6 Tips for Buying Property Overseas

So, you’ve decided it’s time to diversify your portfolio—or perhaps that charming seaside town from your last summer vacation has stolen your heart, and now you can’t stop imagining waking up to a seafront view every morning. Both are good and valid reasons to start the adventure of a lifetime - buying property abroad. 

However, do not start this undertaking blindly. There are certain things every real estate investor should always keep in mind, and doubly so when it comes to buying overseas property. Read our 6 expert tips for buying property overseas and go into the process fully informed.

1. Understand Your Financing Options

One of the most crucial aspects of any real estate adventure abroad is acquiring funds. Some buyers may opt to use personal savings or investments, allowing for a quicker purchase without the need for external financing. 

Another route could be taking out a home equity loan on your existing property, which can provide funds while potentially offering favorable interest rates. Additionally, some countries offer developer financing, where the property developer provides the buyer with a payment plan.

RELATED: What's The Difference – Home Equity Loan vs Mortgage

Think About a Mortgage

Getting a mortgage in a foreign country can be a great way to finance your property, but it’s important to be aware of the unique challenges involved. For starters, every country has its own set of rules, so you’ll need to check if you qualify as a non-resident and what kind of paperwork, like credit history or proof of income, is required. 

It’s a good idea to compare options from both local banks and international lenders who specialize in overseas mortgages. This is where working with a mortgage broker like Kredium can really help—they can guide you through the process and match you with a mortgage plan that fits your needs and goals.

Be Mindful of Currency Fluctuations

Exchange rates are unfortunately not exempt from Murphy’s Law, so they can shift at the most inconvenient of times, which could end up costing you more than expected. To avoid any surprises, you should consider opening a local bank account and transferring money when the exchange rate is in your favor. 

You can also look into options like forward contracts, which let you lock in an exchange rate for future payments, which is especially handy. In any case, it’s definitely something to keep an eye on so your purchase goes as smoothly as possible. 

2. Read up on the Local Real Estate Market

Before diving into any property purchase abroad, it’s essential to do your homework on the local real estate market. Prices can vary drastically from one area to another, and what seems like a good deal might not be as great once you understand the local trends.

RELATED: 15 Best Countries To Buy Property as an American

Take time to research how property values have changed over the past few years and what factors could affect them in the future, like economic conditions or development plans in the area. Local agents, online forums like Reddit and Facebook, and expat communities are all excellent resources for getting a feel for what’s happening in the market. Of course, if you’re lucky enough to have networked with the locals, any info they can give you will be invaluable, as they’re likely to give you unbiased, realistic advice. 

Work with Local Real Estate Professionals

Local real estate agents and professionals know the ins and outs of the market, from the best neighborhoods to legal requirements you might not be aware of. They can help you find properties that meet your needs and budget while also guiding you through the paperwork and negotiations. Plus, they often have connections to other essential services, like legal advice, inspectors, and even contractors for renovations.

Residency Incentives (Golden Visa)

Many countries offer residency incentives, like the popular Golden Visa program, which can make buying property abroad even more appealing. These programs typically grant residency or even citizenship to foreign buyers who invest a certain amount in local real estate. 

Not only does this open the door to living in the country more easily, but it can also come with added perks, like easier travel within the region or tax benefits. If you're looking for a way to make your property purchase work harder for you, exploring residency programs could be a win-win.

Try to Visit the Property in Person

Don’t let the post-Covid trend of doing everything remotely make you complacent - while online listings and virtual tours are convenient, nothing compares to visiting a property in person before making such a big decision. Photos and videos can be helpful, but they often don’t capture the full picture.

RELATED: What to Look for When Buying a House

For starters, you can only get a feel of the local climate if you visit in person. The same goes for the location, which involves checking out the surrounding neighborhood and the property’s access to amenities and connection to the rest of the country. Finally, you can only assess the actual condition of the property, including noise levels and, well, if it’s actually built as advertised, by going over there yourself. 

