This insightful article was written by Charles Simpson and is reprinted here with his permission. He can be reached at

Real estate opportunities in Mexico!  How to prosper & avoid the coming storm and prolonged economic stagnation in the USA.

First: A reality check on Mexico

Mexico is in a unique position to reap many of the benefits of the decline of the US economy. In order to not violate NAFTA and other agreements the U.S.A. cannot use direct protectionism, so it is content to allow the media to play this protectionist role.   The U.S. media – over the last year – has portrayed Mexico as being on the brink of economic collapse and civil war. The Mexican people are either beheaded, kidnapped, poor, corrupt, or narco-traffickers.  The American news media was particularly aggressive in the weeks leading up to spring break. The main reason for this is money. During that two-week period, over 120,000 young American citizens poured into Mexico and left behind hundreds of millions of dollars.

Let’s look at the reality of the massive drug and corruption problem, kidnappings, murders and money. The U.S.  Secretary of State Clinton was clear in her honest assessment of the problem. “Our insatiable demand for illegal drugs fuels the drug trade. Our inability to prevent the weapons from being illegally smuggled across the border to arm these criminals causes the deaths of police officers, soldiers and civilians,” Clinton said. The other large illegal business that is smuggled into the U.S.A. that no one likes to talk about is Human Traffic for prostitution. This “business” is globally now competing with drugs in terms of profits.

It is critical to understand, however that the horrific violence in Mexico is over 95% confined to the three transshipping cities for these two businesses, Tijuana, Nogales, and Juarez. The Mexican government is so serious about fighting this, that they have committed over 30,000 soldiers to these borders towns. There was a thoughtful article written by a professor at the University of Juarez. He was reminded of the Prohibition years in the U.S.A. and compared Juarez to Chicago when Al Capone was conducting his reign of terror capped off with The Saint Valentine’s Day Massacre. During these years, just like Juarez today, 99% of the citizens went about their daily lives and attended classes, went to the movies, restaurants, and parks.

Is there corruption in Mexico? YES !!! Is there an equal amount of corruption related to this business in the U.S.A.? YES !!!. When you have a pair of illegal businesses that generate over $300,000,000,000 in sales you will find massive corruption. Make no mistake about the Mexican Drug Cartel; these “businessmen” are 100 times more sophisticated than the bumbling bootleggers during Prohibition. They form profitable alliances all over the U.S.A. They do cost benefit analysis of their business much better than the US automobile industry. They have found over the years that the cost of bribing U.S. and Mexican Border Guards and the transportation costs of moving marijuana from Sinaloa to California have cut significantly into profits. That is why over the past 5-7 years they have been growing marijuana in State and Federal Parks and BLM land all across America. From a business standpoint, this is a tremendous cost savings on several levels. Let’s look at California as an example as one of the largest consumers. When you have $14.2 billion of Marijuana grown and consumed in one state, there is savings on transportation, less loss of product due to confiscation and an overall reduction cost of bribery with law enforcement and parks service people. Another great savings is the benefit to their employees. The penalties in Mexico for growing range from 5-15 years. The penalties in California, on average are 18 months, and out in 8 months. The same economic principles are now being applied to the methamphetamine factories.

FOX News continues to scare people with its focus on kidnapping. There are kidnappings in Mexico.  The concentration of kidnappings has been in Mexico City, among the very rich and the three aforementioned border Cities.  With the exception of Mexico City, the number one city for kidnappings among NAFTA countries is Phoenix, Arizona with over 359 in 2008. The Phoenix Police estimate that twice that number of kidnappings goes unreported, because like Mexico 99% of these crimes were directly related to drug and human traffic. Phoenix, unfortunately, is geographically profitable transshipping location. Mexicans, just like 99% of U.S. Citizens during prohibition, go about their daily lives all over the country. They get up, go to school or work and live their lives untouched by the border town violence.

These same protectionist news sources have misled the public as to the real danger from the swine flu in Mexico and temporary devastated the tourism business. As of May 27 2009 there have been 87 deaths in Mexico from the swine flu. During those same five months there have been 36 murdered school children in Chicago.   By their logic, if 87 deaths from the swine flu in Mexico warrants canceling flights and cruise ships to Mexico, then close all roads and highways in the USA because of record 43,359 automobile related deaths in the USA in 2008.

