Rent, Buy or Build? Contemplating Moving to Oaxaca?

It took 8 years for my wife and I to find the right piece of land in the ideal location, obtain good title, decide upon an architect/project manager, and commence and complete construction. Throughout the process the learning curve was significant, as were the frustrations, fits of disillusionment and exciting moments, without regret at the end of the day. I now feel qualified to provide advice and opinions, not only from having gone through the experience, but given that in my former life I was a litigation lawyer, versed in land law, construction disputes and contracts. Had I used my Canadian legal knowledge and experiences in approaching the multitude of issues which arose, even with the differences in cultural, societal and legal systems and business practices, the years of agony would have proceeded more smoothly and less costly.

Concrete recommendations follow, which may seem obvious. But in southern Mexico there is temptation to not follow either gut instincts based upon our northern worldview or the fount of knowledge accumulated in our earlier lives, and to instead take advice from a multitude of advisers, compadres, friends and tradesmen.

Before counseling regarding buying land and building, I’ll touch on an initial decision that is more commonly made by those contemplating such a lifestyle change. While we ultimately decided upon building and never rented while on vacation for more than 6 weeks, renting or buying an existing house are two options. Long ago I received sound advice that it is unwise to lay down permanent roots until you’ve lived in a city at least six months. In our case, a dozen or so years vacationing here 2 – 3 times yearly qualifies. Determine whether or not you’ll on balance feel comfortable in your chosen neighborhood. Chock up one point for initially renting, since you are not tied to the home or city quadrant. You have the opportunity to get a sense of the “life” of the colonia, to determine whether or not you can tolerate the level of noise at night, to make an informed decision as to whether or not it will be overly burdensome for you living away from the Zocalo and heart of Oaxaca (i.e. in the increasingly popular Etlas characterized by wonderful pristine vistas and a year-round abundance of water, yet a long way off from downtown, especially late at night after pulling down a few mezcalitos), or for that matter too close to el centro with its unique set of issues. Finally, there’s the water issue which you may want to understand first-hand, especially if you won’t be blessed with a large cistern and don’t want to be at the mercy of the pipas which during dry season can take a couple of days to arrive after ordering.

Initially renting makes sense if you are in the fortunate position of not having to make an irreversible initial decision, let’s say if you own a business and can have someone manage it while you’re doing a trial run so as not to burn a very important economic bridge, or if you’re an employee with marketable skills enabling you to go back and get another job. The downside is your money is “thrown away”, and you’ll be subject to inflationary factors since the cost of buying a home, or acquiring land and building, increases significantly on an annual basis. In a rental, former homeowners tend to lack that sense of comfort, resulting in an unsettled feeling, the last thing you want when deciding upon a dramatically new life.

If you’ve previously rented in a certain colonia or have otherwise familiarized yourself with it, then buying a home in that neighborhood has many advantages. You avoid the dual problem of having to buy land and then build, and the plethora of pitfalls associated with the process (see below). You know what you’re getting and have already decided that it’s what you want, or are willing to accept…you can look out and see the vistas (or lack thereof) from your bedroom window, rather than wonder based upon reviewing an architect’s plans, of which you can make little real sense. You’re not faced with the uncertainly of a landlord asking you to leave or not knowing when your home-in-progress will be ready for occupancy (once again, see below). Your home will have already stood the test of time in terms of resisting minor earthquakes and dealing with leaks during the rainy season. You don’t have to deal with many issues which frequently crop up when you build: you can hear the phone ring and know that there’s phone service, turn on the light and know that there’s electricity, listen for water entering the cistern and know that there’s already a city water connection, and you can drive up to the house and know that you won’t have to wait years for pavement.

On the other hand, with all of these and a multitude of other problems associated with building, still nothing compares to fulfilling the fantasy of constructing one’s dream home in the mountains, which in Toronto or elsewhere north of the Rio Grande would be virtually impossible to achieve due to climatic and much more importantly economic factors. While some may have gone through the building process, you are in the minority, especially when it has included searching for land and knowing that you’re building this one time, and never again. The phrase “wouldn’t it be great if we could…,” here in southern Mexico is not necessarily a pipe dream…but the process does take a lot out of you.

Some of my comments regarding process are applicable to purchasing a home as well as buying land and building, but in our case refer to the latter. As a representative of one of two loathed vocations (law and real estate), I have no difficulty generalizing that one ought to exercise the utmost caution in trusting real estate agents, anywhere. In any job where there’s potential to make a lot of money with little effort in a short period of time, there is significant potential for abuse, cutting corners and putting one’s own financial interests ahead of those of the client, especially when the relationship with the client is for a single transaction. The use of real estate agents is still in its infancy in Oaxaca, as compared to in the north, and thus as one would expect, in a society with relatively little in the way of consumer protection laws, the regulatory framework within which agents work lacks the training procedures and checks and balances to which we are accustomed. Put another way, you have reason to be overly vigilant when working with an agent. Our realtor urged us to buy a lot in Guadalupe Victoria, with services close-by. It was only after viewing it for the second time with an architect friend that we learned that because of the wires running above part of the tract we would be subject to restrictions or complications when it came to building. But the agent was from a then prominent realty company, so we stuck with her. Next time out, while climbing a brushy hill trying to determine the exact medidas of a smaller yet equally attractive property, our rep, with title papers in her hand said “yes, this is it.” Then someone came by asking why we were on his land. After the proprietor and agent compared papers, we learned that once again the knowledge of the agent was suspect.

