How I Found Financial Freedom in Retirement by Moving to Lake Chapala

It’s hard getting old and frail, but it’s even harder if you’re poor.

Even if your house is paid off when you retire… after a decade, property taxes, homeowner’s insurance, gas prices, and essential necessities can soar. Then, you might be slapped with double the car insurance bill just because you’ve reached the age of 70.

I was determined to have a plan for my retirement. Too many people I knew had been forced to sell their homes and move into small trailers—sustaining themselves on hot dogs and canned apple sauce.

I’d lived in Florida for the past 30 years. Working as a copywriter at age 67, I decided it was time to retire soon—and knew, with my nest egg of $350,000, that doing so would be difficult with Florida’s increasing costs.

So I researched, traveled to destinations on five continents, and took a leap, landing in Chapala, Mexico.

Why Chapala? That’s easy. On the north shore of Lake Chapala, in central Mexico, Chapala enjoys a consistent comfortable climate (no natural disasters!), natural beauty, accepting and friendly people, and a stable government and economy.

Another big draw to the Lake Chapala area is the international mix of people, and in most cases, no need to speak Spanish. From Chapala to Jocotopec, most shops, restaurants, grocery stores, pharmacies, spas, and resorts have English-speaking staff members to attend to your every whim. This is one reason foreigners flock to this area.

But the biggest reason I chose Chapala: the cost of living is less than half of what I was paying in the United States. $350,000 would cover a permanent resident visa, a new home, and a comfortable lifestyle.

What I wasn’t expecting—but also found—was a peaceful town full of fun activities all year round. There are ongoing cultural events that offer captivating musical and performing art; organic markets; art galleries; and great restaurants with a wide selection of international cuisine. Plus, there’s the ease of getting a permanent resident visa, and the fact that it’s less than a day’s travel to visit family in the US.

I also discovered that, as a thriving expat destination, Chapala presents a great property investment opportunity…

From Home Ownership to Real Estate Investment

Before my arrival, I spent six months communicating with different realtors and reviewing houses for sale at chapalamls.net to create a list of over 25 homes I wanted to visit. Upon my arrival, I rented an Airbnb in Chapala for two months and connected with Richard and Michaela, Canadian expats from Chapala Realtors who dedicated themselves to showing me these lovely homes.

We got through all of them and revisited my favorites within 10 days. I made an offer. It was accepted, and the realtors took care of all the paperwork, setting up the home inspection, and legal notary to get everything done within 45 days. I was impressed… and we became great friends.

And just look at the value! I sold my 70-year-old, 1,820-sq-ft home in Florida for $400,000… and with half the money bought a newly renovated, 35-year-old, 4,585-sq-ft home with an exquisite view of the lake and mountains.

Instead of paying $4,874 annually for property taxes, I now pay $41 a year. My electric bill went from $480 per month to $50 every two months. The water and garbage pickup went from $175 down to $45 per month, and instead of $67 for internet, I pay $23. Whew … what a financial relief!

The lower cost of living gave me peace of mind while working, but I’d need to secure my financial future—or a source of steady income after retirement. The Lake Chapala area is growing with expats every year—other people seeking lower costs, tranquility, and a stimulating social life continue to pour into the area.

Six months after purchasing my Chapala home, I took a portion of the money from my US house sale and began looking for an investment property.

I found many great deals between $100,000–$200,000 in a variety of towns around the lake. I fell in love with places I’d personally love to live in… but weren’t good rental properties. Most were unfurnished, three- or four-bedroom homes with multiple bathrooms and a nice yard. Great for a family with children, but far too much work for a rental.

After a few weeks, I found the place that fit all the necessary criteria for a Lake Chapala rental… and in a great spot for any non-Spanish speaking expat, in the San Antonio neighborhood between Chapala and Ajijic.

