Buying Land and Building a House in Mexico

Before buying my house in Merida, I had seriously considered buying a plot of land and building a house in Mexico. I had chosen where I wanted to live, driven around searching for suitable plots of land and obtained quotes from architects and construction companies before ultimately coming to the decision that for me personally, buying a house that already existed was the preferable option. 

Since I have already done all of the research, I wanted to share my experiences here for anyone who may be considering building a house in Mexico, particularly if you may be on the fence regarding the build vs buy decision. 

A gorgeous plot of land with rolling hills I viewed in Jalisco
A gorgeous plot of land with rolling hills I viewed in Jalisco

Building a house in Mexico 

Building a house in Mexico is a lot easier than it is in other countries and it’s a pretty common thing for people to decide to do here. It also works out a lot cheaper than purchasing a house that already exists since completed houses usually have a profit margin of anywhere between 30 and 40% tacked on to the final selling price. 

When you buy a house in Mexico, the acquisition taxes are often anywhere between 3% and 5% of the final asking price. (It varies from state to state and in the Yucatan I paid 3.5%). 

However, if you build it yourself, you only pay taxes on the plot of land you purchase rather than on the whole house. So, depending on the final cost and size of the house, this can end up saving you tens of thousands of dollars. 

Obviously, there is a lot more waiting involved if you are building a house from scratch as opposed to having something immediately available. In Mexico, it is very realistic for a two or three-bedroom house to be built in just three to six months which is substantially faster than if you tried to erect a whole house from nothing in many other countries. 

However, the process of searching for a plot of land and applying for and waiting for permits can take a lot longer, which can cause a lot of stress if, like me, you are a somewhat anxious or impatient person. 

A gorgeous plot of land with rolling hills I viewed in Jalisco
A gorgeous plot of land with rolling hills I viewed in Jalisco

Steps for building a house in Mexico 

In the most simple terms, the process for buying land and building a house in Mexico is laid out below:

  1. Find a suitable lot of land, make an offer, and come to an agreement

  2. Hire a notary public and apply for a permit to build on the plot of land

  3. Pay the acquisition tax on the plot of land and if, applicable, the fees for a fideicomiso

  4. Hire an architect and have them work on creating a digital render of your future home

  5. Work with a construction team who will follow the architect’s instructions to turn the digital renders into a real-life home

  6. Add the finishing touches – lights, electrical fittings, appliances, etc

  7. Go shopping for furniture in Mexico and move into your new home!

How much does building a house in Mexico cost?

In Mexico, it is very reasonable to expect to pay around 1.7 to 2.5 million pesos to build a good-sized property with 2-3 bedrooms and a couple of bathrooms. Your architect will be able to tell you a realistic estimate of the total price of the house before you start.

Obviously, there are various things that can affect the cost of the build. For instance:

  • Construction/labor costs in that area

  • Costs of the land

  • Taxes
  • The quality of the materials used 

You should really try and set aside a generous buffer too, because there are often things that go wrong, unforeseen costs that pop up, instances where one material has to be substituted for another, etc.

Exploring San Sebastian del Oeste while searching for land
Exploring San Sebastian del Oeste while searching for land

Get to know your chosen area before you go 

If you are making a move as permanent as considering building a house in Mexico, you should ideally know the area that you want to move to pretty well and have at least some experience living there before you make a big commitment. Vacations are not a good indicator of what the reality of living somewhere is really like. 

So, to be sure that you really do want to move and you are not just idealising something, be sure to spend a couple of months in your chosen city/area and ideally, spend time renting different homes/airbnbs in different neighbourhoods to really get a feel for it. 

Searching for plots of land in Mexico 

There are a couple of different property websites in Mexico that list plots of land for sale, with Point2homes and Inmuebles24 being two of the most popular. It is also worth reaching out to regional real estate agents in your area as they may be advertising some land for sale or know of someone who is. 

Facebook Marketplace is extremely popular in Mexico and people will use it for basically everything – from selling houses, land, and cars, to selling things like furniture and clothing. (I actually found my house on Facebook Marketplace!) 