What is just getting underway is what many are calling the “Largest southern migration to Mexico of people and real estate assets since the Civil War” A significant percentage of the Baby Boomers have been doing the research and are making the life changing decision to move out of the U.S.A. The number one retirement destination in the world is Mexico. There are already over 2,000,000 US and Canadian property owners in Mexico. The most conservative number of American and Canadian Baby Boomers who are on their way to owning property in Mexico for full or part time living in the next 15 years is over 6,000,000. Do the math on 6,000,000 people buying a $300,000 house or condo and you will understand why the U.S. Government is trying to tax this massive shift of money to Mexico through H.R. 3056. The U.S. government calls this “The Tax Collection Responsibility Act of 2007”. Those who will have to pay it are calling this the EXIT TAX.

Mexico: A better economic choice than China

Another large exodus from the U.S.A is high paying skilled jobs.  The job shift in automobile sector, both car and parts manufacturing, is already known by most investors. In the last few months as John Deere and Caterpillar have been laying off thousands of workers in the U.S.A., and hiring equal numbers in Mexico. The most recent industry that is making the shift is the aerospace manufacturers. In the city of Zacatecas there is currently a $210 million aerospace facility being built. With the 11 U.S. companies moving there, it is estimated to provide over 200,000 new high paying jobs in the coming years.  One of the main factors for the shift in job south to Mexico instead of China is realistic analysis of total production, labor and delivery costs. While the labor costs in China are 40% less on average, the overall transportation costs and inherent risks of a long distance supply chain, and quality control issues, gives Mexico a distinct financial advantage.

Mexico’s real economic future

Mexico has avoided completely the subprime problem that has devastated the U.S. banking industry. The Mexican banks are healthy and profitable. Mexico has a growing and very healthy middle and upper middle class. The very recent introduction of residential financing has Mexico in a unique position of having over 90% of current homeowners owning their house outright. U.S. banks are competing for the Mexican, Canadian and American cross border loan business. It is and will continue to be a very safe and very profitable business. These same banks that were loaning in a reckless manner have learned their lesson and are loaning here the old fashioned way. They require a minimum of a 680 credit score, 30% down payment, and verifiable income that can support the loan. In most areas of Mexico where Baby Boomers are moving to, with the exception of Puerto Penasco (which did not have a national and international base of buyers), there is no real estate bubble. The higher end markets ($2-20 million) in many of these destinations are going through a modest correction. The Baby Boomers market here is between $200,000 and $600,000. With the continuing demand inside the Bay of Banderas, that price point, in the coming years, will disappear. This is the reason the Mexican government is spending billions of dollars on more infrastructure north along the coast all the way up to Mazatlan.

The other major area where America has become overpriced is in the field of health care.  This massive shift of revenues is estimated to add 5-7% to Mexico’s GDP.  The name for this “business” is Medical Tourism. The two biggest competitors for Mexico were Thailand and India. Thailand and India’s biggest drawback is geography. Also recent events, Thailand’s inability to keep a government in place and the recent terrorist attack in Mumbai, have helped Mexico capture close to half of this growth industry. In Mexico today there are over 56 world class hospitals being built to keep up with this business.

Mexico is currently sitting on a cash surplus and an almost balanced budget. Most Americans have never heard of Carlos Slim until he loaned the New York Times $250 million. After that it became clear to many investors around the world what Mexicans already knew: that Mexico had been able to avoid the worst of the U.S. economic devastation. Mexico’s resilience is to be admired. When the U.S. Federal Reserve granted a $30 billion loan to each of the following countries Mexico, Singapore, South Korea, and Brazil, Mexico reinvested the money in Treasury bonds in an account in New York City.

According to oil traders, Mexico’s Pemex wisely as the price of oil shot to $147 a barrel put in place an investment strategy that hinged on oil trading in the range of $38-$60 a barrel. Since the beginning of 2009 Mexico has been collecting revenues on hedged positions that give them $90-$110 per barrel today. Mexico’s recent and under reported oil discovery in the Palaeo Channels of Chicontepec has placed it third in the world for oil reserves, right behind Canada and Saudi Arabia.

The following is a quote from Rosalind Wilson, President of the Canadian Chamber of Commerce on March 19, 2009. “The strength of the Mexican economic system makes the country a favorite destination for Canadian investment”.


The answer is simple and old fashioned: SUPPLY AND DEMAND.

The area of Puerto Vallarta/Riviera Nayarit inside the Bay of Banderas is an investor’s dream. This area has the comprehensive infrastructure in place, world class hospitals and dental care, natural investment protection from the Sierra Madre Mountains, endless future water supply, low to nonexistent crime, international airport, and limited supply inside the Bay, first class private bilingual schools and higher than average appreciation potential. Like many areas in Mexico there is large demand for full and part time retirement living and a lot of construction underway to meet this demand. Pre construction of course is where the best bargains are available.

