When people fall in love with a travel spot and dream of buying a condo on the beach or a villa in the city, they might not expect how complicated it can be to purchase a home overseas.
While it isn’t always easy, it’s not impossible to purchase a property either for personal use, an investment or a permanent residence. But research and comparison shopping are definite musts before delving into this endeavor.
“If you are thinking about a piece of property in another country, first take a step back, and decide why you want to make this purchase,” says Kathleen Peddicord, founder of the Live and Invest Overseas publishing group.
Peddicord is author of How to Buy Real Estate Overseas and How To Retire Overseas—Everything You Need To Know To Live Well Abroad For Less.
She lives in Panama City, Panama, and has lived outside of the United States for 18 years.
“If you are looking for a place to live because you want to move to a specific place, that’s one agenda. But if you are thinking about buying a piece of property for an investment, then that’s a whole different agenda and thought process,” she explains.
The best idea might be buying the home in a great tourist location, using it part-time for your own pleasure and renting it for profit when you aren’t using it, she says.
“If it’s purely lifestyle or retirement that make you desire to live in another country, then take another step back and figure out if you really need to buy a place or rent one for a while,” Peddicord says.
Let’s say you fall in love with the Cayo District in Belize, she explains. You sell your home and everything you own and buy a home in this quiet area of the country. Then at some point you realize that you miss living in the United States – at least some of the time.
“But if you simply rented a house, there’s no harm, no foul. You simply get out of your lease or run it out, and then leave,” she says. “But if you bought a house, then you have to sell it. And buying and selling real estate has a high cost in Belize. The transfer costs are relatively high.”
Here are some other things to consider if you want to buy a house overseas.
You Probably Need Cash
In many parts of the world you will need cash to buy a property. It will be hard, or maybe even impossible, to borrow money for a home in a country that you are not a resident yet in.
However, it’s always worth checking with lenders to see what the rules are with this, especially since most people don’t have tons of cash lying around.
Loans Aren’t Normally For 30 Years In Other Countries
If you do get a loan for your home overseas, you might be surprised at the terms or interest rates.
“Fixed rates are very rare outside of the United States, and the terms will be connected to your age in many places,” she says.
A life insurance policy may be expected to be purchased for the term of your mortgage. If you die before the mortgage is paid off, the insurance money goes to your lender. But in many places, insurance agencies won’t write a policy past a certain age.
Don’t Take The Title For Granted
Make sure to work with an attorney experienced in real estate transactions in whichever country you want to move to. They will have a better understanding of the nuances there.
Also, find someone that is experienced in working with foreign buyers and also speaks fluent English.
“When working with hundreds of thousands of dollars, you also need an attorney whose staff also speaks real English. You need an attorney to verify that the title is clean and clear,” Peddicord says. “In the U.S. we take that for granted because the bank won’t give you a loan without a clear title. “
Many agents and developers in emerging markets don’t care about things like clean titles because these markets aren’t regulated, she adds.
Check Out The Areas Around The Property
If you buy the home for your own residence or to rent out part-time, figure out if you’ll need to own a car or if your renters would need to rent a car to get around.
The ability to just walk to restaurants, attractions or even the beach can make things a lot more convenient and save you money. Also, if you are renting it out, being close to the action can lead to higher rent payments that tenants make.
Don’t Buy Anything On Your First Visit
You need to keep your guard up when purchasing property in another country.
Don’t get rushed into anything by smooth-talking salesmen who offer you an amazing free weekend at the condo resort. The last thing you want when you return from vacation is buyer’s remorse.
Check Out The Cars Near The Property
If you pull up to a gorgeous condominium development and there are only old rusty vehicles there, then you won’t want to purchase a property there.
Areas with nicer cars are bound to be safer, and it’s a sign that the property is valuable. Remember, this is another country, and safety can always be an issue – even if you’re in your own home.