It is not only foreigners who can be deceived by unknowledgeable or less than forthright vendors of land or their agents. A Oaxacan buddy of mine purchased a piece of sloped land from a friend of his whose family had been the landowner for years. It was only after excavation had begun that my pal learned that the lot had previously been filled, and that his “friend”, the vendor, knew it. The cost of construction immediately became much greater, and the proposed construction methods would have to be dramatically altered. My friend could no longer afford to build what he wanted, or how and when he wanted to do it, and is stuck with land that must be sold at a discount.

After giving consideration to land in various colonias, ranging in size from 200 M2 to 3000 M2, in fraccionamientos and otherwise, both fully and “soon-to-be” serviced, we settled on un terreno in Guadalupe Victoria owned by Don Julio and his wife. We found it on our own, and after checking with an architect and negotiating price, executed the papers and provided our deposit to Don Julio personally (here, such deposits are not held in trust by the notaries), in our notary’s office, the deal to close as soon as government okayed subdividing, since the land was close to an ecological zone. The closing was to be completed within days (quince dias as they always say). The deal didn’t close as a result of administrative issues, but some three years later, after several discussions and the execution of a release by us, Don Julio’s widow and children counted out that 10,000 peso deposit, late at night at their kitchen table, saying that they didn’t want to have to look the other way and run if they came across us on the street. Knowing that the likelihood of getting title was growing slimmer and slimmer, by that time we had already purchased another lote much smaller and on steeper land, but closer to downtown, serviced, and with exquisite vistas…welcome Colonia Loma Linda.

Architects in Oaxaca are often also the project managers and builders, and as such may prepare plans, obtain permits, liaise with regulatory bodies and hire trades. Your architect should be hired before you buy land, since he should be consulted to determine the viability of what you have in mind for the land, any additional or unusual costs associated with building as a consequence of elevation, the subsurface composition or required municipal involvement in terms of pavement or sewer/water connections. In our case, that was one of the things we did right, that is, used architects at the outset.

Interview more than one architect. We walked through homes built by four, prior to deciding. Our error was not speaking to the owners about the relationship they had with their architects, problems with the finished houses not apparent to the eye, timeliness of completing the project or financial issues, all of which became issues for us down the road notwithstanding that, and perhaps because, our architect was a friend and landlord first. Next rule is therefore, don’t befriend your architect. Keep the relationship as businesslike as possible, though this may be difficult in Oaxaca where business relationships quickly turn into friendships, and acquaintanceships frequently become solidified through compadrazgo. In our contract our architect was to receive construction draws, with honorario paid upon completion. Because of the pre-existing friendship, when she asked for a significant advance against her fee for some urgent family matter, we naively provided it. We lost the upper hand which resulted in ongoing problems, ultimately costing us an additional 100,000 pesos or more, and a year’s delay in completing the obra. While I ought not generalize about lending money to friends, and I have done so in Oaxaca without incident, if something doesn’t seem to sit right, follow your gut reaction. Surely our architect must have had closer friends than us from whom to borrow.

When contracting with an architect you should have someone with experience, from your camp, review and redraft the construction agreement. Be as exact and detailed as possible, no matter how long it takes to get it right and how many pages of verbiage are required. Take time to enumerate what type of wood and other construction materials will go where, the sizes, brands and models of appliances, tanks, pumps, etc., the type and quality of finishes, and a timeframe for reaching designated stages of completion. Include implications for missing or reaching deadlines, to create an incentive for the architect to finish on schedule. Go with her to the building supply outlets to choose. Let her factor into the timetable the weeks when trades will be off work in their pueblos with family for fiestas, how many times she’ll run afoul of regulations and be subject to an obra suspendida notice, and how much delay will result from unavailability of construction materials such as adobe during the rainy season. We indeed had a multi-page contract, but it failed to include all of the above…had I been negotiating on behalf of a client, it would have been different. Get yourself a good, fully bilingual notary, or possibly a lawyer with a litigation background, to assist. A lack of solicitor-client confidentiality and conflicts of interest are not uncommon, so be careful to whom you say what, and ensure that there are no or limited connections between your architect and legal representative. Remember, you and your architect at this preliminary stage are adverse in interest. While certainly you can sue to attempt to obtain justice, recall that you are not dealing with the British Common Law system to which you are likely accustomed. In most if not all states and provinces we have legislated home ownership warranty plans to which home builders are subject, providing the new homeowner with speedy and effective recourse…not so here in Oaxaca.

The following is a short list of problems we encountered subsequent to moving into our home after our architect had been paid virtually all of her fee, which would have been covered by the standard warranty plan had there been one: leaky toilets, sinks and cistern, several areas where water pooled instead of drained, damp walls, a serious polilla problem (insects eating away at the wood and carrizo), shoddy carpentry, a non-functional carport which had to be reconstructed at a cost to us of over 50,000 pesos, both water and gas leaks, and more. But we do have our dream home, and look forward to years of ongoing expenses as further deficiencies become apparent, until the house is finally sound….and it’s time to sell. Would we do it again knowing now what we have gone through? In a heartbeat, but taking my own advice!.

Casa Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com ) ©

The Starkman’s Casa Machaya Oaxaca Bed & Breakfast ( http://www.oaxacadream.com ) combines the best of bed & breakfast Oaxaca (quaintness and personal touch) with the comfort and service found in the best downtown Oaxaca hotels. The Casa Machaya Oaxaca accommodations have the added advantage of co-owner, Alvin, a Oaxaca destinations expert for a major international travel website, who provides Oaxaca tours to both house guests and those lodging elsewhere, both in downtown Oaxaca and in the surburbs.

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