem

Apartment rents for 1000 pesos/m²/month

Rent in square feet would be?

1000 pesos X __________ = __________ pesos/sq.ft./month

.0929.0929 92.90 92.90

Sample ProblemSample Problem

Office space rents for US$25/sq.ft./mo. Rent in square meters would be?

US$25 X __________ = __________ US$/m²/month

Office space rents for US$25/sq.ft./mo. Rent in square meters would be?

US$25 X __________ = __________ US$/m²/month10.763910.7639 269.10269.10

Convert The TimeConvert The Time

IF:Price is quoted per month

MULTIPLY by 12 to get price per year.

Price is quoted as an annual amount

DIVIDE by 12 to get price per month.

IF:Price is quoted per month

MULTIPLY by 12 to get price per year.

Price is quoted as an annual amount

DIVIDE by 12 to get price per month.

Putting It TogetherPutting It TogetherConvert the Currency

258 pesos X __________ = US$__________/m²/month

Convert the AreaUS$ __________ X __________ =

US$__________/sq.ft./monthConvert the Time

US$_________/sq.ft./mo. X __________ = US$__________/sq.ft./year

Convert the Currency258 pesos X __________ = US$__________/m²/month

Convert the AreaUS$ __________ X __________ =

US$__________/sq.ft./monthConvert the Time

US$_________/sq.ft./mo. X __________ = US$__________/sq.ft./year

.0935.0935

24.1224.12

24.1224.12 .0929.09292.242.24

2.242.24 121226.8826.88

Practice ProblemsPractice Problems

These problems may be done as homework to apply the formulas we just covered.

These problems may be done as homework to apply the formulas we just covered.

Chapter 2 Features of

The Americas

Chapter 2 Features of

The Americas

ObjectivesObjectives• Define Americas region

• Identify major countries and territories

• Describe social and economic sub regions

• Discuss treaties

• Evaluate business environments

• Identify market-unifying trends

• Define Americas region

• Identify major countries and territories

• Describe social and economic sub regions

• Discuss treaties

• Evaluate business environments

• Identify market-unifying trends

Nations and TerritoriesNations and Territories

• The Americas known as W. Hemisphere• Consist of North, Central, South

America and islands of Caribbean• Range from highly developed and

wealthy to undeveloped and impoverished

• Contains 28% of world’s total land mass

• Total GDP exceeds $8.6 trillion

• The Americas known as W. Hemisphere• Consist of North, Central, South

America and islands of Caribbean• Range from highly developed and

wealthy to undeveloped and impoverished

• Contains 28% of world’s total land mass

• Total GDP exceeds $8.6 trillion

Nations and TerritoriesNations and Territories

35 Independent Nations

16 Dependent Nations/Territories

35 Independent Nations

16 Dependent Nations/Territories

Two MythsTwo Myths

1. Canada and the USA are NOT identical.

2. South American countries are NOT a monolithic cultural bloc.

1. Canada and the USA are NOT identical.

2. South American countries are NOT a monolithic cultural bloc.

AboriginalAboriginal

Mayan, Inca, AztecMayan, Inca, Aztec

ColonialColonial

Spanish, English, Dutch, French, Portuguese

Spanish, English, Dutch, French, Portuguese

ImmigrantImmigrant

Voluntary and InvoluntaryVoluntary and Involuntary

ReligionReligion

Indigenous animism, Roman Catholicism, African animism, Protestant EvangelicalsIndigenous animism, Roman Catholicism, African animism, Protestant Evangelicals

Cultural SubgroupsCultural Subgroups

• Much of North, Central and South America is Spanish or Portuguese

• Canada is mostly English or French

• Various cultural groups distinguish one country from another

• Much of North, Central and South America is Spanish or Portuguese

• Canada is mostly English or French

• Various cultural groups distinguish one country from another

Potential Investment SitesPotential Investment Sites

ArgentinaArgentina BrazilBrazil CanadaCanada

ChileChile Costa RicaCosta Rica MexicoMexico

Puerto RicoPuerto Rico

UnitedUnited

States of States of AmericaAmerica

VenezuelaVenezuela

Geographic SubregionsGeographic Subregions

• Smaller than continents, larger than countries

CanadaCanada

AndAnd

USAUSA

Central Central America America

and Mexicoand Mexico

Andean Andean CountriesCountries

ArgentinaArgentina BrazilBrazil CaribbeanCaribbean

Economic SubregionsEconomic Subregions

NAFTANAFTA Southern Cone

Southern Cone

CAFTA-DRCAFTA-DR

Andean CountriesAndean

CountriesThe

CaribbeanThe

Caribbean

Organization of American StatesOrganization of American States

• Established in 1910• Known as Pan American Union until 1948• Encompasses all countries in the Americas

