International Property

Think Global: International Property

Second home living or retirement offers you the chance to expand your horizons outside the borders of the USA. With research and the help of a good agent, you can master the art of buying international property. For a successful venture, investigate the three C’s: currency, culture, and convenience.

International Property Checklist

Are foreigners welcome?
What visas are required?
Can foreigners own property?
Are loans available?
What are the tax implications?
Is there a language barrier?
Is there a favorable exchange rate?
Is the currency stable?
Are there restrictions on moving currency?
Are medical services nearby?
What is the cost of travel in and out?
What is the cost of local travel?

Currency

Often, the number one appeal of an international property is pricing. In many locations the same money buys almost twice the house overseas compared to the US. However, fluctuation of world currency creates both a benefit and a risk. You can still get more value for your US dollar purchase in places like Mexico and Canada. However, buying in Europe, for example, would be costly at today’s exchange rates (April 2004). Ideally, if you decide on an overseas purchase, the best hedge against a dramatically changing rate of exchange would be to move a portion of your US dollars into the local currency while the exchange rate is favorable. In that way you have the local currency available for your on-going living expenses, regardless of how the rate subsequently changes. Be sure to investigate whether there are any restrictions on moving currency in and out of the country.

In addition to finding great homes for lower costs, the infrastructure of many overseas locations provides very affordable support services. Support such as babysitters, gardeners, and maintenance can be included in your new lifestyle more easily than if you bought your second home in a luxury area in the US.

Along with the value of the currency, another consideration is financing. The easiest, least complicated method is to purchase your overseas property outright. This is an especially good way to take advantage of a favorable currency exchange. If you require financing, some US banks have overseas offices that could help with the mortgage. However, in many countries a fairly sizable (50%) down payment is common. To obtain a local loan, investigate the local banking system to find out what options are available. Many US real estate companies have international affiliates that can provide assistance. Be sure to find out the unexpected costs as well, such as unusual legal and transfer costs.

Finally, consider the affect of taxes on your lifestyle. Some countries, such as Belize, offer very favorable tax plans for outsiders, while others are just the opposite.

Culture

A second reason people choose international locations for second homes is for the cultural experience of overseas living. Take time to find a location that welcomes Americans, and allows them to own property (countries such as the Philippines and others, for example, do not allow foreign purchase.) In choosing an overseas community, compare it to your own self-evaluation. If it is a community mostly of locals, are you fluent in the language (or willing to learn it)? Are you comfortable adapting to other cultural traditions? Or, do you want to live overseas, yet be in the company of other expatriates? Again, check that the expatriate community has been welcomed and not seen as intruding on the local culture.

As you consider living overseas, it is important to be sensitive to the fact that you are a guest in the country. Even with the purchase of property, until you have established yourself there over a long period of time, your actions will be visible to others. Take time to be familiar with local customs and local issues so that there are no unintended insults to your host country. This includes the accepted standard for dress (in some countries, women dress modestly in public places, even beaches) and attitudes towards the environment, politics, and race. An attitude of respect and genuine interest in the local culture is a sure formula for promoting good relations. Part of the culture also includes the variety of legal systems overseas. What are your rights as an American citizen? What kind of visa do you need for living in the country? Do you need to have local status to open bank accounts, buy property? Are your rights protected as an American? Take time to research the judicial culture in your proposed country before making a final move.

Convenience

Living in the US we often take for granted many of the conveniences available. For example, running out of milk or water isn’t a problem… you run out to the local 24-hour convenience store. However, in many of the popular overseas destinations, the access to unlimited shopping is non-existent. Be sure you can handle the preparation needed to have supplies on hand. Are you used to drinking the tap water at home? Overseas, you may need more preparation, such as filters, boiling, or purchasing water. More serious is the question of convenient medical care. Again, in the US we are accustomed to near-by emergency rooms where the doctors speak our language. It is important to know where the nearest medical facilities are in your chosen destination, and what they are like. This is particularly important if you are considering the destination for retirement.

Ease of travel may also differ in your international location. This includes availability of gasoline (at affordable prices), good roads, nearby airports. Check it all out before making your final decision.

Where to go

Once you know your own capacity to live overseas, the world is at your feet. Mexico is a very popular destination, including the Yucatan Peninsula, Baja Mexico and inland locations such as Todos Santos. Costa Rica and Belize are also attracting Americans. The Bahamas and the Cayman Islands are a great locations for island living. On the other side of the world, Greece has always been a favored second-home location, as is the South of France and Italy. Closer to home, our nearest neighbor Canada, still offers one of the best international locations, without the barriers of language and culture. Remember to get the help of an agent who knows the area. Take the three C’s with you, and find a home wherever you want to go.

Printed with permission from EscapeHomes.com