Why settle for a country house when you can settle in a foreign country? Carolina Buia reports on making yourself at home in nine to-die-for destinations

Overview: Mexico's Spanish colonial towns, Mayan temples, and long stretches of coastline lure American retirees in droves. The Baja Peninsula—a U.S. favorite—is where the second-home market has been especially strong. In Los Cabos, a two-bedroom condominium sells for $200,000, houses on a golf course or with an ocean view start at $400,000, and oceanfront homes easily reach into the millions. While the market in Los Cabos is saturated, bargains can still be unearthed farther south in Puerto Vallarta and surrounding towns such as Careyes. If you're after a more cultural experience, try San Miguel de Allende, 150 miles north of Mexico City. In this town of ancient streets and lush courtyards—famous for its thriving artistic community (two of the country's most prestigious art schools are here)—two- to three-bedroom homes can still be had for $150,000.

Fine print: Under Mexican law, foreigners are prohibited from direct ownership in the "restricted zone," a strip of land 30 miles wide along its seacoasts and 60 miles wide along its borders. However, property can be transferred to a Mexican bank, which acts as your trustee in a common trust known as a fideicomiso. Currently, the life of the trust is 50 years, but renewals are permitted. Real estate transactions are traditionally cash only, but since NAFTA, a few banks offer financing, particularly in resort areas. Make sure your lawyer verifies that your home does not sit on an eijido—a government land grant made to farmers; in the past, unscrupulous individuals have sold eijidos to foreigners, who later learned that their title was in question.

Hidden costs: Setting up a trust will run you about one percent of the purchase price. Make sure you pay within the allotted time (usually 30 days), because banks won't remind you of your payment—they'll just start billing you some hefty late fees.

Rental prospects: Be aware that Mexican law protects tenants, so eviction is nearly impossible; consequently, you'll want to employ a reputable real estate agent or property manager. High season on the Baja Peninsula is from December through May, during which occupancy rates exceed 60 percent. The rental market is much softer in San Miguel de Allende, whose high seasons are December through March, and June through July, the latter attracting crops of art students. The rental-income tax can reach 21 percent.

Suggested real estate agents: For San Miguel de Allende, Armando Bueno of Century 21 (52-415-152-1842; century21mexico.com); for Los Cabos, Michael Schaible at Baja Properties (877-464-2252; bajaproperties.com); and for Puerto Vallarta and environs, Raul Villalpando of Pacific Estates (52-322-223-0565; pacificestates.com.mx).

Want a home (far) away from home? Follow Carolina Buia's directions through swamps of bureaucracy and knotty financing:
Buying the Dream: Introduction
Buying the Dream: Bali
Buying the Dream: Barbados
Buying the Dream: Bermuda
Buying the Dream: Costa Rica
Buying the Dream: England
Buying the Dream: France
Buying the Dream: Italy
Buying the Dream: Spain