The key to buying a home abroad, like many other types of investment, is research and preparation. Even the experts get it wrong sometimes after falling head over heels for a property, or not following their own advice. Make sure you consider the fundamentals:
Ask yourself why you are buying. It may sound pretty basic but do you happen to agree on your priorities with your partner (it’s amazing how husband and wives have different aims, report agents) and also: how important is investment vs. lifestyle? From these questions will stem what type of property you buy (size and how do you intend using it?) and where. Rental returns may not be important to you now, but if running costs rise, they might be a useful fall-back.
Recently 10 buyers were asked what was the one thing they regretted about their recent purchase and six of them said they wished they’d researched the location more carefully. Airport transfer times are key for rental properties but the main issue is choosing a property that is too far from towns or amenities. Unless you have spent time ‘living’ in an area you might not discover exactly where you want to be – is it worth renting somewhere first?
Think about whether you want to be in a place where you have to have a car (assuming you can drive, that is). Then there’s the micro-location – have you visited the property at different times of day and what will the area be like out of season?
Don’t just research location but also local markets. Research online but then consider making research trips, or even viewing trips with estate agents once you have honed down the search to a town or resort. Happy buyers often report that good agents have suggested locations – after listening to their needs – that they had not considered themselves. This is an agent’s job but doesn’t always happen. So meet more than one agent and try to talk to people who live in an area to ask them what it’s like. Before you go and view properties, try to have a good idea about how prices work in your given area so you have a handle on ascertaining if something is good value – or not.
You should have your finance in place before you start viewings or you may lose out on a property if you need to move quickly. Bear in mind that obtaining a mortgage overseas can be more complicated than in the UK as overseas buyers – without assets in the relevant country – are often considered higher risk. Florida is one example.
Also make sure you use a foreign currency broker to transfer sums across when you are ready – there is no reason not to. One final point is to factor in all the attendant buying costs – don’t just budget for the sales price as you may need an extra 10 per cent on top of that for closing costs such as stamp duty, legal fees (do use a lawyer) and notary fees. Needless to say there will also be ongoing costs too – have you factored in yearly service charges or community fees? Do not underestimate the costs of ownership.
5) Taking the long-term view
Another common mistake made by buyers abroad is not thinking ahead, although buying a holiday home is normally for at least a five or ten-year period. A property might be perfect for you now, but what about if your circumstances change – will it suit? Common reasons for premature sales include teenagers growing up and not wanting to holiday with their parents; elderly relatives not being able to cope with steep paths or dozens of steps, or – more positively – if you decide to relocate there full time, will the home be large enough?
Also, what is your exit strategy? The more potential buyers out there (is there a local market and/or a mix of nationalities?), the easier it will be to sell your home when you need to.
by Liz Rowlinson, overseas property journalist