Overseas Property Investment 101: What to Know Before Becoming an Expat
Currently, there are nearly nine million Americans residing in over 160 countries around the world, excluding the military.
The reasons for Americans moving abroad are many, including work opportunities and the pursuit of a better life. Some of the people who move to foreign countries as expats end up falling in love with their new destination and opt to buy property there.
If overseas property investment is something that appeals to you, you need to learn a few essential things that can turn your dream into reality. A lot of countries have strict rules when it comes to the purchase and ownership of property.
Of course, there are some universal factors related to buying real estate, including location, size, and price range. However, when you’re buying overseas property, you need to factor in issues concerning making international purchases. These include travel issues and legal matters.
In this friendly guide, we give you some essential tips for purchasing a property in a foreign country. Read on to learn more.
Determine Why You’re Making the Overseas Property Investment
One of the first things to consider when buying a home abroad is how you intend to use the property. You may have fallen in love with a certain place while on holiday, but staying somewhere for several days as a tourist is different from living there full time.
As an expat, are you looking for a family home to live in during your assignment or a place you can retire to once your appointment is over? Will the property be a holiday home or an investment to give you an income from rent?
The purpose of your investment will determine the type of property you buy, as well as how much you’ll be willing to spend on it.
Look For Independent Advice
As an investor in a foreign land, you’re going to need all the good advice you can get. Your best source of legal advice should be from an independent source. Never opt for a lawyer suggested by the developer or real estate agent.
A seller who stands to make some money from the purchase or represents the developer is less likely to give you impartial advice. Always hire your own surveyor, translator, and attorney. Even more importantly, don’t ever sign any document that’s in a language you’re not familiar with until you’ve read the translation from an independent translator.
Ask the Appropriate Questions
Try to find out as much as you can about an area before you buy a property there. The best sources of information are other foreigners who live or own property in the same area. Below are some of the questions you may want to ask:
- How good is the infrastructure in the area?
- Are the communication systems up to date?
- Is the property connected to the energy grid?
- How is the plumbing system?
- Does the area have a good network of roads?
- Is security guaranteed in the area?
The answers to these questions will help you decide whether to proceed with the purchase or not. Remember to purchase a property based on what you can see, not on what the seller promises will exist in the future.
Visit the House before Starting Negotiations
One of the biggest mistakes you can make is to sign up for a home that you have not seen in real life. Take the time to visit the property during the day and at night. This gives you a good idea of what you’re about to sign up for.
Sure, the property may look awesome in the sales brochure, but how do you know it’s not located in an utterly unsuitable location? What if what looks like your dream home is next to a rubbish dump or an airstrip? The only way to know for sure is to visit it in person and take a look.
Find Out the Rules
One of the common questions for many U.S. citizens aspiring to move to Mexico is: can Americans buy land in Mexico? Well, the answer is yes, except when that property is along the coast of Mexico. Foreigners determined to purchase land along Mexico’s coast must do so through a Mexican bank trust.
Other countries have their own rules regarding the purchase and ownership of property. Take the time to familiarize yourself with these rules, so you avoid unnecessary hurdles and penalties for not complying.
Understand the Difference between Civil and Common Law
One of the things to consider when buying a house overseas is whether the kind of law the country follows when it comes to real estate. English speaking countries like Great Britain, Australia, Belize, and Canada use common law. An American buying property in Italy or Latin America, on the other hand, will most likely have to adhere to civil law.
So what is the difference between common law and civil law? Well, in common law, the buyer gets a title for a home and a strata title for a condo. Under civil law, you get a deed known as escritura publica once you purchase a property.
Double Check the Contract before Signing
Now that you’ve found a piece of property you like and gone through everything to make sure everything is in order, it’s time to close the deal. Before signing on the dotted line, however, take the time to go through the contract carefully. You want to make sure that you know what you’re signing.
Typically, the contract will be in the local language. Ask for a copy in English and verify whether it’s an accurate translation. Your independent contractor should help you do so you don’t unwittingly agree to terms that could adversely affect you.
Once you’re comfortable with what’s on the contract, you can proceed to sign it and seal the deal.
Make Your Dream of Owning Property Overseas a Reality
For any expat, making an overseas property investment requires sufficient research as it can involve a lot more risks than buying a property at home. The best way to go about the process is by planning for the purchase early enough and following expert advice whenever necessary.
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