except Cuba• Work for peace and justice• Promote solidarity among American states• Aid economic, social and cultural

development of the hemisphere

• Established in 1910• Known as Pan American Union until 1948• Encompasses all countries in the Americas

except Cuba• Work for peace and justice• Promote solidarity among American states• Aid economic, social and cultural

development of the hemisphere

Inter-American Development BankInter-American Development Bank

• Created in 1959

• Accelerate economic and social development in Latin America

• Largest and oldest multilateral development institution in region

• Has mobilized financing of $194 billion

• Lending in 2004 was $16.4 billion

• Created in 1959

• Accelerate economic and social development in Latin America

• Largest and oldest multilateral development institution in region

• Has mobilized financing of $194 billion

• Lending in 2004 was $16.4 billion

Explore…Explore…

Exercise 2-15Exercise 2-15

Key Point ReviewKey Point Review• The Americas are culturally, economically

and geographically diverse

• This diversity has led to the development of subregions

• Notable regional differences

• Important for investors and agents to know and understand

• The Americas are culturally, economically and geographically diverse

• This diversity has led to the development of subregions

• Notable regional differences

• Important for investors and agents to know and understand

Chapter 3 Economic Trends and Opportunity for

Investment

Chapter 3 Economic Trends and Opportunity for

Investment

ObjectivesObjectives

• Identify capital flow in Americas

• Evaluate economic integration

• Recognize role of offshore banking

• Identify developments and reforms needed to enhance investment climate

• Identify investment trends, risks and opportunities

• Identify capital flow in Americas

• Evaluate economic integration

• Recognize role of offshore banking

• Identify developments and reforms needed to enhance investment climate

• Identify investment trends, risks and opportunities

Market CharacteristicsMarket Characteristics

• Trade agreements

• Offshore banking opportunities

• Free trade treaties and agreements

• Focus on increasing market size

• Patterns of specialization

• Trade agreements

• Offshore banking opportunities

• Free trade treaties and agreements

• Focus on increasing market size

• Patterns of specialization

NAFTANAFTA• North America Free Trade Agreement

• Largest trading block in the Americas

• 2003 was the end of trade barriers

• Represents 1/3 of world’s total GDP

• Significantly larger than EU

• All member economies have grown

• US$1.7 billion/day in trilateral trade

• North America Free Trade Agreement

• Largest trading block in the Americas

• 2003 was the end of trade barriers

• Represents 1/3 of world’s total GDP

• Significantly larger than EU

• All member economies have grown

• US$1.7 billion/day in trilateral trade

PAECAPAECA• Central American Economic Action Plan• Approved in 1990• Costa Rica, El Salvador, Guatemala,

Honduras and Nicaragua• Goals include:

– Common tariff structure– Cooperation rebuilding infrastructure– Free movement of people and merchandise– Elimination of trade barriers

• Central American Economic Action Plan• Approved in 1990• Costa Rica, El Salvador, Guatemala,

Honduras and Nicaragua• Goals include:

– Common tariff structure– Cooperation rebuilding infrastructure– Free movement of people and merchandise– Elimination of trade barriers

CAFTA-DRCAFTA-DR

• Central America Free Trade Agreement

• Free trade agreement, not a treaty

• USA, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Dominican Republic

• Guarantee foreign investment

• Reduce government corruption

• Central America Free Trade Agreement

• Free trade agreement, not a treaty

• USA, Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and Dominican Republic

• Guarantee foreign investment

• Reduce government corruption

CACMCACM• Central American Common Market• Common trade alliance—1963• Costa Rica, El Salvador, Guatemala,

Honduras and Nicaragua• Established free trade area with Mexico

– Help equalize trade deficit– Spread benefits of economic expansion

• Considering similar agreement with Venezuela

• Central American Common Market• Common trade alliance—1963• Costa Rica, El Salvador, Guatemala,