Located in a quiet, enclosed street with eight houses, each home comes with designated parking spots and the use of a casita for friends and family. It’s half a block to Walmart. Across the street is a mall with a six-auditorium movie theater, clothing boutiques, gift shops, several cafés, an exquisite bakery, specialty food and spice stores, and a large food court—no car needed. Most of the homes in the neighborhood have long-term renters; a few have been renting for over 12 years. My fully-furnished, two-bed, one-bath home with a rooftop patio view of the lake rented immediately to a lovely couple from Canada. Now I’m looking for another rental property while renovating my house to create a separate apartment.

After retirement, I’ll have money to travel—financial security—and a constant extra income to continue to enjoy paradise.

5 Tips For Buying a Chapala Investment Property

Nearby Guadalajara; Long-term renters generally seek a quieter residence that gives them a taste of the region.|©iStock/Elijah-Lovkoff

If you decide to retire in the Lake Chapala area and investment properties are the thing for you, there are several factors you need to consider.

1. First, Decide If You Prefer Having a Short-Term Rental or Long-Term Rental

An Airbnb tends to draw a short-term client rather than one that wants a six-month stay or longer. Airbnbs can be more costly to run because of quick turnovers and frequent cleaning. Foreigners looking for an Airbnb are usually first-time visitors who prefer to be in walking distance of shops, restaurants, and fun activities; Mexicans looking for an Airbnb usually come from Guadalajara and want to spend a weekend enjoying the monthly lakeside festivities.

Long-term renters generally seek a quieter residence. Most rent a car while in town or drive to Mexico, crossing through Texas. These visitors are checking out the area and considering if they may want to stay. They want a taste of the region, a feel for the lifestyle in Mexico, and to explore everything offered. If you select a home in a great location, you’ll probably end up with a long-term renter who prefers to continue to rent from you than purchase a home. (For more real estate investment opportunities in Mexico and across the globe, sign up for Overseas Dream Home.)

2. Then, Consider Your Desired Renter

Most single expats and retirees want a sense of security. They look for small furnished homes in gated communities with security cameras, off-street individual parking spaces, and a community space for neighborly get-togethers. Smaller communities where everyone speaks English brings people. Friendships instantly spawn, and neighbors frequent local establishments with live music to hang out.

I’ve found that single individuals and couples respect the property more than families with children, so I recommend properties no larger than two bedrooms. Since most of the renters I’ve met didn’t speak Spanish, I focused on HOA, gated communities and fully furnished homes with security and groundskeepers that kept the exotic gardens and community areas in pristine condition.

3. Once You’ve Found Your Investment Property, Keep Local Laws in Mind

A notary in Mexico is a specialized licensed property lawyer. They ensure there aren’t any liens against the home or past due debts from the previous owner. That could include six months’ wages owed to a housekeeper, nanny, gardener, live-in nurse, or the cost of a total remodeling.

These debts, if they exist, are considered part of the property at the time of purchase and get passed on to the new owner. The notary will discover any existing debts before your purchase so you don’t have any unwanted surprises. Plus, all the paperwork required for the purchase and exchange of monies is handled by his office.

An excellent consortium of legal counselors is Notaría Pública 2; they can be contacted at +52 (376) 766-0190. They can also handle your will and testament so the property goes to your selected beneficiaries without any problems in the future. These documents must be in Spanish to establish a legal record, but for a small fee you can also receive them in translated in English for you and your loved ones’ records. So don’t forget to ask.

4. Outsource Property Management

I had my property listed, advertised, and managed by Cosala Homes, a property administration service that takes care of everything that concerns my property, including paying the bills, ordering gas, organizing repairmen when needed, and paying the annual taxes. They charge 80% of the first month’s rent for finding longterm renters and 10% monthly to manage it—the same as the percentages charged in the United States and worth it for a relatively trouble-free cash cow.

Cosala Homes manages both individual properties and large HOAs. They can be contacted at cosalahomes@gmail.com or by calling Sergio Gómez at +52 (332) 343-3206.

5. Finally, Strategize Your Rent Collection

For a safety net, my personal rule is to save the first 12 months of rent collected for any future repairs and upgrades—after that, it’s all gravy.