Tips For Buying Property Abroad

Buying property overseas is not just for the rich and famous. It has real financial benefits for the average American too - as a long term investment option, part of your retirement plans or simply as a chance to live abroad and sample what the rest of the world has to offer outside of the USA. 

If you are considering buying abroad then there are a few things that need to be considered. First of all there are many legal and economic qualifications you need to understand about living and working in another country that might have an impact on how you choose to buy your overseas property.

Then there is the tax question.  For more information and advice on how your tax might be affected if you move outside the USA visit here.

Once you have done your research and you are ready to make the leap and buy a house overseas here are the necessary steps you should take to ensure you protect your investment and exchange contracts without falling foul. 

1) Thoroughly investigate the market; global real estate markets do sometimes follow the same trends but what is more common is for individual markets to go up or down independently depending on outside factors determined by the country’s other political of financial systems. Therefore before you start your property search abroad you should get a feel for where is going to be the right place to put your money. This is of course assuming you are not moving for employment or family reasons where you will be limited to a choice; however if you are looking purely for investment or for an exciting change it pays to look at lots of different areas and compare their potential for growth and income. Don’t limit your research to the real estate market either - you should also consider the country itself in terms of how stable it is, it’s ability to support foreign investment and whether it would be a nice place to live - culture, weather and safety are all important issues to add to your search criteria.

Tips For Buying Property Abroad

2) Limitations; once you have a country/ies in mind then you need to understand and preventions or limitation to buying real estate by foreigners in that area.  If you don’t have a legal right to buy then there is no point continuing with your search as you could end up handing over cash for a property that you will never be able to own. 

3) Find a real estate attorney; you may now think you know all there is to know about the country you are buying in but when it comes to legal and financial transactions it is vital you have an independent professional on your side. A real estate attorney doesn’t just ensure that the paperwork is correct they are there to check out the local housing market, spot challenges and potential problems before you even make an offer, understand the currency exchange and what paperwork actually needs to be filed for that particular legal system - and a whole lot more. Dealing with a foreign process in a foreign language is asking for mistakes to be made. If you can’t afford an attorney you can’t really afford to buy abroad.  

4) Make sure it all adds up; with your attorney onboard now is the time to start looking at your budget and working out just how much you have to play with. Don’t overstretch yourself because there is less protection in certain countries and you could find yourself losing your home very quickly.  If you are planning on finding a home loan then you will need to either find a local bank who is willing to lend against an overseas property or venture into the realms of foreign borrowing. If you are looking at countries like the UK, Europe, China or Australia you will probably find it easy to negotiate local lending solutions. However some countries this will now be an option and you will need to find financing options from elsewhere. Your attorney can help navigate this issue. Even if you are planning to finance your investment yourself then there are still consideration to make in terms of the final numbers including factoring in legal expenses and any other expenses determined by the country’s property system.  You may also find restrictions on overseas property ownership which all need to be understood before you can even start looking at suitable properties. 

5) Beware exchange rate movements; exchange rates do not need to fluctuate by much to substantially change the value of your purchase. If you start looking at houses within your budget and there is a 10% drop in the value of the dollar against the seller’s currency for instance then this could suddenly put the house outside of your budget. If you have already signed contracts this could be a real issue and one that you will want to avoid at all costs by understanding your budget in both currency terms. A fluctuation in currency will also affect the cost of your mortgage particularly if you are still earning your income in the US. A foreign exchange specialist can help with all of these issues and is another key member of your team when looking to purchase abroad. 

6) Only use the professionals; unlike buying property at home there are very few guarantees for property sales abroad because of the different legal systems in which you are operating.  This is another reason for employing a real estate attorney with international investment experience as they will understand this and will do everything they can to minimize your risk. Using a professional agent is also a must as this will allow you to ask the right questions. You probably know a which developer or bank has a good reputation locally but how can you be sure that the person or people you are buying from abroad has the same consideration for quality and customer service. A professional agent will not only get the information needed on the property you are buying but also the company that is selling it so that you can be a little more reassured that your money is in safe hands. 

7) Find the property that’s right; once you have your team in place and you are ready to start searching potential properties.  This can be an incredibly exciting time and one of the highlights of the whole process. It can also be one of the more challenging aspects as you are suddenly faced with the reality of trying to find a property in a country where you don’t speak the language and where there may not be the well organized process of posting property for sale as you are used to in the US. Often you will need someone on the ground to find suitable houses for you to stop fruitless trips to see properties that don’t match your criteria or may not even be on the market. Likewise someone on the ground can alert you to a property that is for sale but that hasn’t made it on the list of the limited number of agents that act in that area. Then you have other barriers such as language and even timing of appointments. If you are buying in India for instance don’t expect viewing appointments to run anywhere near to time, which can be very frustrating. If you approach the process with a sense of humor and discovery however you will get through it and once you have found the right property you are then ready to move on to close the deal.

8) Have your documents translated; once you have made an offer on your property you are likely to receive a lot of paperwork and this might be more than confusing if it is in another language. Before signing any legal document or in fact any document relating to the sale make sure you have them professionally translated so that you can understand what is being asked of you, what to expect in the transaction and how your money is going to be transferred and protected during the process. If you sign without full understanding you could become liable under law for whatever the document asks even if you disagree with the content.

9) Moving on; when you finally exchange contracts and the property is yours you then need to decide how you are going to protect it and what you are going to do with it.  If you are going to live there it is a slightly more straight forward case of moving. If you plan to rent the property out however then you will need the support of a local agent to ensure your property is being marketed and managed properly. 

10) Where there are rewards, there are risks; finally buying a property abroad has lots of rewards. A better and cheaper lifestyle, the chance to significantly increase your investment or provide a nice income on your retirement. However it comes with substantial risks too. Ensure you are looking at both sides of the coin when making your investment choices. Being aware of all the facts and having contingency plans if things don’t quite work out will save a whole lot of pain after the fact. 

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