Honduras and Nicaragua• Established free trade area with Mexico

– Help equalize trade deficit– Spread benefits of economic expansion

• Considering similar agreement with Venezuela

CARICOM CARICOM

• Caribbean Common Market—1973

• Designed to remove barriers between Caribbean countries

• 1991, common tariff on non-CARICOM countries

• Largest countries now use tariffs

• Barbados, Guyana, Jamaica, Trinidad, Tobago

• Caribbean Common Market—1973

• Designed to remove barriers between Caribbean countries

• 1991, common tariff on non-CARICOM countries

• Largest countries now use tariffs

• Barbados, Guyana, Jamaica, Trinidad, Tobago

CBICBI• Caribbean Basin Initiative—1984

• 23 independent countries

• Goals:– Promote economic development

– Expand foreign and domestic investment

– Diversify CBI country economics

– Expand CBI country exports

• Caribbean Basin Initiative—1984

• 23 independent countries

• Goals:– Promote economic development

– Expand foreign and domestic investment

– Diversify CBI country economics

– Expand CBI country exports

ANCOMANCOM• Andean Group Common Market

• Colombia, Venezuela, Peru, Bolivia and Ecuador

• Originally a free trade alliance called the Cartagena Agreement

• Began free area trade phase in—1992

• Andean Group Common Market

• Colombia, Venezuela, Peru, Bolivia and Ecuador

• Originally a free trade alliance called the Cartagena Agreement

• Began free area trade phase in—1992

MERCOSURMERCOSUR

• Common market treaty between Argentina, Brazil, Paraguay, Uruguay

• Market established in 1994

• Tariff barriers were lifted

• More than doubled trade in 20 years

• Multiple natural resources

• Common market treaty between Argentina, Brazil, Paraguay, Uruguay

• Market established in 1994

• Tariff barriers were lifted

• More than doubled trade in 20 years

• Multiple natural resources

FTAAFTAA• Free Trade Area of the Americas

• Introduced in 1994

• Stalled in 2005 at Summit of Americas

• If carried out, would create trading area twice size of EU

• Would assist north-south capital flow

• Free Trade Area of the Americas

• Introduced in 1994

• Stalled in 2005 at Summit of Americas

• If carried out, would create trading area twice size of EU

• Would assist north-south capital flow

Off Shore Banking CentersOff Shore Banking Centers

• Caribbean a major host to OBCs

• Do business outside jurisdiction where they are chartered

• Attract foreign capital

• Deposits and loans in currencies other than that of host country

• Bank controls are few, if any

• Considered a tax haven

• Caribbean a major host to OBCs

• Do business outside jurisdiction where they are chartered

• Attract foreign capital

• Deposits and loans in currencies other than that of host country

• Bank controls are few, if any

• Considered a tax haven

Subsidiary/AffiliateSubsidiary/AffiliateUSA Firm

• Exports to affiliate

• Undercharge subsidiary

• Taxable income decreases

European Affiliate

• Pay USA firm through subsidiary

• Taxable income decreases

Subsidiary• Overcharges Affiliate

• Shifts USA firm income from Europe to tax haven

• Low or no taxes apply to subsidiary in tax haven

• Taxable income increases

Tax LawsTax Laws• USA Tax Reform Act of 1986

– Limits or eliminates legal means of deferring taxes on:• Interest• Dividends• Capital gains

