budgeting for baja

A checklist for planning your escape to Baja

by pam gray, Homes And Land Of Baja

Part 1

One of the best reasons to own a home in Mexico is the low cost of living you’ll enjoy while you are here. You’ll be amazed at how inexpensive many things are compared to the U.S., Canada or the E.U., but a little planning will help you avoid unpleasant surprises. Each property is different, so ask your Realtor® to help you understand how the location and type of property you purchase will impact these costs.

Water. The infrastructure in Baja California Sur has improved substantially since I arrived 12 years ago but there are still some areas where water is “trucked in.” That means you purchase it by the truckload and have it pumped into a storage tank on your property.

Be sure you understand the source and fees for the water before you purchase your property. Whether the supply is municipal, a private well, or a common well you’re likely to find the cost surprisingly reasonable considering we live in a desert.

Increase your estimate if you have a pool or landscaping that requires a lot of water. If you are lucky enough to get your water from a potable supply, you still have to consider the method of transport. Broken or cracked pipes can lead to contamination.

The easiest way to address this is with a whole house filtration system. My husband and I found it well worth the expense to be able to drink from any water source in the house. I don’t even worry when the cats drink out of the toilet!

Food. If you are willing to adopt a diet with lots of fresh veggies, fish and fruit, you can eat like a king here on a very limited budget. You can indulge in things that are expensive in the states like avocados and mangos, but items that are less common (low fat anything, gourmet ingredients, i.e. pancetta, truffles) are going to be pricey. Likewise, you can enjoy dinner at many good Mexican restaurants for under $10/person or opt for the white linen experience for just a little less than you would pay in the states. Remember, minimum wage here is less than $5 US dollars a day, so tip generously for good service.

Electricity. There is one electric company here, CFE. I have been impressed with their level of service and automation, considering they have no competition. The bill can be confusing because the charges are tiered and based on your previous usage. If you run your air conditioners all of July, expect to pay top dollar per kilowatt hour in August.

Things that impact your electricity bill include pool pumps and electric heaters. Your electric bill is due every other month and you are responsible for this whether or not you receive a physical bill. Fortunately, you can auto-pay your CFE bill if you have an account with one of the local banks.

Propane. Most homes use propane powered water heaters and stoves. Some will have a large tank and others use “bottles” (those green tanks you see alongside some houses). Both are supplied by trucks that rove around honking their horns or playing a song over a speaker. You can also call them and ask for a delivery. Ever see a sign at the side of the road that says, “GAS?” The arrow points to the house needing a fill or replacement bottle.

Internet/Phone. Recent changes in the law suggest we may have more options in the future, but right now TelMex is your best bet for a landline with DSL. If you just want a phone, a cell phone is a good option. But DSL over a landline is a practical and fairly reliable way to get Internet. This bill can also be paid automatically with your local bank account. If TelMex service is not available at your property find out how the existing owners are connected. Some neighbors may share a connection or you may need to budget for satellite service.

Gasoline. At this writing, regular, unleaded gas was running around $3.25/gallon. Rumors of a large price decrease have proven over-optimistic but new laws allowing for foreign investment in Pemex (THE provider of gasoline in Mexico) mean it’s possible that the price will not continue to rise at the historical pace.

Satellite TV. While cable has become available in a few neighborhoods and streaming shows over the Internet is starting to catch on, most people watching TV are doing so with a Satellite connection. DishTV is the most popular. Packages vary but you can get a good selection for about $100/month. I have limited personal experience with this. We just never got around to installing TV and I must say I’m not sure when I would find time to watch it. Consider all the other wonderful ways you will enjoy passing the time here before you invest in an expensive TV package.

 





Stay tuned for Part II with more important items to consider when estimating your total cost of living in Baja.

Part 2:
Property Taxes. While lower than in the US, property taxes are on the rise here. When you purchase your property, it will be appraised by the government and your tax rate adjusted… up, of course. The rate and payment options will depend on the municipality your property is in. The division between the Los Cabos and La Paz municipalities is in the town of Buena Vista. Both municipalities offer great discounts if you pay your taxes before they are due each January.

