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Preamble
Well by now we have a car, a dog and we have bought a new fridge. It makes me almost feel like a young couple starting out and establishing a life together — something that is more than a one night stand. Yay, I’ve always wanted to move beyond that stage in life. Mind you, truth be told, dogs are always a dead give away and I have always wondered what one night stands were like! The new fridge was another tell tale sign that we were in it for the long haul. A new fridge says, we are going to buy food and we are going to eat together. Wait a minute, we are already in it for the long haul. We have a kid. Let’s go back to buying a house.
Finding a house
We moved to Mexico with enough money to buy a home, a modest home. We decided that owning a property would be an asset that remained more under our control than leaving money in some account where an anonymous entity might decide that we were no longer entitled to our money.
Lucia wanted the house picked and bought, the sooner the better. I was more circumspect. I was worried about emptying out our bank account in pursuit of owning a house. I wanted to ensure that we had resources left over to maintain the house as well as ourselves. However, we were agreed that we wanted to own a house in Mexico so set a budget and Lucia found a couple of agents that were happy to show us properties that usually exceeded the budget we had set.
There was one house that really caught our attention. Lucia discovered it last summer. We got a tour of it online last fall after returning to Canada. It was beautiful, but way beyond our budget. The seller wanted $4M pesos, we could offer $3M pesos. Worlds apart.
When we arrived back in Mexico we went for another look. Then we did one more trip to the house, bringing Lucia’s aunt. Her husband was an architect, her two daughters were architects and her sons were engineers. She would know if the house was worth buying. More importantly, she would know what a fair price might be.
She ended up telling the real estate agent, a friend of the family, that the house was not worth $4M pesos. She thought it was worth $3.2M at most, though she did think it was a most beautiful house. She was all for us buying it, but at a reduced price.
Hoping you can follow along here; we certainly had trouble keeping up!
While we were considering the house we couldn’t afford, the owners of a second property we were interested in and where we would build our own house, sent out an email. They were announcing the price of the land would be going up after the next two lots sold. And surprise, surprise, they had two families lined up to purchase the next two lots.
This was a project where some young architects had bought a large piece of land in the middle of nowhere, well a short car ride to somewhere, and divided it into eleven lots. Their plan was to attract like minded people to build a community that would be focused on preserving the natural environment. To that end, more trees would be planted instead of removed; houses would be limited to two stories and 30% of the lot size; fences needed to be made from natural materials i.e. bamboo, or hedges not metal barriers. If they were metal, they needed to be hidden by natural materials.
Most of the lots, were over 1,000 square meters, ensuring distance and closeness from neighbours at the same time. There would be common areas for the children. Eventually there would be a Waldorf school. All eleven families would breath the clean air while absorbing and preserving the beauty of their surrounding. In short, there would be eleven families on the planet who would live happily ever after.
We could even plant our own vegetables!
What to do?
Our plan was to let the owner of the first house decide where we would live and we needed him to do it fast.
Unlike Canada, the selling agent was under no obligation to share the commission with other agents. So some agents, the one who showed us the house being one of them, tended to be protective of their listings. We were uncomfortable having the seller’s agent representing us as well as the seller. The selling agent wasn’t overly interested in knocking a $1M pesos off the list price. Five percent of a $1M pesos is no small amount. We found our own real estate agent who drew up an offer and submitted it to the agent representing the seller. We paid him what amounted to an honorarium for his efforts. The selling agent, in the end, which seemed to us reluctantly, put the offer to the owner.
The owner sent a reply, “Thank you for the offer, but when I say $4M pesos, I mean $4M pesos. Let’s not waste our time.” His firmness sent us scurrying after the second property. We needed to get in there before the two families that were interested showed too much interest. We knew it was a marketing ploy but it worked. We needed to sign the contract and come up with a 50% deposit for the land before either of the other families did. More about that shortly.
Once we had set the wheels in motion to buy the land, we received a message from the agent for the owner of the house. He was willing to come down to $3.8M pesos. Had we gotten this offer in the previous paragraph, we would have countered with $3.2M pesos cash and have him hold a mortgage for the rest. Unlike the market scene in Monty Python’s “Life of Brian” the bartering went all amuck. He kept his house and we put a deposit on 1,500 square metres of land, beautiful land. Where we could have a big vegetable garden and Chiquita (remember her?) could run free.
Here’s “the more about this shortly”
Skip this section if numbers make your eyes gloss over. Don’t skip this section if you may need large sums of money outside of Canada.
We had money in our Canadian bank account(s) that we would eventually need to get to our Mexican bank account. However, as long as we weren’t buying big ticket items, there was no hurry to have the money in Mexico. This was certainly good news in terms of the exchange rate. The peso was at a five year high. An exchange rate that at one point was 20 to one was now down to 12 to one. I was insisting that we not rush moving our dollars into pesos because once a dollar was turned into 12 pesos, we were stuck with 12 pesos. Wait a bit, and we might get 13 or 14 or more pesos for each dollar.
