When I bought my first home in South Africa, I had no clue what I was getting myself into. All I knew was that the home was affordable, the neighborhood was up-and-coming, and I could see my family really enjoying life there—eventually. But I had no clue that there would be so many "gotchas." From property taxes to currency exchange, property managers to notaries—the devil is in the details when it comes to purchasing a home abroad.
For foreign buyers, taking a chance at a new life in a new home can be exciting but scary. However, enthusiasm can easily give way to skipping some vital steps needed to make the best purchase for you and your family. Here, real estate pros share valuable advice to keep in mind before buying a home in a foreign country.
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Can Foreigners Stay and Pay?
International Living, a resource for moving overseas, has a brief guide to common countries where foreigners look to purchase a home. Some countries offer the same property ownership rights to non-residents as to citizens, while others are less welcoming. Do your homework before you get too attached to one country. The difficulty level might not be a question of rights (check with a lawyer and real estate agent in the destination), but also of financing the purchase. Local bank financing makes it a bit easier to cobble together the money necessary to make a big move.
"In terms of financing a property here as a non-resident, Portugal has an outstanding reputation for welcoming ex-pats, and the conditions for getting a mortgage are somewhat straightforward," says Rafael Sena, director of Goldcrest Real Estate. "In general, mortgages are the most common way to finance a property investment in Portugal. Both residents and non-residents can apply for a mortgage from Portuguese banks." Meanwhile, in South Africa, non-residents have to pony up 50% of the purchase price of the home to get a property loan from a local bank.
Each country and each lending institution is different, so ask around for the best deal. If a local bank loan isn't an option, some people use their savings, annuities, pensions, retirement funds, or a U.S. loan (personal loan, home equity line of credit, and more) to make it work.
Last, research insurance, taxes, and other banking details to make sure that you can easily transfer money between your new home and your old one.
Get Specific About Your "Why"
Now that you've done your research, you know this is not a pipe dream. But your motivation alone won't seal the deal. Think about why you'd like to move and narrow down choices based on locations that deliver on that promise. For example, if you're aiming for financial freedom through geographic arbitrage, you'll need to ensure that the cost of living in your new hometown is really worth the moving costs and employment changes. If you're looking for a space immersed in nature, get specific about what nature means to you. Is that surrounded by snow-capped mountains or a stone's throw away from a deep blue sea? Even small countries can have vastly different climates and costs, so get very specific about the country, then the state or province, then the city that gives you what you're hoping for. This process of elimination can take months, if not years, but don't rush the process. If journaling and introspection aren't enough, try online courses that can help.
Fit In or Be a Resident Tourist
Once you've decided on a city, finding the right home is about location, location, location. You'll notice that uneven housing development is never more apparent than when you're looking abroad. Top-notch infrastructure with modern fixtures might only be in a certain part of town, while picturesque historical buildings might be clustered in another zone. What matters most isn't so much the style of the house but whether you want to fit in like a local or if you'd like tourist amenities that remind you of home.
If you want to blend in, consider the distance to work, public transportation, schools, and common attractions. If you want easy retirement living complete with sunsets and waterfronts, shape your searches around these factors. In some places, you can get the best of both worlds, but it might take much longer to find. And in other places, there's just no in-between. If your conscience is torn, chances are family members joining you have similar feelings; have an open dialogue with spouses and kids so that everyone's preferences are considered. More importantly, communicate with your real estate agent, so they're equipped to find the perfect match—both the home and the neighborhood that suits your needs.
Visit More than Once
It should go without saying that it isn't best practice to buy a house sight unseen, but this is fairly common when buying a home abroad. After all, you're moving thousands of miles away and it might be inconvenient to visit a few times before making a final decision. But invest the time and money to explore.
"Get to know the different areas, visit at different times of the year if possible, and even check out places at different times of the day. Don't take the area on first impressions, as there are big seasonal variations. Some developments become a ghost town over the winter or can become uncomfortably crowded in the summer. Do your research and if you can't visit several times, make sure you ask as many questions as possible to form a complete picture," says Joyce Little, director of Cloud Nine Spain, a luxury real estate company that caters to expat clientele.
If you can't fly back and forth, "start with online research, join community Facebook groups, and dig into the pros and cons," says Little. Expat groups are full of people with recent practical experience navigating the leap you're attempting. Make friends and ask lots of questions so that you can avoid costly mistakes and have local buddies to celebrate with when you sign on the dotted line.