Honestly, though, the best way to search for plots of land in Mexico is to travel to the area, rent a car if you don’t have a vehicle, and simply drive around looking for land for sale. When searching online, I found very few options and initially thought that nobody was selling any land, but it turns out that most people here don’t really bother to advertise online at all and instead, just place a sign outside of the lot with their phone number on it. 

Before settling on my house in Merida, I had mostly considered building a house in one of the villages in the Sierra Madre mountains of Jalisco (either Mascota, La Estancia, or San Sebastian del Oeste) because they had cooler mountain climates that were much more bearable than in many parts of Mexico. 

So, over the course of a week, I drove back and forth along the roads around the villages, looking out for signs. If I saw one, I would call and inquire about the price. 

The vast majority of plots of land were not suitable because they were either giant plots (and the dimensions were never displayed on the signs), they were ejido land, or they had already been sold. 

A sign advertising land for sale in Jalisco, Mexico
Signs advertising plots of land for sale in Jalisco, Mexico

Viewing plots of land in Mexico 

I found a couple of potential residential lots (“terrenos”) for sale on Facebook Marketplace around San Sebastian del Oeste and La Bufa but found it nightmarish to arrange viewings with people, with several people (who represented legitimate businesses) standing me up, constantly rescheduling, or never confirming a time despite knowing that I had specifically travelled somewhere to meet them. 

I can speak fluent Spanish and I think it really pays off to be able to speak a little Spanish (or at least, have a Mexican friend or realtor with you who can help translate). Interestingly, I was also able to find a lot of plots by simply asking people that I met in the various villages if they knew of anyone selling land and I wouldn’t have been able to do that if I couldn’t speak Spanish. 

Land prices in Mexico

Land prices in Mexico vary substantially depending on the area and of course, the lot size. Lots are generally sold smaller and at a higher price in cities, particularly in areas that are popular with expats like Puerto Vallarta’s waterfront or the northern part of Merida, Yucatan. 

You get more bang for your buck in the rural areas. In Jalisco, I was quoted 400,000 pesos for a plot of land with dimensions of 20m by 20m close to the town of Mascota, in a really beautiful (if a bit isolated) locale. 

I also found a plot of 10m by 50m land in the hills above San Sebastian del Oeste for just 200,000 pesos, although it was not linked up to the electrical grid. In the Yucatan, similarly sized lots of land in Merida and Cholul are priced as high as $60,000 – $85,000 USD. 

House and land prices have increased year on year in Mexico over the last five years and the trend looks set to continue. I called several people who were selling houses and land throughout my search and often found that the price had already increased over just a few months. 

For this reason, you should be mindful when you see articles and information online that break down the costs of building a house in Mexico as things have changed substantially in the last few years. Anything written a year or two ago is already significantly out of date. 

Ejido land 

If you are a foreigner purchasing a plot of land in Mexico, you need to be sure to inquire whether that land is “ejido” land first of all. Ejido land or “propiedad comuna” is a plot of land that has been designated for agricultural use and is owned by all the people in a community. 

It is not possible to purchase ejido land as a foreigner. Mexican citizens can purchase ejido land if they obtain permission from every single member of a community, but it is still risky because you could potentially build a house and then find that someone else comes along with a stronger claim to the land than you have! 

In simple terms, if you encounter a plot of land you like on your search and find out that it is ejido land, you should drop it from your consideration and move on.

Hire a notary and apply for a permit 

Once you find a suitable plot of land and have made an informal agreement with the landowner, you need to involve a Mexican notary (notario). Mexican notaries have more authority than notaries in say, the US, and can handle the entirety of the real estate proceedings when purchasing land or a home. 

You may be asked to pay a small fee called an “apatado” to hold the land while the paperwork is being drawn up. This is usually a small amount of around $1000 USD or so.

The notary will check that the land has a clean and clear title and can be sold before changing the deed into your name. It usually takes around a month for all of the paperwork to be completed and for a new deed to be ready, but it can take longer at busy times (particularly around Christmas in Mexico), or if you also need to obtain a fideicomiso if the plot is within a “restricted zone”. (40km of a land border or natural coastline.)

