The slowdown in the U.S. housing market is making headlines in Mexico, but the Mexican residential real estate market is stronger than ever. More than ever, people are buying their second home in Mexico with an eye towards retiring there in the future.

Significant changes in Mexican politics and the introduction of the North American Free Trade Agreement (NAFTA), have made purchasing property in Mexico much easier and more secure, especially for residents of the United States and Canada. As a foreign buyer, you obtain all rights of ownership by setting up a bank trust, (known as a fideicomiso- fee-dee-co-MEE-so). The bank acts on behalf of the foreign buyer, holding title to real property. The bank, as trustee, buys the property for the buyer, and then has a fiduciary obligation to follow the instructions of the buyer, who is the trust beneficiary. The fideicomiso lasts 50 years and is perpetually renewable. They are generally renewable at any time or at the end of the 50-year period for a relatively small fee (less than US$1,000) for additional 50-year periods.

For the new foreign investor, however, the prospect of buying property in Mexico can be daunting. Below are the answers to some of the questions commonly asked about buying a second home in Mexico.

What ownership rights do I have?

In Mexico, a foreigner or foreign corporation obtains all the rights of ownership (meaning you can sell, lease, use, bequeath, improve, transfer and encumber the property) through the Fideicomiso.

What taxes can I expect to pay in Mexico?

Property taxes are relatively modest. The tax, which is known as 'predial', is calculated as a percentage of the assessed value, paid every two months, and determined at the time of sale. Historically, property taxes have been low in Mexico because they have never been considered a source of revenue for the government; however, this is subject to change.

If someone is interested in a second home in Mexico, where should they begin

The process of finding a second home in Mexico is just like finding property in your own country. If you don't live in the city, you visit, ask questions and do your homework. Choose your location and property carefully, and verify the strength and credibility of all the major players with an investment stake in the development.

What should I do once I find a home I like?

Once you've decided on a home, ensure that you hire competent professionals who will follow the letter of the law and confirm that the property you are purchasing is free and clear of any claims or liens. A good local attorney or the notary public can help with this.

What about title insurance?

Title is the legal right to possession of property. By purchasing title insurance, you make sure you hold clear title to your property and that, should anybody dispute that title, you'll have an advocate who will defend your claim in the local courts. We highly recommend title insurance - particularly for undeveloped land. If the title insurer you've hired says he will not insure the property, don't buy it.