When we bought our car, we took financing (nominal interest) for about a quarter of the cost. The idea was to lock in the amount in pesos, in this cases 71,000 pesos (at the time $5,800 CAN) over 12 months. If the peso went down, which I was sure it would, we would save. In a similar vein, we could pay for our land purchase all at once, but we had the option of a 50% deposit with remainder due in six months (no interest). Again, my bet was that the peso would fall between signing the contract and when the balance was due. While the number of pesos would remain the same, not only would we get more pesos if the peso fell, but we could keep 50% of the purchase price in a Guaranteed Investment Certificate for six months.
This may sound strange to some of you, and it certainly did to my mother-in-law, but a realization I had a couple of weeks into retirement was that we no longer had my civil servant salary, we had but a fraction of it. It was necessary to figure out how to stretch the resources we had.
It boiled down to us needing a means of transferring money when required. The required part was tied to the exchange rates as much as it was to any purchase we might make. We needed to streamline the movement of money between our bank accounts, both in Canada and in Mexico. We had been using xe.com but it was too slow. Over time, the requirements to use xe.com became more and more cumbersome. We started looking for another service provider.
We discovered wise.com, which claimed to be cheaper than its competitors and faster. While we never tried all the competitors, we can confirm that wise.com is a lot cheaper than the banks, and xe.com. It even turned out to be a lot cheaper than our credit union (which we love), that assured us its “partners” were competitive. They were competitive with the banks but not wise.com. Additionally, the speed with which the money moves across borders from one country to another is very impressive. We’ve never waited more than a day for the transaction to be complete. In most cases the transaction is complete in under half an hour.
As I’ve mentioned, up until the need for the deposit for the land purchase, there had been no need to rush the transfer of funds. Funds were being moved whenever I saw a drop in the peso. By the time we needed the money for the land deposit, the peso had been fluctuating between 12.3 and 12.5 and the predictions were that it would continue to drop. We had transferred just under $20,000 Canadian. Now, almost overnight, we needed another $30,000 and this is when I started to learn that there were limitations when moving money between and from Canadian banks, particularly with speed.
For example interact e-transfers, which I was using to pay for the wise.com money transfers, had dollar limits. These limits were day, week and month and varied from bank to bank. Our main bank had a limit of $3,000 per transaction, $10,000 per day, $10,000 per week and $30,000 per month. A day, week or month were based on he exact time the transaction was carried out until the same time the next day, week or month. If the daily limit was reached on Monday at 11:00 am, the clock would restart on Tuesday at 11:00 am. This proved to be a bit of a problem because we had used up the limits moving around money before the land sale appeared.
Another way of transferring money was to have one bank account pull the money from another bank account. There didn’t appear to be the same dollar limits, but there were waiting times for the funds to clear. One bank was able to pull the money from another bank immediately, but then they put a 5 business day hold on the funds.
We had expressed our desire to go ahead with the purchase on Monday, and they were looking for the deposit to be in their account by Friday. With all these limitations, we were not going to be able to get the entire deposit to the sellers on the date they wanted. We explained our problem with moving the money around on such short notice and offered to give them what we had, about 200,000 pesos immediately and the balance the following week when Lucia would be in Canada. She would be able to go to our credit union and have them send a wire transfer. Fortunately, we did have a relationship with the sellers and they were understanding.
On the Friday, we sat down at my computer, set up the seller’s account in our Mexican account to enable a transfer to their account. We got confirmation from our bank that the account of the sellers could now receive funds. We selected them from the list of recipients, entered the amount and hit send. We were promptly locked out of our account and advised to go visit our branch. There was some kind of “security” breach. Ugh!
We went to the branch, after informing sellers we had run into an issue, and sat down with the bank employee who had opened our account. Turned out that their security department had been alerted and had blocked our account. Half an hour later, with copies of our IDs resubmitted, a chat with the security department on the phone, we were told the account would be unlocked and could process our transaction. They explained that it was because desktops were no longer trusted devices. The Mexican banking system relies heavily on cell phones.
All the inconvenience was for our protection. Layers and layers of security to ensure the safety of our money, almost ended up costing us a land purchase. This reminded me of trying to take advantage of the exchange rates one day, and the code the bank likes to send in a text message, wasn’t coming through. I couldn’t confirm the purchase without the code. I lost the savings but my money was protected.
We left the bank and took the half hour waiting period to look after some other business. I wanted to go back to the bank, but Lucia was certain we could get the transaction complete from the computer at home. At home, we tried again, and again we were locked out of our account. We returned to the bank. All rather nerve-racking. This time we waited in the bank until we received a notification that we could proceed with the transaction. Third time was the charm. Our payment went through and we were now half way to owning a very beautiful piece of land.
Epilogue
Mexicans elected a government that the business world claims not to like and as a result, the peso has continued to fall. It got close to 14 to 1 before regaining some ground to 13 to 1 and currently is moving back towards 14 to 1. We’ve been able to move more money into our Mexican bank account where short term certificates, similar to Canada’s Guaranteed Investment Certificates, offer close to 8%. By the end of November we should be more than ready with the second half of the money for the land purchase. We might even have an idea of what it is we are going to build.
Lucia is working on the permissions required for a foreigner, me, to own land.
Robert
CONGRATULATIONS TO ALL OF YOU🎉
what an awesome ending and i did have to read the whole thing twice to follow it all!!
but it was worth it!!