I would offer a word of caution for investors in Mexico.  Do not be seduced by the endless natural beauty that is everywhere, both inland in colonial towns and along thousands of miles of beach. Apply conservative medium and long term investment strategies without emotion. The demand for full and part time living by American and Canadian Baby Boomers is evident throughout the country. The top two choice locations are ocean front, and ocean view. The third overall choice, which is less expensive, is inland in one of the many beautiful colonial towns or small cities.

Mexico, with the world’s 13th largest GDP, is no longer a “Third World Country”, but rather a fast growing, economically secure state, as the most recent five-year history of its financial markets when compared to the U.S.A.’s financial markets  suggests.

DOW JONES AVERAGES         MAY 2004   10,200         MAY 2009   8,200          20% LOSS IN 5 YEARS

MEXICAN BOLSA                     MAY 2004   10,000         MAY 2009   23,000        130% GAIN IN 5 YEARS

I am glad to share all of my research with investors.

Charles Simpson


  1. you have saved me from buying where I should not be buying, on the other hand, I am starting in the investment industry. I do not know anything about it, but giving my first steps….. I will look to your page. thank you

  2. Great article! It’s a cool place to live! A coupla comments, however. I’ve been living full-time in Mexico Lindo for 3 years…..potential ex-pats need to do research about the various areas of the country….there is a distinct difference in lifestyle and attitude vs the states & Canada. I recommend visiting various parts of the country 1st, then renting for a while, THEN buying. The popular coastal areas, for example are more expensive (no R.E. bargains), & hot & humid in the summer. Lotta good books about living down here available….suggest you read a couple before pulling the trigger!


  3. Thanks for an extremely informative article. I am tired of hearing my friends in the States shudder about the crime in Mexico. I have lived in Mexico for three years, and like your article, I go about my business, walk to restaurants, and walk to my continuing Spanish lessons…I have no fears!
    I am sending your article to the recipients of bad press from the U.S. news

  4. Mexico is not a third world country?? Is that why my church goes and builds houses for people living and raising families under cardboard boxes?? Maybe the Government is living large but the people suffer and struggle …. maybe if Mexico’s Government would take care of its people we wouldn’t have all the poverty, drugs, killings and hatred in this world.

  5. Great article. I have moved to Mexico and see nothing here but opportunity. You mention parts of the coast, Im here selling Real Estate on Lake Chapala, Mexico’s largest lake, and I think some of your readers may want to see if this area suits their lifestyle/investment needs as well.
    Again very informative and refreshing to see

  6. Thank you for your sober and well researched article. Generally, our news sources are more … balanced than Fox News here in Canada, but I take this as evidence of the pervasive culture of fear which has been cultivated south of the border. Your piece succinctly points to issues of interest beyond over-hyped swine-flu and the drug cartels. The US has plenty of scary neighborhoods one would be wise to stay clear of, as does Mexico. Me? I don’t frequent these locales in either country.

  7. It’s amazing what the researched “facts” can do. Gossip and fear, on the other hand, block and distort the facts, making the speaker a self-proclaimed expert and fearmonger.

  8. Thank you for an intelligent, thoughtful and truthful article.
    After 10 years in La Paz, I know where it is a bttere place to spend my retirement years.
    There are many things about life in the old country that I miss. But having access to excellent affordable healthcare, goo food, and beautiful beaches makes up for those things.

  9. You don’t understand what is happening in Mexico and your piece strikes me as a real estate promotion piece. Mexican corruption has no counterpart in the US. At every level of Government from Federal, to State to municipal corruption dominates. Same is true at PEMEX and CFE. Corruption is endemic and systemic and a massive tax on the economy. There is no political will to fix it. The Government has no will to collect taxes with the result that education standards are terrible and getting worse. Without education Mexico will continue to sink. And the grip of monopolies on the economy is another block to growth. Now, with the border almost closed pressure for some sort of revolution can only mount, as it must and should. The violence is not that important now, confined as it is. It’s the other stuff that matters, and the gradual takeover by drug money of civil society. ANSWER. Mexico should legalize drugs now. 1) Big tourism boost and 2) the US will have no choice but to follow suit. Asi es.

  10. Stop the gun traffic from the usa to mexico! legalize drugs in the usa. Problem solved. Mexico’s economy is growing, the peso is strong, banks in Mexico are lending money. And in the Lake Chapala area, the weather is great, the people are friendly and 7 million city people live just 35 minutes north in Guadalajara, Culture, Entertainment, Shopping and restaurants, and an international airport.

  11. Once barred from mines by an ancient myth, women here make up an increasing percentage of the mining industry’s labor force as they try to support their families and fill in for men who have migrated north. The women of Mexico’s mines say they are convinced they can transform one of Mexico’s leading industries.

