With the American economy in quite a strong position, more Americans are considering putting some of their hard-earned cash into buying a vacation home overseas. Despite the issues with the Brexit and also due to the increasing failures of the National Health Services (NHS) even one in three Britons has their sights set on buying a holiday home in the sun.
If you dream of owning a sunny villa in Italy, a cottage in Scotland or maybe a beachside apartment in the Caribbean, here are some essential tips to consider when looking for real estate overseas.
Falling in love with an exotic location on vacation is one thing, but you’ll need to really do your research if you want to live there.
Vacationing somewhere and actually living there are often vastly different experiences. You may already have a favorite destination in mind and be visualizing your life lazing by a swimming pool overlooking the Mediterranean Sea…on the other hand you may be interested in shopping around to find the best countries in which to buy a vacation home and make an investment in property.
While most Americans use other countries as tax havens, it might surprise you to know that for foreigners American real estate is their tax haven. Foreign property investors often have protections in the US that even US citizens do not.
It’s wise to do a fair amount of research into any new destination and cover everything from foreign ownership of real estate rules, property taxes, the political and economic stability of a destination and also the investment potential a given country offers. With this information in hand, it will be easier to make the right decision about which location suits your lifestyle objectives, budget, and long term investment plans.
Don’t go it alone and get assistance.
Googling is fun but the last thing you want to do is rely on the internet for your investing education, especially when you are researching other countries. Finding a realtor able to assist with your search for the perfect vacation home could save you time, effort and even money in the long run even with the commission from the sale. A local agent will understand the dynamics of their property market and be able to quickly and efficiently track down real estate bargains that match your vision for your vacation home overseas.
Be aware that in some countries real estate agents neither have to be licensed nor qualified, so find this out first and if you still decide to go that route take recommendations and get second opinions. Agents may get kickbacks or other incentives to push properties so getting more than one person to help you increases your chances of getting unbiased and fair information.
Exchange rates fluctuate and mortgage and land-owning requirements differ by country.
Most people go the route of raising a mortgage or re-mortgaging their home to raise finances in their home country to fund the purchase partly due to the fact that in many countries it is difficult for non-residents to get a mortgage. In some of the emerging property markets around the world, there is no possibility to get a mortgage because they simply aren’t offered.
When transferring money overseas beware of fluctuating exchange rates that can devalue your lump sum significantly and make the difference between you affording your dream home and affording a poor second best. There are professional companies available who can help those buying property abroad to deal with fluctuating currencies so look into your options well in advance. There is an art to getting the best exchange with savvy professionals watching the markets and advising so that you get the most attractive conversion. If you need to open up an account, you’ll want to both time it correctly and use only the minimums until it gets close to closing and let the professionals guide you on when to initiate the transfer and subsequent currency exchange.
Titles and Deeds are just as complicated in other countries as they are in the States.
Legal systems vary from country to country as does the land registry system, and in some countries, title deed transfers are not registered at all which can make it difficult to prove who owns the property. Educate yourself on the legal rights that you will have as a property owner in the country you’ve chosen and understand the different types of assurances you can get from either the seller, the agent or government that you own the freehold title to the vacation home that you have bought.
Never buy real estate overseas without the aid of a good lawyer. You’ll want to check their credentials and ensure that your signed contracts or agreements are translated into your native language. It’s important that you check the wording carefully before you sign and ask your attorney to clarify any questions you have with your rights and responsibilities outlined in the documents.
Protect your new asset by hiring a good management company or property overseer.
Once you make the transition from house seeker to vacation homeowner you will want to keep your real estate assets well looked after. If you are only going to be vacationing in your home overseas occasionally consider having a management company look after your home when you are away. You’ll want to ensure your property if it is to be left for periods of time is well secured. Even in countries where there is a very low crime rate, a beautiful home left standing empty is always a temptation for criminal activity.
Include your overseas property in your estate planning.
You’ll want to make sure that your property is properly owned and managed by a controlling entity that is clearly listed in your will and referenced in your pour-over will. You’ll also want to direct your executor/executrix in writing using these legal instruments on beneficiary considerations. Before you do this, during your research, you’ll need to ask if the property is able to be passed on. Some countries may have laws that prevent or require additional filings to occur either at or after closing in order for your property deed and titles to transfer correctly.
Don’t forget to insure your property.
Get insurance to cover the value of your home and contents and make sure someone regularly checks that your property is in good order, that the weeds are not growing over your veranda and that your swimming pool is clean and ready for when you next take a holiday in the sun.