It’s no wonder many people dream about owning property overseas; you get to have a home in multiple countries, may be able to make an income out of it, and will always have somewhere to stay when you visit the country.
Yet, the process of actually getting there is full of pitfalls – and it’s important that you know exactly what you’re doing before you sign any papers. Here is an easy-to-understand guide on how you buy property overseas as well as the pros and the cons of doing it. That way, you get to enjoy your new home as soon as possible or simply rent it out, lean back, and enjoy the feeling of making money.
Why buy property abroad?
There is an endless list of reasons to invest in property in another country; you’ll usually be able to buy it for quite a lot cheaper than at home, you get a passive income if you’re able to rent it out, and you can live there yourself when you feel like it.
However, sometimes, foreigners won’t be allowed to purchase property and, if you are, you might not be able to rent it out or even stay in the country for too long at a time. The message is clear and simple: do your homework first, and you should be good to go.
First: Take a long look at the market
When you invest in a house or apartment in your own country, you’d usually know the market a bit beforehand. You’d know if it has been growing steadily over the last decade, you know which areas are better than others, and you know if one neighborhood is about to crack and if one is about to rise.
These things matter a lot when you buy property and, just because the real estate prices are rising in the country in general, it doesn’t mean that the prices in a specific area do the same. If you just know that Spain, in general, has a booming real estate market, but end up investing in the least sought-after neighborhood, you’re going to have a hard time later on.
As a local, you would normally know this before buying property – but as a foreigner, you better read up on the area before you make any big investments.
It’s also important that you understand the visa restrictions of the country. Sometimes, you’ll only be allowed to stay there a certain amount of time, and then you will have to rent it out in the meantime. If you plan on retiring to or moving to the country for work, figure out what it takes to obtain residency before you do anything else.
Second: Seek professional assistance
Some people do this even when they’re buying property in their own country, but getting legal assistance from a professional in a country overseas can seem like a hassle. It’s really important, though, and you might be able to find someone at home who knows the laws and regulations in the country you’re investing in.
It’s important to do this sooner rather than later so that you have someone representing your interests, and making sure that everything is done properly.
Plus, all legal documents must be translated to a language you understand before you sign anything so that you know exactly what you’re signing yourself into.
Another point to seeking professional assistance is, of course, that you should consult a professional real estate agent in the country you’re buying property. Even if you’d don’t normally do this at home, it’s important to do it when you’re in a country you don’t know that well.
They can point you in the right direction and assist with anything that has to do with the purchasing process. All in all, it’s going to make everything a lot easier on you.
When buying property overseas you will, naturally, need to pay for it one way or another. The best way to do this is to use the cash you have saved up. Check out the best housing loan for properties overseas, and remember that even though it’s not always easy to get a mortgage for property abroad, you might be able to find it if you look around online.
You might be able to purchase the new property with equity from your existing home as well, though, as long as you just vacation in it and rent it out from time to time. That way, when you’re ready to retire and live abroad for good, you simply sell your home and pay off the home equity loan.
Another point to financing your home is that you may want to rent it out to make a bit of money of it. Before you decide on this, make sure that you read up on the local taxes and regulations as limits on rentals are under consideration in some countries.
This is because hostels, hotels, and local property owners are starting to suffer under the competition of sites such as Airbnb. When the foreign investors are able to rent out their property for so much cheaper than the locals, it’s going to be regulated sooner or later.
If you’d like to join the ranks of foreign investors making money out of rentals, you better read up on what the future holds for your specific real estate market first.
Fourth: Get A Management Company
Every landlord knows the hassle of keeping a property in shape. There will always be some wear and tear, something will break, a pipe will burst, or some sort of foreign bug will infest the house. It’s normal and you better prepare for it by finding someone who can maintain it for you if you’re not planning on staying there throughout the year.
In some countries, you might be able to find a professional maintenance company to take care of everything for you – but in many cases, you’ll need to get to know people. In a community of many expats, you should be able to befriend them and find a number for the same local maintenance guy they’re all using.
Informal networks will always be your safest bet when there is no professional company to rely on. They can keep an eye on your place while you’re away, and send you a photo if there is something wrong with the place and a bigger repair is called for.
Everything you need to do at home to purchase property will have to be done abroad as well – just with the added confusion of a language you don’t understand, a market you don’t know, and often a lack of professional assistance. The more help you seek out, the better off you’ll be when it’s time to actually sign those papers.
This guide should help you a bit on your way, though, so that you get to enjoy your new home without any hiccups. Check out these other great resources to help you with your personal budgeting and investments –
Yes, I include affiliate links in all my blogs. I get paid a little each time you click and buy from the included links, but I only recommend products that I use myself. Thanks for supporting our blog and our dream of changing the financial futures of all families and individuals! ~ Lydia Y-S.