by Pat Tyson and Gordon Rich
For more than 450 years, the story of Los Cabos pioneers has been tightly woven into the quest for land. Ownership of Baja often changed hands until 1914, when a new Mexican Constitution was written. One Article prohibited foreign ownership of land within thirty-one miles of any coastline. However, by 1970, financial distress caused Mexico to search for ways to circumvent that law, realizing that tourism and land ownership could garner huge revenue.
Initially there were abuses, making it detrimental to land ownership in Mexico. But with the creation of a Fideicomiso, or Foreign Trust – allowing foreign ownership of property in Mexico – and the advent of NAFTA (the North American Free Trade Agreement), commerce and opportunities began to be exchanged across the Border. Certain perceptive entrepreneurs not only saw opportunity for personal gain, but had a special love for the land in Los Cabos. They perceived that the changing times in Mexico could be good for everyone.
For example, Rick Wesselink and Steve Galvanoni are two astute U.S. entrepreneurs who top the list of Pioneers. Their property, El Encanto, a community of individually-owned luxury homes, is being developed just outside of town, on the pristine coastline adjacent to the development of Puerto Los Cabos. El Encanto is evidence of how policy changes are making real estate in Cabo a great investment. Approved and supported by the Mexican government, it is the largest single beachfront development by foreign developers in Los Cabos.
“As an entrepreneur, I sense good deals whether in the U.S. or Mexico,” says Rick. “The area was absolutely gorgeous; all it needed was someone to help guide and work with people like Sanchez-Navarro and Jorge Buch, Puerto Los Cabos developers. It became clear that the area was on the verge of explosion and we felt comfortable being pioneers in that area. One thing I’ve learned is that things don’t happen overnight anywhere, particularly in Mexico.” This is one of the places that Old World Mexico and New World Mexico are starting to separate, he notes.
“New Mexico is young, energetic, passionate and full of patriotic professionals,” he observes. “Old Mexico appears to have had people who were more into the immediacy of their pocket. Baja has been the stepchild in many regards. Here, people are much more frontier-like than the people overall in Mainland Mexico. The Nationals say, ‘We do things differently here.’ Now you have a lot of people coming in and realizing that this is the new Cancun of the West Coast. It’s making a lot of things happen.”
Rick is certain that there will be less of the “fast buck mentality,” because plans that are now being approved are thought out – and not spur of the moment situations where individuals became half involved in a project, then ran out of money. He sees those days finished in Mexico – especially in the planned communities. He believes that governmental agencies will cooperate with developers who have the pockets as well as the vision to help Mexico. When buying something in the United States or Canada, you do your homework and follow the rules. So, in defense of the Mexican government’s past repossession policies, he advises people not to be upset with the Mexican Government for trying to enforce rightful ownership laws.
“They are getting more sophisticated down here,” he states. Too often in the past we only heard about of the failures. When he first brought his deal to Steve and talked him into going partners of the first house, the latter thought it a crazy idea.
“I said ‘Steve, my Daddy always taught me Location, Location, Location. If you have a beautiful setting, and you make it easy for people to get there, they will break down the door to do so. Sure enough, it has taken a lot of people to pull this together, but it’s happened! Our concerns now are not whether we can SELL any more product, but now it is getting houses built and delivered.” Rick explains.
“To me, Los Cabos and Baja represent to the American and Canadian client a tremendous upside, compared to current property values in Southern California. A Californian, who can no longer afford beachfront property at home, can buy beachfront property for a third of what they would have to pay, with all the amenities that they would expect in the United States. It’s almost Newport South!” Rick exclaims.
“More importantly, they can get these deals without any worry or risk about entitlement of the property,” adds Steve. Both developers credit much of the modernization of Mexican society to other high-end resorts, such as Palmilla or Pueblo Bonito. Many Americans have visited them and realized their worries over food, water or the laws are no longer of concern.
For example, most of the water in the better resorts in Cabo is desalinated. El Encanto has its own desalination plant that produces 100,000 gallons of totally pure water a day. Another benefit for today’s consumer acquiring a home in Baja is the fact that U.S. title companies add a level of comfort that you are purchasing a piece of property that is actually yours.
“All our model homes have come with title insurance and preliminary title approval from Fidelity in New York. Now we’re looking to not only insure the finished home, but also the lots,” Steve proudly points out. Whether or not the customer chooses to participate in insuring a property – insurance IS available. Now that the deeding and title insurance issues are in place, Rick and Steve would like to see lending, or opportunity for mortgages on residential homes for foreign investors, come into play. It is also vital to understand Mexico’s dedication to the environment.
“Mexican authorities are very particular about the cactus and indigenous plants, and that’s good. It’s a lot of work and expense for us, but it’s another reason that the government is cooperating with us – because we’re willing to cooperate. It’s the right thing to do for future generations. They clearly understand the value of quality product and the value of planned development,” states Rick enthusiastically.
“We at El Encanto are very bullish on the area – and Mexico in general! I would much rather put my money in a piece of property that I know is on the path of growth in Cabo San Lucas or San José del Cabo, than put it in the stock market or buy a house in the Los Angeles area.”
El Encanto is comprised of 36 beachfront high end homes priced from 1.2M-4M USD and six Condo buildings priced from 600k-1.2M USD. To date, 90% of the Buyers are High Net Worth US Citizens and 10% Canadians whom purchased in El Encanto as a second or third home. Current Owners have commented on the Magnificent Quality of their home/condo.
For more information, please visit ElEncantoLosCabos.net