Fideicomiso Fees. If your title is held in a Fideicomiso (a requirement for most expat purchases in Baja) you will owe the bank about $500 each year in service fees around the anniversary of your signing date. If you have a special type of fideicomiso or have multiple properties in one fideicomiso your rate can be higher. Mark your calendar; the fines for late payments can be steep!

Yard Maintenance. This expense can vary widely. When planning your landscaping, keep in mind the amount of upkeep that it will require and don’t overestimate your DIY contribution. Even an automated drip system will need regular attention as the drippers tend to clog and power outages may reset your timers. If you have a pool, include an allowance for maintenance and the cost of replacement filters and chemicals.

Property Management. If you intend to rent your home when you are away, a good property manager is a must. In addition to making your guests feel welcome and making sure the home is well maintained, they can help you navigate the tax implications of renting your property.

Housekeeping. I have found regular house cleaning to be an affordable luxury here. My housekeeper also helps me practice my Spanish and keeps me up to date on local happenings. The size of the house will impact the cost, as well as what you want done. Most housekeepers here have no trouble doing windows and even laundry. Don’t be afraid to ask for everything you want, but please pay fairly for the services.

Home Owner’s Association Fees (HOA Fees). Be sure to ask your Realtor® if your desired property is governed by a Home Owner’s Association. If so, you will want to see a history of those fees and recent assessments in order to estimate your potential costs.

Home Owner’s Insurance. While many of us “Self Insure” (i.e. set a little aside each month in case something bad happens) new types of policies are becoming available that make the cost of homeowner’s insurance pencil out. When shopping for insurance be sure to get a copy of the policy in English. If the agent cannot provide this, it is worth the cost to have the Spanish version translated before you sign up.

Maintenance. A well built home here will cause you little trouble. We have very little mold for example and the concrete block or foam construction methods produce sturdy homes when done right. You need to budget for things like annual maintenance of your air conditioning, re-sealing of flat roofs every 3-5 years, painting metal details, etc. Fortunately, labor is still a bargain here and the quality of materials available at your local construction supply store are better all the time.

Fumigation. There is not much for pests to eat in the desert, so make sure your home does not become their buffet. Have it treated regularly - at least twice a year.

Vehicle Registration/Insurance. If you are going to keep a car here, you should bite the bullet and get it imported. Alternatively, you can register it in South Dakota using an online process. If you register it in Baja, the annual fees for keeping it up-to-date are minimal and insurance is also quite reasonable.

Health Insurance. Many people have good coverage in their home country and simply need to be able to get there if they have a serious health issue. Air evacuation insurance is available from multiple vendors for just for this purpose. If you are not insured back home, international policies can be a good option and may allow you to seek care in countries that offer cutting edge treatments not yet approved in the US or Canada. You can also participate in Mexico’s socialized medical plan or just pay cash if you need care. While private hospitals have a bad reputation for gouging foreigners, many local clinics can provide good care at a reasonable price.

Travel. How often are you going to want to visit friends and family in your home country? Be sure to allocate funds for these trips. You can also get great deals on flights to the mainland from Cabo or La Paz. We’ve really enjoyed exploring the old cities on the mainland… of course, we are always happy to come home to our tranquil little village by the sea.

This list does not include one-time fees like closing costs, building, or adding a water purification system but those are often lower here than in the states, further making your Total Cost of Ownership a bargain in sunny Baja. Factor in the Happiness Quotient and you will surely find that that your Baja home is a great investment.

Read the full article on Pam’s blog at www.homesandlandofbaja.com. Pam Gray is a Realtor® in Los Barriles. She holds the CIPS® and ABR® designations. Reach her at: Pam@HomesAndLandOfBaja.com or visit the Homes and Land Tourist Information Center on your next trip to Los Barriles.r Mobile 044-624-118-1395