of subsidiaries until income repatriated

• USA Tax Reform Act of 1986– Limits or eliminates legal means of

deferring taxes on:• Interest• Dividends• Capital gains

of subsidiaries until income repatriated

Latin America Regional Trends

Latin America Regional Trends

Latin America ChallengesLatin America Challenges

Settling Foreign Debts

Reducing Poverty

Conserving Natural Resources

Adequate and Sustained Growth

Policy ReformsPolicy Reforms• Depreciation of exchange rates

• Dismantling trade barriers

• VAT to replace taxes on foreign trade

• Incentives for foreign investment

• Depreciation of exchange rates

• Dismantling trade barriers

• VAT to replace taxes on foreign trade

• Incentives for foreign investment

Needed ReformsNeeded Reforms• Financial

• Labor

• Regulatory

• Central bank

• Administrative

• Judicial and legal

• Education

• Financial

• Labor

• Regulatory

• Central bank

• Administrative

• Judicial and legal

• Education

The USAThe USA• Strongest economy in the world

• Per capita GDP of $40,100

• 2004 real estate FDI was $1.709 trillion

• Reasons for foreign capital inflow

• Has net negative international position

• Low inflation and unemployment

• Long term problems

• Strongest economy in the world

• Per capita GDP of $40,100

• 2004 real estate FDI was $1.709 trillion

• Reasons for foreign capital inflow

• Has net negative international position

• Low inflation and unemployment

• Long term problems

MexicoMexico• Hospitality-related properties

• Restructured companies

• Manufacturing facilities

• Hotel operating companies

• Hospitality-related properties

• Restructured companies

• Manufacturing facilities

• Hotel operating companies

BrazilBrazil

• Attractive investment target

• Immense privatization effort

• Large capital expenditures

• Economy expected to continue recovering and growing

• Attractive investment target

• Immense privatization effort

• Large capital expenditures

• Economy expected to continue recovering and growing

Economic IndicatorsEconomic Indicators

EcuadorEcuador20022002 20052005

Population (M) 13.413.4 13.313.3GDP (US$B) 39.639.6 49.549.5GDP/capita (US$) 3,0003,000 3,7003,700% GDP Growth 4.34.3 5.85.8Inflation 2222 22Unemployment 1414 11.111.1

PopulationPopulation• Challenge to economies of Americas

• Puts strains on an economy

• May not be enough jobs

• Decline in GDP

• Decrease in living standards

• Increased poverty

• Challenge to economies of Americas

• Puts strains on an economy

• May not be enough jobs

• Decline in GDP

• Decrease in living standards

• Increased poverty

Productivity TrendsProductivity Trends• USA, Brazil, Canada and Mexico have

trillion dollar economies

• USA and Canada are most productive

• Bahamas, Argentina and Chile next

• Americas unemployment manageable

• Latin American countries with per capita output of less than $5,000– Bolivia, Ecuador, Guatemala, Paraguay

• USA, Brazil, Canada and Mexico have trillion dollar economies

• USA and Canada are most productive

• Bahamas, Argentina and Chile next

• Americas unemployment manageable

• Latin American countries with per capita output of less than $5,000– Bolivia, Ecuador, Guatemala, Paraguay

Key PointsKey Points• Renewed economic integration• Attractive to FDI in real estate• Capital flow needs to move more freely• OBCs and tax havens still important• Working to liberalize trade, privatize

business, achieve growth, conserve environment and attract FDI

• Statistics/trends provide investment overview

• Renewed economic integration• Attractive to FDI in real estate• Capital flow needs to move more freely• OBCs and tax havens still important• Working to liberalize trade, privatize

business, achieve growth, conserve environment and attract FDI

• Statistics/trends provide investment overview

Chapter 4 How to Look at a CountryChapter 4 How to Look at a Country

ObjectivesObjectivesIdentify Investment CharacteristicsIdentify Investment Characteristics

Social Political

Economic

International Market Knowledge

International MarketsDo not make assumptionsKnow your marketKnowledge increases your valueKnowledge reduces your riskKnowledge increases opportunitiesInternational is an exciting specialtyExperience personal growth

Knowledge Useful To:Knowledge Useful To:

Advise Outbound Investors

Work With Inbound Investors

Network Effectively

Be Aware Of…Be Aware Of…• Sources of capital

• Government structure and attitudes

• The economy

• Market landmarks

• Local culture

Country Assessment ModelCountry Assessment Model

DataData• Factors to consider

• What the data can mean

• Favorable characteristics

CultureCulture Other Other FactorsFactorsOther Other

FactorsFactors

InfrastructureInfrastructureInfrastructureInfrastructure

PeoplePeopleGeographyGeographyGeographyGeography

GovernmentGovernmentGovernmentGovernment

Real EstateReal Estate

Country Assessment ModelCountry Assessment Model

Model Model

ComponentsComponents

Model Model

ComponentsComponents

Economy

Sample Analysis Sample Analysis Use current data

Multiple resources

Expand or modify the model

Interpret data to meet objectives

Sample Analysis Group Activity

Sample Analysis Group Activity

Working With an Inbound Residential Investor

Working With an Outbound Commercial Investor

Working With an Inbound Residential Investor

Working With an Outbound Commercial Investor

Group ActivitiesGroup Activities

Key Point ReviewKey Point Review Know as much as possible about a

country Understand its potential for investment Provide meaningful information for

potential investors The Country Assessment Model is a tool

for evaluating markets

Chapter 5 Working in the Americas

Chapter 5 Working in the Americas

MexicoMexico

ObjectivesObjectives Assess real estate markets for

activity and opportunities Integrate country-specific cultural

and business knowledge Incorporate crucial aspects of

cultivating relationships Review key elements of a transaction

FDI in Mexican Real EstateFDI in Mexican Real Estate

1. Improvement in Mexican economy

2. Liberalization of investment and ownership laws

3. North American Free Trade Agreement

Commercial PropertiesCommercial Properties• Multiple opportunities• Little or no speculative development• High-rise office markets in big cities• Buildings constructed by user• Built for specific purpose• Occupied indefinitely