Linking your lot up to the electricity grid  

If you find an interesting plot of land in Mexico, you need to ask the seller whether it is connected to services such as water and electricity. Many in rural areas are not. 

If your property is not connected to the electric grid, you need to buy a transformer which can cost a couple of thousand dollars. If your property is really far out in the sticks and is not connected to water services, you may need to build a well – though this is very easy to organise.

Hire an architect and have them make a digital render 

There are many excellent architects across Mexico who are accustomed to designing gorgeous, contemporary modern houses at a fraction of the price you would pay in the US. (You can also find many architects skilled in more “traditional” styles and basically, architects that can design you a dream home whatever your taste). 

If you are completely clueless, you can ask them what houses they already have in their portfolio. In my case, I would take photos of houses that I had viewed and liked, or digital renders of pre-sale properties, and then give those to the architect to ask him to draw up something similar. 

It is important to know the lot size before you draw up the render. An architect can usually provide you with a render for around 10,000 Mexican pesos (circa $500 USD). 

If the architect works with you throughout the construction of the house (which is usually recommended unless you have specific construction experience), he may charge a fixed fee or a fee of around 10% of the total cost. 

Hire a team of construction workers 

It is a good idea to reach out to a couple of construction companies in your area as soon as you start considering building a house in Mexico. Construction costs vary from city to city and are generally cheaper in large towns and cities versus rural areas where the workers will have a trek to transport the materials back and forth. 

Within a specific city, the variation from one company to another is quite marginal. Yet from one side of the country to another, you can expect vast differences. 

I was quoted 7,500 MXN per metre squared in Merida, 8,500-9,000 MXN per metre square in Puerto Vallarta, and 15,000 MXN per metre square in rural Jalisco. 

You should also note that all of these quotes were received in August/September 2023 and since things are fluctuating so wildly lately, they are subject to change at short notice. From memory, I am sure I was quoted a cheaper construction price when I first started to consider building a house back in 2022. 

You need to be willing to oversee the project to an extent which ideally means travelling to the construction site and checking to make sure that progress is being made. You should hold on to all of your receipts as you may need them for tax purposes at a later date.

Overseeing the construction 

Having an architect will help you massively when it comes to checking the construction progress of the house, especially if they are bilingual and you don’t speak Spanish. In Mexico, houses can be built quickly because the albañil (construction workers) are usually paid at the end of each completed task. 

For instance, they are paid in cash for a specific room/wall after they have finished building it so they work quickly in order to get the money faster. This is different to in many other countries where builders may get paid by the hour and may drag out the time they spend on each project to get the maximum amount of money. 

Materials being stolen from construction sites or mysterious expenses being added on with no merit, are not unheard of. This is why you need to visit the construction site regularly and stay informed of what is going on. 

Once the outer “shell” of the house is up, the electricians and plumbers will get involved to sort out the wiring, the lighting fixtures and the water pipes. 

You need to pay social security (IMSS) for the workers 

In Mexico, anyone who commissions a team of builders to construct a house needs to pay their IMSS (aka their Mexican social security). It may be that you liaise with IMSS directly, or that the lead contractor manages this on your behalf. 

If it is the latter, make sure that you get the agreement in writing, and retain all of your receipts.(Specifically, it must be a legal receipt known as a “factura”).

If the project takes longer than six months (which is very likely), you may need to pay your workers something known as an “aguinaldo” – a “bonus” December payment equal to 15 days of pay which is usually a legal requirement. 

If you have a team of 10+ workers, your aguinaldo can end up costing several thousand dollars.

Do I need a Fideicomiso? 

You need to obtain a fideicomiso (bank trust) if you are not a Mexican national and your land/property is located within 40km of a natural coastline or land border. This is due to an outdated, centuries-old law in Mexico that prohibited foreigners from purchasing land near the borders as this is how the United States stole California and Texas. 