    Read more:

  12. Very interesting. You don’t mention our home away from home, Acapulco, which has had its share of scare headlines. We just returned from our Winter Hiatus and trust me, we lived very normally there, going out to dinner parties, to restaurants, to the beach. None of our friends or acquaintances have been beheaded, or even wounded. The news is all about narcos fighting narcos, tourists are not in their sights. And the weather….! Well, everyone who knows ACA knows it has the VERY BEST winter weather in the entire world. When you think of the mass murders (in schools!) in the US, you can put Mexico in perspective.
    Jim 14 April 2011 at 9:36 a.m.

  13. Found the article most interesting. As a 10 year part-time and now full time resident of Valladolid, Yucatan, I can say we have found a wonderful place for our retirement. Just discovered a new cenote yesterday, Yaxunah.

  14. Great article and really puts things in perspective. I live in Lake Chapala, in the 2nd best climate in the world, on the largest lake in Mexico. We enjoy a much lower cost of living and live a stress free, laid back life. We offer 8-Day Educational Tours to Lake Chapala, to help people learn about the real Mexico and put things in perspective. Your article is spot on. Our clients are now telling us that, in addition to the attraction to Mexico, they are feeling pushed out of the U.S. (and Canada). With the sheer numbers of boomers that are heading south of the border, it is clear that the governments north of the border are concerned that affluent boomers will take their money with them to south of the border. It appears they are right.

  15. I enjoyed your article on Mexico THE NEW GLOBAL ECONOMIC REALITY.

    Good points made about the violence in Mexico.

    As people living in San Jose del Cabo, Mexico, I can tell you that Mexico is not unaffected by the property crisis in the US. It is most definitely affecting property prices to the downside.

    In speaking to realtors in Mexico I am often told that the US property crisis has not affected Mexico because 95% of people paid cash for their properties in Mexico. Since they paid cash there is no mortgage problem. This is simply not true. The mortgages were taken out in the US against properties owned there and that was how most gringos paid for their vacation homes. Now that so many houses are in foreclosure and under water in the states there are more and more desperate sellers here trying to save their lifestyle back home. They are willing to take significant losses on their vacation properties to save their primary residence.

    Construction has also virtually stopped here. All the construction workers are leaving Baja to return to the mainland in hopes of finding work.

    HOA fees are seriously in arrears on most developments. Often HOA fees are not paid for 2 or more years placing enormous strains on the rest of the HOA owners. Desperate measures are being applied by HOA’s and some properties are even preventing owners and renters for entering or exiting the development if HOA fees are in arrears. Beware if you are a renter and you landlord does not pay the fees, you may find yourself locked out of your property. Be aware as a potential buyer to make sure the HOA is in good shape and plan for the event that people stop paying their fees.

    Mexico is and remains a third world country. The corruption is rampant, 60% of the economy is underground resulting in poor tax revenues. Poverty is massive and the culture and self serving ploitics, really prevent much progress on addressing and real issues.

    With thast said we love it here and the weather is fantastic.

    On a side note: With the anticipated devaluation of the US dollar owning property in Mexico might just be a pretty good inflation hedge if you took out a mortgage in Mexico in US dollars. Your mortgage could get cheaper and cheaper if you are from Canada for example.

  16. Nice article – but beware of the rose colored glasses that the author was wearing [paid for my Mexico’s Secretary of Tourism, perhaps?]. The people in the area where I live, south of Cancun near the Belize border, are POOR. The economic situation and anti-Mexican sentiment in the U.S. have exacerbated the poverty. The tiny middle class seems to be shrinking. The Mexican government seems hellbent on exploiting the natural resources for a quick buck with no regard for their grandchildren. And those smart Mexican economists who are hedging the bets – how long can they afford to turn a blind eye to the criminally low minimum wage in their investment paradise? The poor are being pressure cooked into desperation, with no friendly northern neighbor to turn to for work. Baby Boomers who want nothing more than ocean views and cheap labor should be ashamed of themselves.

  17. To Dick Avery: Spot on…and one more thing. talk to your potential neighbors before you buy To. To Liz Hartman. Good for you! To Jen: Want me to show you people living under bridges and in the woods in Houston, Washington DC, New York, Chicago? I can. To all the people living in Chapala and Ajijic: You lucky dogs you!!! I love it there. I remember going to a wedding in Chapala once and, while driving back to my hotel, I passed where the restaurants are. I heard the mariachis and absolutely had to stop and have a beer. And, I NEVER drink beer!! To Niels: And, of course there is no corruption in the US. Of course there is! We are just better at hiding it. To James: I LOVE Acapulco! Especially the Quinta Real Hotel.To Jaquicline McGrath: What is the difference between Cancun and Miami? In Miami they still speak spanish!

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