Key Guidelines for Your Overseas Property Purchase

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By Kathleen Peddicord

The idea of buying a home as part of your retirement in a new country can be intimidating, and it isn't for everyone. However, a piece of property in your chosen retirement haven can double as an investment, generating cash flow from rental income when you're not using the place yourself and allowing you to build equity to bolster your retirement nest egg.

How, though, do you make a purchase like this with confidence? The property purchase process is safe and secure in most places where you might be thinking about buying, as long as you follow the rules and use the same good sense you'd use when buying a piece of real estate in your home country.
For any purchase you're considering, address these issues:

1. Location

When buying property anywhere in the world, location is paramount. You can fix almost anything else with enough time and money, but you can't fix the location. Make sure it's either good or that you have a strong reason to believe the place where you're buying is on its way to becoming good. In addition to the neighborhood, consider the distance to the airport, good medical facilities and other elements that are important to you.

2. Walkability and Public Transit

Unless you're considering buying in a remote region where owning a car would be necessary, remember that walkability and proximity to public transit systems will be important to you, to your potential tenants if you plan to rent the place out when you're not using it and to anyone you might eventually sell to. If your location is not walkable, you may be requiring your buyer or renter to have a car, which is a big factor in a foreign country.

3. What's Going on Next Door

In Santa Marta, Colombia, I looked at a beautiful, new high-rise apartment three blocks from the beach with an impressive view of the Caribbean. When I looked out the window, I noticed that the adjacent "never to be developed" property was filled with construction equipment. As it turned out, this undisclosed neighboring building was going to block most of the view I'd have been paying for.

You can't see into the future, and you can't know everything that will happen in the neighborhood or region surrounding where you buy long term. However, you should keep your eyes open to what's going on around you when making your purchase.

4. The Path of Progress

Take a big-picture look at major infrastructure upgrades in the works. On one hand, buying in the path of infrastructure and development means you're positioning yourself to benefit from the construction of a new highway, airport or hospital, for example. However, if you're buying for peace and solitude, a new airport is the last thing you want just around the corner.

5. Details About Condos

If you're buying into a condo building, also consider these things:
  • Condition of the building. Look at paint, general appearance, the pool, grounds, elevators and other shared facilities. A quality, well-managed building is never rundown. Don't take promises that the homeowners association is planning to fix things up during the coming year.
  • HOA. The homeowners association is responsible for preserving the value of your investment. Make sure the rules for appearance and maintenance are being followed, and that the HOA is well-funded. Ask to review financial statements (your real estate agent should be able to get these). Compare the amount of monthly HOA fees for the building where you're considering buying with fees charged by other buildings in the area. Fees shouldn't be dramatically different. If fees are too high, what are you paying for? If fees are too low, the HOA won't have the funds required to take care of the building properly.
  • Short-term rentals. If you want to rent your property in the short term when you're not using it yourself, make sure this practice isn't prohibited by the HOA or the municipality where the property is located. On the other hand, if you intend to live in the property full time, you probably don't want short-term tenants coming and going around you all the time.
  • How many units are for sale. If a mature building has a relatively large number of units for sale, it could be a sign of trouble -- maybe a big tax increase, a big jump in HOA fees or something unpleasant going on the neighborhood, like a nightclub being built next door. Ask around to find out why so many apartments are available for sale. The best source of this kind of information is the building's doormen.
  • The parking lot. A building with well-off owners who care about the properties will likely have a garage full of nice cars, and the more expensive, the better. If you see old junkers in the parking garage, take it as a warning.
Kathleen Peddicord is the founder of the Live and Invest Overseas publishing group. With more than 28 years experience covering this beat, she reports daily on opportunities for living, retiring and investing overseas in her free e-letter. Her newest book, "How to Buy Real Estate Overseas," is the culmination of decades of personal experience living and investing around the world.
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