Waiting for the rest of the story…
Last time you were left at “Stay Tuned for the rest of the story.” This part of the story ties in with the topic of square meters and square feet as a measuring stick for the value of property, be it vacant land, rental property or a house. For example $110 or so a square foot is the average and $85 a square foot a bargain in Las Vegas right now. Then there is Boston where $585 a square foot is an average priced house – wow! This is computed by dividing the asking price by the total square footage of the house. That figure lumps in the value of the land and any other improvements. Thus an average 1600 square foot house in Las Vegas will set you back about $176,000.00 USD and an average pad that size in Boston is a whopping $936,000.00 USD.
When I buy or sell a property, and I have done much of both, I evaluate vacant land value, add costs before swinging a hammer like architectural fees, building permit fees, service connection fees, perhaps drilling a well or installing septic, accessing power etc. Then add building per square foot cost. Add up all other improvements like walls, sheds, patios etc. And finally adjust for depreciation. All that a more detailed version of a cost per square foot lumped into the size of the dwelling as described above. Whew!
My advice is to never pay more than replacement value less depreciation – kind of leaves Boston off my playlist. Well a million dollars actually scratches Boston.
Some of the differences between Mexico and the United States include there are usually less pre-hammer-swinging fees. Also the finished product is usually less refined. Mexicans are famous for their lack of attention to detail like light bulbs mounted in sockets hanging by wires from the ceiling. Truly I have seen this in otherwise very fancy hotels. Flimsy quality plumbing because most water pressure is gravity fed etc. There is a laundry list of quality issues.
Of course there are bargains to be had everywhere – but it often takes some hard looking. I could write a book on our purchase experiences on the three properties we own in Mexico – perhaps I will.
Getting back to our square meter or square feet example. My custom is to multiply square meters by 10.8 to come up with a close square feet answer. So for example 80 square meters would be about 864 square feet. That worked out in my head. Using a calculator the actual answer is 861.113 square feet – using more decimal places – but yes 10.8 times the square meters is a close approximation. After a while you may just perceive size in square meters – but that takes time for those that started with square feet and inches/feet tape measures.
You can convert pesos to dollars and divide that number by the number of square feet to give you an idea about the cost of a place – is it a better deal than replacement value less depreciation? You get the idea. The greater attention to detail (and decimal places) will give you a more accurate picture of real value.
OK all that said here is how this ties in to my story. Our beach house was prominently listed by a number of realtors (seldom are there exclusive listings here in Mexico). The description in all cases was depicted as a 700-800 square foot house – decidedly small but proportional to the smallish asking price (which recently had been reduced $20,000 USD after being on the market 3 months without so much as a looker).
Because Senora Calypso and I tend to look at a wide variety of houses and prices in our exploration stage, even though the description led us to believe the place was probably too small – we decided to have a look (maybe build –on or ???).
Our Beach Casa before we owned it November 2010
When we viewed the beach house in person, I remarked to Anita that the casita just seemed much larger than the advertised square footage. I went back to the hotel and did the numbers. It appeared as if the size of the house was described by using the measurements of the footprint rather than doubling it accounting for two stories – or whatever! The bottom line was I suspicioned it was near twice the advertised size – hmm.
We contacted the real estate folks inquiring sheepishly about the size of the casa – again it was described as it was in the sales literature. We made an appointment to look again – this time with metric tape measure in hand. After perimeter measuring the casa was in fact twice as large as advertised. We kept our mouths shut, eventually buying the place while from the start through the completed sale those grossly inaccurate figures went along for the ride.
It should be noted that the actual sellers had inherited the property from afar. They made one visit; Mexico not being on their list of places wanting to be. So truly an oversight that was not to be caught by the new owners/sellers.
We have bought enough property to know there are arguments that state ‘What you see is what you get – forget what the papers say.’ Or ‘What is in writing are the facts. Seeing can be deceiving.’ Take your pick – and they often do – pick to fit.
Our Beach Casa March 2014
However that descriptor error came about, it remained in place and presented a unique value. The story has not even been told until this day. We put it all on black and came up winners. We started all this by suggesting you go and learn about the metric system. Now you have read an example of just how valuable that lesson can be. Stay Tuned!