It is said that the three most important factors in purchasing real estate are location, location, location. But in buying property overseas, it may be information, information, and information. “We take so much for granted in how we transact real estate here,” Greg Herb, president of Herb Real Estate, Inc. told millionairecorner.com. “It’s certainly not the same from one country to another. There are very specific differences.”
But even before you get to that destination, experts agree that research is crucial. Why do you want to purchase property overseas? Where do you want to live? How will you use the property? How much do you want to invest? These are just a few of the questions real estate investors need to ask themselves, according to Margaret Summerfield, managing director of Pathfinder, which specializes in finding global real estate opportunities.
“Foreign property sales…are on the upswing,” she said. “I’d say it’s partly a desire to diversify outside the US, the fact that there are better opportunities for investors (many overseas markets are booming) and a feeling that you can live better, for less, overseas. This is hugely important for retirees or those nearing retirement and unsure if they can maintain their current standard of living.”
Summerfield provided millionairecorner.com with some rules to avoid pitfalls when buying real estate abroad. Step one is to “ruthlessly profile yourself.” If, for example, the property is purely for investment, then your financial objectives, existing portfolio, and risk tolerance must be considered.
Whether the property is an investment or will be used as a vacation/second home will also have a bearing on location. If the property will be used for short-term rentals, for example, the location should be one visited by a lot of tourists and business travelers, but not one where lots of hotels and condos for rent would provide unwanted competition.
For those who nurse “A Year in Provence” fantasies, it is perhaps most important for potential buyers to visit the property and see it for themselves. Real estate descriptions for foreign properties can get lost in the translation. For example, measurements may be given in meters in Europe, and some countries, Pathfinder cautions, aren’t exactly strict when it comes to property advertising, leading to misleading brochures.
Familiarization (FAM) tours are a way for investors to get the lay of the land, both literally and figuratively in terms of legal and financial issues property buyers face. These typically three or four day small group tours allow potential buyers to visit the properties, explore the area, and get a feel for life aboard. Among the “hot” countries, according to Summerfield, are Mexico (the Riviera Maya), Brazil (the northeast coast around Fortaleza), and the southern zone of Costa Rica.
Regardless of where you buy, the fundamental things apply for property buyers. These include hiring a reputable in-country attorney, purchasing title insurance, researching true market value, checking out a developer, and figuring all the costs.