Residential PropertiesResidential Properties• More speculative than commercial• Financing

– Self– Government-subsidy– Subdividers

• Population increase causes shortage• Growing cities need new housing

Vacation OwnershipVacation Ownership• Timeshares, apartments, resort clubs• Mexican, Canadian and USA buyers• 1993 Foreign Ownership Law

Revision • Higher developer credibility• Government regulation

FideicomisoFideicomiso• Established in 1972• Bank trust encourages foreign

investment• Allows foreigners to hold real estate

rights in restricted areas• Authorized institutions hold title• Foreign owner is beneficiary of trust• Trust can be renewed indefinitely

Agricultural LandAgricultural Land• 1993 Foreign Investment Law

– Allowed foreign nationals or their companies to own agricultural land

• Small farms yielding to foreign agricultural firms

• Mexican authorities expect the land to be purchased after leasing period

MaquiladorasMaquiladoras• Foreign owned factories

– Employ Mexican labor– Assemble products sold in foreign market

• Mexican government incentives• Low industrial vacancies in

established maquiladora cities• Foreign manufacturing sector growing

at 18%/year• Agromaquila fastest growing industry

Hotel/Resort PropertiesHotel/Resort Properties• Expanding in Mexico• Conversions, rehabs and new construction• USA investors prefer existing properties• European investors prefer to build• 80% existing properties not franchises• Golf courses have great potential• Marina market is strong

Three Professional SkillsThree Professional Skills

Networking And Relationships

Networking And Relationships

Technical Aspects of a Transaction

Technical Aspects of a Transaction

Selling and MarketingSelling and Marketing

Who You Need to Meet

Who You Need to Meet

Potential

Clients

Owners and

Sellers

Connections to all

Colleagues

Where to Find ThemWhere to Find Them

Cultural a

nd Business

Differences

Cultural a

nd Business

Differences

General AttitudesGeneral Attitudes• People more important than time

• Will be late for meeting to talk to a friend

• Punctuality is not business standard

• Two-three hour lunches common

• Many public and religious holidays

• Literacy rate 88% and rising

LanguageLanguage

Importance of FamilyImportance of Family

Access to InformationAccess to Information

MordidasMordidas• Bribe, kickback, payoff

• May be punishable under criminal law

• Can be very expensive

• Effects may not last

• Undermines integrity and reputation

• Hinders internal accounting controls

• May damage or destroy relationship

Elements of a TransactionElements of a Transaction

• Brokerage Practices

• Contracts and Notaries

• Timeshare Regulations

• Foreign Ownership Limitations– Forbidden Activities– Minority Ownership Activities– Majority Ownership Activities– Unrestricted Activities

TaxationTaxation• Non-residents pay 20% of sales price• Corporate income rate is 35%• Withholding tax of 35% with stipulations• Royalties subject to 40% withholding• Asset values may increase with inflation• One-time deduction for newly purchased

assets• Deduction amount is set by law

Financing• Foreigners not discriminated against

• USA entities provide loans

• Title insurance now available

• Increased buying stimulus

• Variable costs

• Fideicomiso

LeasesLeases• Commercial

– Net leases– 1-3 years– Limited options and indexed rents

• Residential– Minimum 1 year– Payments in local currency– Rent increased annually

Listing GuidelinesListing Guidelines• Mexico is a big country

• Exclusive representation arrangement

• Consider joint ventures

• Information is protected

• Reliable appraisals are hard to find

Marketing PropertiesMarketing Properties• Presentations are low-key and leisurely

• Resort properties often marketed on-site

• Additional resort property marketing– Information booths in town centers– Presentations for hotel guests– Referrals by restaurant

hostesses

Negotiating and Closing

Negotiating and Closing

• Request for proposal

• Direct negotiations

• Price agreement reached– Buyer pays 10-50% of purchase price

• Balance due at closing

• Notary handles the money

Key Point ReviewKey Point Review• Learn as much as you can

• Establish a strong network

• Work with capable and trustworthy partners

• Expect things to move differently