(Post 83 of 233. Thanks again to those who participated in the Fundrazr!)
In Mexico, contracts are a lot more about your relationship with the other party than they are about written clauses. I’ve been blessed with an incredible relationship with the previous owners of this house. This was their family home for decades and they preferred to let it sit empty for years than to pass it over to the wrong person. When we signed a rental agreement, there was no checking of my financials or referrals. Everything was agreed to based on how I presented myself in our initial meetings. Over the years, I have proven myself to be exactly who they thought I was, someone dependable, serious, motivated, and really in love with the house that they are having such a hard time letting go of.
In November, they rather blindsided me by saying that they wanted to sell the house. They wanted me to give me a chance to buy it if I wanted it. I expected to have until October of this year to worry about such things, as per our verbal rental agreement renewal. But they assured me that there was time and that they would work with me if I wanted the house. Their initial offer was that I pay them 1 million pesos cash (about 50,000USD) and then take over a mortgage of about 1.6 million pesos, at monthly payments of just under 18,000 pesos. I did not have anywhere near 1 million pesos in cash available to me because all my investments are locked in until I am 55 years old.
I took several months to crunch numbers and ponder scenarios and at the start of January, I finally felt ready to get some legal advice. Literally five minutes after I made an appointment with lawyers the phone rang, and it was the owner wanting and update! Talk about being on the same timeline!
The lawyers told me anything is possible here if both parties agreed to it and told me my best bet involved working out something with the owners that would not require me to get any credit here, essentially a rent-to-own agreement with a balloon payment at the end. We discussed protections on both sides (powers of attorneys, wills, insurance contracts), and all of that left me comfortable to make an offer.
My offer was that for two years, I would pay them the 18,000 peso a month mortgage plus an additional 12,000 pesos towards the million while assuming all costs associated with the house. At the end of two years, I would pay them the balance as a balloon payment, we would do the official deed transfer (escritura), and then I would continue to pay the mortgage for the five-ish years remaining on it.
They came back about a day later with a counter offer that blindsided me. I was not expecting anything like what they ended up proposing. I can’t remember the last time I cried as hard as I did after reading their letter (happy tears, though!).
Rather than two years for the rent-to-own portion, they proposed three years. Rather than 30,000 pesos a month total, they proposed 38,000 pesos ($20,000 to them, 18,000 to the mortgage). At the end of the three years, they would consider themselves paid and then I would continue to pay the mortgage for the four-ish years left. If you do the math on that, that comes out to only about 770,000 pesos to them, not 1 million. So while I will have much higher monthly payments, I will be paying less overall! The house also comes with all furnishings currently in it!
So how am I managing to buy my (nearly) dream house? It’s a gift, plain and simple, from people who left their house to a son who did not want cherish it the way they did and who wanted someone who will appreciate and enjoy it to have it. Of course, I’m paying A LOT for it, but they are making it manageable. I could not imagine buying a nearly 3 million peso house any other way. I’m at a point in my life where I make a really good income, but accessible savings are low. My only other chance for homeownership in the medium-term would be house of no more than a million-ish paid for in cash since my odds of getting credit here, at least for any significant amount, are so low.
I’ve been looking at properties off and on for the last year, just to see what is out there. The price for this house is extremely fair (the lawyers were astounded at what I’m getting for my money in the heart of a desirable location). Every other house I look at is lacking something. I’m used to living in a detached compound-style home. I’m used to the space. I’m rooted in my neighbourhood and appreciate the central location within the city. Everything this house lacks, I can add to it over time. Do I wish I was on a less busy/quieter street and not next to a mechanic shop? Sure. Does the 10% of the time that the noise and traffic bother me trump the 90% of the time it’s quiet? Nope. (And by the way, my mechanic neighbour is the BEST.)
Another thing to factor in is that this house comes with absolutely no surprises. I know exactly what maintenance it absolutely needs right now. How often do you buy a house with that kind of peace of mind? What I’m looking at is needing to paint the exterior before the rainy season starts. The previous owners are going to put me in contact with the gentleman who has painted this house for the last 20 years. I’m super grateful that I have savings to get started on projects like that and projected income that will let me continue to move ahead with projects in the months ahead, even with my immigration matters, even with the high monthly housing payment.
It’s crazy how all of this is possibly only because the pandemic changed my priorities and got me to learn scoping so that I could significantly increase my monthly income. I would never have been able to take on this project with the income I was earning through September of last year. It would have been foolish. Now, I can afford it comfortably and still do some work on the house. Any significant projects beyond exterior painting, like changing the floors and remodeling the bathrooms, will have to wait, but they’re not pressing projects like creating a lovely home office or giving the kitchen a tiny bit of a facelift.
The former owners came by today to do the verbal hand off of the house and give me my blessing to start treating it as my own. They want to meet with my lawyers on Tuesday to work out the details of the contract and then sign said contract within the next three weeks. I’m paying them the 38,000 pesos for February. But, truly, the verbal hand over, with my former landlady choking up and saying that she feels blessed that the house is going to someone who cherishes it, makes this feel more real than any piece of paper could.
Soon as they left, I dragged a ladder upstairs and took down the first set of vertical blinds. The others will come down soon as I can replace them with something better. 🙂
I had covered the window in the back part of the bedroom with a prettier curtain but really wanted nothing over that window since I don’t need the privacy and the view is so lovely. I also can’t open it without the stupid blinds flapping and making a ruckus. Such a small change, but woot, woot, woot!