Obtaining a fideicomiso is the (legal and mainstream) way around this. When you purchase a property or plot of land via Fideicomiso, you still have full rights of ownership and nobody can take the land away from you. 

It is just a bank trust that you maintain with a Mexican bank. Fideicomisos cost around 54,000 MXN to form and around 500 USD a year to maintain. 

One advantage of forming a fideicomiso is that properties which are purchased in this way are exempt from capital gains tax (charged at 35% in Mexico) should you choose to sell it later. (A caveat is that you must gain residency in Mexico and obtain an RFC tax number). 

You have a lot of creative freedom when building a house in Mexico

In some countries, you are somewhat limited when it comes to your creative freedom when constructing a property. You may need to obtain permits and permissions to make any kind of structural change or extension. 

That is rarely the case in Mexico. You generally have full creative freedom – which is great news if you decide that you want to add a gym at the end of your garden, or just whack a second level onto your house. 

The only exception is in some pueblo magicos where houses have to honour some kind of uniform design. (Like in San Sebastian, where I was searching, where houses are typically built from stone with red tile roofs). 

Building a house in Mexico vs buying Preventa properties 

Buying pre-sale properties in “preventa” is popular in tourist areas like Tulum, the Riviera Maya, Cancun, Puerto Vallarta and Los Cabos. This happens when you commit to buying something before the construction is finished. 

You will find digital renders of the property shared on real estate websites, and your realtor can take you to tour the construction site so that you can see that the property is actually being constructed. 

If you buy the property after the project is completed, you wind up paying more for it as costs increase when projects are finished. 

Even so, you can save yourself a pretty penny if you decide to take “inspiration” from their designs and renders and do the whole thing the hard way by yourself. It just depends on whether building a house in Mexico from scratch is something you want to go through. 

Note the strengthening peso 

Sometimes properties in Mexico are listed in US dollars, particularly if the seller is American. However, most of the time, things here are listed in Mexican pesos. 

Obviously, currency fluctuations always happen, whichever specific currencies you are dealing with. However, the Mexican peso has been particularly volatile and has strengthened a lot in recent years, following significant foreign investments in the country. 

A couple of years ago, $1 USD was about 20 pesos and yet in summer/fall 2023, it dropped to a conversion of $1 USD =17 MXN. Even small changes in the exchange rate can cause a relative swing in the price of something when you are buying land and paying construction bills or purchasing a house that will cost you several hundred thousand dollars. 

So, it is worth keeping an eye on the peso and following economists’ news and predictions. Because of the constant changes, the price of my house increased by several thousand dollars just because of the changing exchange rate over 6 weeks! 

Final thoughts on building a house in Mexico

Building a house in Mexico is one way to save significant costs when designing your dream home and when you build a property by yourself from scratch, you can have something perfectly tailored to your tastes. 

Of course, in the “best case scenario”, you can build something in 3-6 months but delays are possible at any stage – delays in getting permits, for certain materials to be obtained, tasks taking longer than planned, etc. As with doing anything in Mexico, it is important to approach the situation with a lot of patience. 

Expect the worst/slowest turnaround and then be pleasantly surprised if things worked out better than you hoped. If you do not already own property in Mexico or have a long-term lease, be prepared to bounce around different Airbnbs and short-term rental properties while your property is being completed. 

(Sometimes it is worth signing a 6-12 month lease in Mexico in parallel so you are not paying a premium on Airbnb or constantly moving around). 

Do you have any further questions about building property in Mexico? I have been living in the Yucatan capital of Merida for the last two years and I am happy to help out with any queries you may have.

Please do not hesitate to reach out to me and I will do my best to get back to you as soon as I can. 

Buen Viaje! Melissa xo 


Melissa Douglas

Melissa Douglas is a British Travel Writer based in Merida, Mexico and the Editor-in-Chief of Mexico Travel Secrets. She has over seven years worth of experience in working in travel media and has travelled to 57 countries, mostly solo. Throughout her career, Melissa has produced written content for several high-profile publications across the globe - including Forbes Travel Guide, the Huffington Post, Rough Guides, and Matador Network.

Similar Posts