Are you dreaming of Mexican haciendas, emerald green Bordeaux vineyards, a sun-washed Mediterranean villa, or a seaside beach house in Santos? Your reasons to invest in international property may be many ranging from diversifying your investment portfolio, and higher returns, to lowering the cost of living to afford a better lifestyle and of course your sense of adventure. Well, you are not alone as many people share the dream of buying international property. However, it can be an unfamiliar path for a first-time international property buyer to tread. So, there are certain pivotal points to be considered in 2023 before buying international property.
- Watch out for Social and Political Stability
Firstly, you must keep your eyes and ears cued to the international news reports emerging from the country of your choice residence. Is the political and social situation stable out there? Are they on the seismic fault line? With the political unrest and volatile scenario in the current world affairs, you wouldn’t want to repeat the experiences of property buyers in Ukraine, Kuwait, Turkey, Iran, Iraq, or Sri Lanka no matter how attractive.
- Consider the Cost of Living in Your New Country
Moving overseas can raise your standard of living if the country you choose has a lower cost of living than your home country. However, if necessities like food, transportation and medical care are much more expensive than they are in your current city, it might prove to be a bad decision unless you have won the lottery or inherited a massive fortune! So, while scouting out properties compare the cost of living you will incur in your new country of residence to your current cost so that you can plan ahead and budget accordingly.
- Legalities of Owning Foreign Property in Your Home Country
You must abide by the rules of your home country as well when you buy international property. Find out your home country’s policies on owning overseas property. Most nations usually allow you to buy a home in a foreign country without charging too many additional taxes. But you must always confirm to avoid any unpleasant surprises.
- The Ownership Laws in Your New Country
Every country has the right to place restrictions on foreigners buying properties on their land. Even if the country of your choice residence allows foreigners to buy homes, it may require you to register with a government agency or obtain special residence permits before you complete the transaction. If you don’t know the country’s rules, you can always contact a real estate attorney who knows how to execute foreign transactions. Of course, After all, you wouldn’t want to discover that you are not legally entitled to buy a home in the country after you have moved in!
- Hire local professionals
You need to start by researching two local professionals- A local lawyer to help you deal with the legal matters as property laws are different in each country and a reputed local estate agent. Choosing a reputable local estate agent will go a long way to ensure that your first international property purchase goes off smoothly. Research the agents in the area where you are planning to buy the property, and ask them questions about the local culture prevalent there. They can provide you with insight into the available properties, become aware of the market, stay organized, and will help you find the best deal.
- Consider Your Tax Liabilities as an Investor
In the volatile and diverse real estate market, every country has its own legislation and tax laws, asking you to repay the inheritance tax, title transfer tax, and stamp duty at the time of purchase. Apart from these, some countries may ask property owners for land tax in the form of an annual cost. Factor these potential costs into your budget to avoid legal penalties.
- Funding and Finance
Though selecting viable properties that meet your needs is comparatively easy, securing finance liable to international laws in terms of local currencies is rather challenging. To start with, ensure that you obtain your “Agreement in principle” before making the purchase, as it will safeguard you when you do not get a loan or are not able to get your initial deposit back. If you’re planning to approach a foreign bank to get a mortgage, you must be prepared for a huge down payment and pay a high-interest rate. They may also require you to purchase a separate life insurance policy so that your mortgage can be paid off if something happens to you. To avoid the hassles of financing, you could use cash or use a home equity line of credit as your source of cash. But you will be putting your primary residence at stake if you can’t make timely payments. You could also dip into your self-directed IRA, for fast cash. However, you will not be able to live in your new home and it will only be an investment property.
- Confirming Title & Ownership
Since investing in international real estate is mostly done remotely, finding trust with the agents and vendors can be rather challenging. Therefore, you have to be extremely careful when discussing title and ownership issues. Because once the transaction is made, you will be liable to pay any debt that may exist on a property. So, it is advisable to take a flight down to confirm the title and ownership, before making the transaction.
- Overcoming the Language Barrier
Language can be a big barrier and can be a big hurdle to communication in such deals as it can create miscommunication easily or delay the process of completing a deal or even impact the cost negatively. So, learning the local language can be a huge asset whether you plan to relocate temporarily or permanently. Moreover, you have to connect with local real estate advisers and vendors hence it would be advisable to hire a lawyer or an attorney with conveyance knowledge.
- Go for High-Quality
Opting for quality is necessary when buying your first home overseas. You may be tempted to buy a lower-standard property at a low price, but you may end up being dissatisfied in the long term. A high-quality property should always be your priority, so choose a prime property. Keep an eye on the capital appreciation, and whether the rates in the area are appreciating or depreciating.
- Know Your Visa Requirements
Not all property markets are the same. So, find out the buying procedure, hire a reputable real estate company, and find out your visa requirements, so that a sale doesn’t fall through at the last moment. If you plan to sell or let out your property in the long term, read all about capital gains tax and how it can affect you. Before scouting for property, confirm whether it is legal for you to buy property as a foreign national. Some countries have very strict rules about who can buy a property on their land, and it would be futile to spend time and money on a visa process if it all comes to nothing.
- Beware of Different Cultural Norms
The property buying process is different in every country, as is the culture surrounding property purchases. A two-bedroom apartment in one nation may only have enough square foot area to be classified as a one-bedroom apartment in another nation. Different countries have different legal issues, and perceptions so hire a local expert who has the required experience and track record to see you through the international property purchasing process.
- Stay for Some Time in Your Chosen Area
Living in a locality is different from visiting and staying in a hotel there. Visit your chosen area of residence at least thrice before choosing to buy a property there. Rent a house to stay in instead of staying in a hotel to give yourself a fair idea of the neighbourhood.
- Make a Quick Move
International property markets move fast, so don’t hesitate to make a decision or you might end up being disappointed. Go for it, when you see a flat you like. A property might not be available if you take a long time to make a decision.
- Have an exit strategy
Man proposes, God, disposes! Whatever your intentions for purchasing property overseas, sometimes even the most well-articulated plans can go away. Hence you must have a contingency plan or an exit strategy ready. For, it will help in curbing any inconvenience that may arise in the event of a potential financial loss.
