Larry McKinney, a sales executive for High Tech Composite Structures Inc. and his wife Cassandra Evans, a philosophy instructor at San Diego City College, take in the view from the “back yard” of the Baja home they own with seven other couples.

The original $5,000 bill of sale – executed on the back of a paper picnic plate – included the construction of a one-room rustic beach bungalow as well as provisions for a 99-year land lease. That was in 1982, when San Felipe was still a relatively quiet and undeveloped little fishing village.

Today, this same Baja retreat perched on a sandy shore of the Sea of Cortez is owned by Larry McKinney and his wife Cassandra Evans – along with seven other couples. In 2001, the McKinneys decided to create a handshake partnership with each couple kicking in $3,000 to help with badly needed repairs.

Since then, the cement-floored casita has seen more than its fair share of fun and hardship. “We replaced the leaky palapa roof, and then extended the foundation and front porch to protect the main structure from the encroaching sea,” explains Larry. “Dealing with the Mexican land owners was problematic as they held a monopoly on any construction on our little piece of paradise. One time we drove down here to deliver the ‘final’ payment only to discover that the work was less than halfway complete. I guess it’s like anywhere else; there are good people to deal with and there are bad.”

In 2003, the land was purchased by a group of American investors, and there are now several qualified contractors from which to choose. Last spring the hurricanes hit, and most of the new foundation work and veranda were swept out to sea. The partnership is in the process of taking on two additional members to fund reconstruction and erect a sea wall.

Larry’s wife Cassandra appreciates the absence of parking hassles and crowds. “It’s a great place to learn about ecology and the environment, as well as to appreciate things we have in the U.S.A. I have to admit, though, I do miss hot water showers when I’m down here.”

San Felipe is a bit rustic compared with the urban and suburban development along Baja’s northern Pacific Coast, near San Diego. One hundred fifty miles northwest of San Felipe near Rosarito Beach, Miles Smith, his fiancée Susie Christensen, and her son Vonn are not missing anything in their luxurious four-bedroom, three-bath, Club Marena condominium. The 3,300-square-foot, fifth-floor unit, with its stainless steel appliances and white marble floors, resembles a swanky San Diego penthouse apartment.

Enjoying life as residents of Baja’s coast are Miles Smith, his fiancée Susie Christensen and her son, Vonn.

Smith sold his Inc. 500-listed, wholesale vegetable business four years ago and began seeking out waterfront property where he and his family could enjoy the spoils of an early and well-financed retirement. “I always had this dream of living on the water. I looked in Monterey, Santa Barbara and Lake Tahoe, but most places were $2 million just for the dirt.”

After a three-year search, Smith paid $355,000 cash for their Club Marena condominium. To safeguard the transferability of his investment, Smith set up a Mexican corporation which now leases the house back to him. “I have a deed of trust with Stewart Title Guaranty as opposed to a Mexican bank trust. Many Americans have bank trusts with 50 or 99-year leases, but I felt more comfortable structuring my investment through the creation of a Mexican corporation. I didn’t want my heirs to walk into a Mexican bank one day and have the bank say, ‘Miles Smith. We don’t know any Miles Smith.’”

Now celebrating their first year in their Baja home, the Smith family has dispelled many of the misconceptions their U.S. friends had about living in Mexico. Miles’ fiancée is a scheduling coordinator in the cardiology department at Sharp Hospital. She uses her Sentri Pass to cross the border in 15 minutes, commuting to work and to visit her brother in San Diego. She was taken aback by people’s initial reaction to their move. “Friends would ask me ‘What about your young son? Are you out of your mind?’ It was as if we had decided to pick up and move to Iraq.”

And what about 10-year old Vonn? He’s thriving in school and enjoys playing on a Little League baseball team in Rosarito three days a week. Vonn recently completed the third grade at Colegio Reina Isabel, a bilingual private school that costs $360 a month. Smaller class sizes, more challenging material, and a teaching style that Christensen describes as “loving and kind” have turned Vonn into an enthusiastic and more confident student. “Almost all of my school friends are Mexican,” says Vonn. “I help them with their English and they help me with my Spanish. I’m a good speller and I love to draw. Here, we get to hug our teachers.”

Smith and Chistensen have also been delighted with the quality of the professional and medical services in nearby Rosarito. “The doctors and dentists are awesome,” says Smith. “But if I ever got a heart attack I’d probably ask to be airlifted back to the U.S.”

Safety and security issues also take on a different tack south of the border. “The drug cartels are fighting for turf right now, but we’re very well protected here,” says Miles. “I read about crime in San Diego and actually feel safer in downtown Rosarito than I would in Downtown San Diego. Guns are illegal in Mexico and someone like Michael Jackson never would have survived here.”

Of course there have been adjustments. “When the tile workers arrived for work three days later than they promised I got very upset. It’s taken me a while to accept that. However, my feelings about life and my sense of time have changed since moving to Mexico. Now I just know that eventually they’ll get the job done. It’s a different rhythm down here. A healthier rhythm.”

Elias Terman is the managing director of Terman Consulting Group, a strategic marketing firm with offices in the U.S. and Mexico. He can be reached at elias@termanconsulting.com or on the Web at termanconsulting.com.