3. Stay on Top of the Legal Requirements

Making sure that you understand and adhere to the law at all times is crucial to ensure a smooth and hassle-free transaction. Each country has its own set of regulations around property ownership, taxes, and residency, so it's important to familiarize yourself with these early on.

The last thing you need or want when buying property abroad is to find yourself in a legal soup; the process is complex enough even when you’re doing everything by the book. 

Hire an Attorney if Needed

There’s no need to navigate the jungle of foreign property-buying legalities on your own. A local attorney familiar with local regulations will ensure that every contract is legally sound, protecting your rights as a buyer. 

They can also help you avoid potential pitfalls, such as hidden clauses or legal disputes related to property ownership. While hiring an attorney may seem like an extra expense, it’s really an investment in peace of mind—making sure you’re legally covered from start to finish.

Use a Local Bank Account

Setting up a local bank account not only simplifies payments for things like taxes, utilities, and fees, but can also save you money on currency exchange and international transfer fees. Plus, having an account in the country where you're buying property gives you quicker access to funds when needed and keeps everything organized in one place.

4. Be Aware of All Tax Implications

Buying property abroad comes with its own set of tax responsibilities, and it’s important to be fully aware of them before you commit. Many countries have taxes specifically for foreign buyers, which can include stamp duties, capital gains tax, or even annual property taxes.For example, in Portugal, if you buy property under their Golden Visa program, you might be eligible for certain tax breaks, but you could still be hit with the IMT (Municipal Property Transfer Tax), which can range from 1% to 8%, depending on the property's value.

Additionally, your home country might have tax implications for owning foreign property, like income taxes on rental earnings. To avoid any surprises, it’s a good idea to consult a local tax expert or financial advisor who can help you understand the full scope of taxes involved.

5. Consider Safe Living Factors

It’s important to think beyond just the property itself—considering the safety and well-being of you and your family in the new location is just as crucial, if you plan to live there.

Look Out for Security 

Safety should always be a top priority. Take time to research the crime rates in the area and consider whether the property is located in a secure neighborhood. Are there security systems in place, or will you need to invest in one? These are the questions to ask yourself when looking at properties. 

It's also worth checking if the local community is tight-knit or if there are security patrols. If you plan to leave the property vacant for extended periods, you’ll want to ensure it’s well-protected.

Check out the Local Healthcare System

Access to quality healthcare is an important consideration when buying property abroad, especially if you plan to live there long-term or spend significant time in the country. Research the local healthcare system to see how it compares to what you’re used to. 

Are there good hospitals and clinics nearby? What are the costs for both public and private healthcare, and will your insurance cover you abroad? For peace of mind, it’s helpful to know that you’ll have access to reliable medical care if needed, especially in emergencies or for ongoing health concerns. Furthermore, if your healthcare system back home is not one you favor, buying property in a place where the system is top-notch will only boost your overall quality of life. 

6. Think Long-Term; Future Resale and Rental Potential 

It’s important to think beyond your immediate needs and consider the long-term potential of the investment. One key aspect is the return on investment (ROI), which refers to the profit you can expect to make from the property over time. ROI can come from both property appreciation and rental income. 

RELATED: The Benefits of Owning International Real Estate

Look into market trends—are property values in the area expected to rise? Buying in a growing market can significantly increase your property's value over the years. Make sure to also consider the rental demand in the area. If you buy in a popular tourist destination or a city with a constant influx of expats, rental income could help you cover your mortgage payments or even turn a profit! 

Conclusion: Explore Kredium’s Real Estate Solutions

Buying property abroad can be both exciting and challenging, but with the right preparation, it’s easier to proceed. From securing financing to considering long-term resale value, each step is important in making a smart investment.

Kredium is here to help you through the process. Whether you need assistance with mortgage options or advice on local real estate markets, Kredium's team of specialists offers tailored solutions and expertise in international real estate.

Our experience in international markets makes buying property abroad simpler and less stressful. Contact Kredium today to start your journey toward owning your dream property abroad.

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