10 Home Purchase Abroad Tips For Success
by Rhiannon Williamson
Are you seeking
your little corner of sun drenched heaven on earth? If you are you’re
certainly not alone!
Many Northern Europeans, Americans and Canadians
are looking overseas for investment real estate or for a holiday bolt hole and
if you’re considering buying a second home in the sun, a home from home
abroad or an investment property overseas and you’re in a hurry to get
started, these top 10 home purchase abroad tips for success should set you off
in the right direction.
1) Legal
Advice
Legal systems differ from country to country so never
assume that you understand how exactly the entire house purchase process is
going to work, and never expect things to necessarily go exactly your way! To
be assured of the fact that your personal interests are being looked after and
that you, your money and your property are 100% secure, legal and legitimate
it’s essential to seek independent legal representation in the country
you’re considering buying property in. 
This is
especially true if you’re buying property in a country where you do not
speak the language. You will be putting your name, signature and bond to
contracts and legally binding documents…and however pleasant and helpful
the real estate agent or vendor are it’s in your own best interests to
make sure you have a local lawyer who’s in your pay representing you at
such times.
2) Build Times
If you buy off plan or
you’re self-building or renovating abroad you need to factor contingency
into your overall time planning. Weather, seasonal pressures, holidays,
availability of essential building materials – the list of factors that
can adversely affect the build time of a house is almost endless! Your builder
may confidently assure you that your property will be completed by a given
date, and yet, depending on where in the world you’re buying your
property, the completion date is likely to always be delayed! It’s just
‘one of those things’.
3) Setting a Realistic
Budget
Another factor, like time, that can often spiral a little
out of control is the budget. Often we’re told that we should add an extra
10 - 20% on to any purchase price for fees and taxes; that’s all very
well, but actually you have to factor extra money into your budget for things
like visiting your second property abroad during and after the build phase,
extras like light fittings, curtains, kitchen and bathroom upgrades, the
application for and connection of vital services, removal costs and/or
furniture purchase costs, satellite TV installation, air conditioning or
heating installation, car rental. If you have a set budget limit it’s
important to sit down and work backwards including all the potential extras and
fees and then see exactly how much is left for your property purchase.
Don’t be caught out and seduced by the sunshine, set budgetary limits
before getting on the plane!
4) Ongoing Communication
If you’re buying a brand new property abroad – either off plan or
during its build phase – make sure you have some way of keeping in touch
with the developer or managing agent. Ask in advance about how often you will
be kept up to date with progress, whether they can email or send you regular
visual updates and what level of ongoing communication you can expect for them.
Buying property is a very big commitment – financially and emotionally
– it’s important you’re not left in the dark, sitting back home
wondering how on earth your investment is coming along. Sort out your lines of
communication before you sign on the dotted line and make sure you’re
entirely comfortable with how the process will work.
5) Overseeing
& Managing
If you self-build abroad or purchase to renovate
you will need someone on site or in the vicinity of the property to oversee and
manage the on-going build process. If you employ someone to take on the project
management you need to be assured of their experience and credentials, you also
need to comfortable with any language or cultural differences and that they
will not affect the successful outcome of the project. Ask for references, ask
to see other properties they have managed, ask to see qualifications. In terms
of language and cultural differences you need to make sure your words will be
understood and interpreted correctly, you also need to be sure that any
instructions are passed on correctly to the builders. Employing the right
project manager is a very important task! Get it right and the project should
be a dream, get it wrong and the concept of ‘stress’ is one that you
will become increasingly familiar with!
6) What You See Versus What
You Get
If you’re buying off plan or remotely (e.g., from the
comfort of your arm chair back home) you need written confirmation that what
you see is what you get. All too often agents will show you the top of the
range property and finish when your budget is going to buy you something
slightly different. You need every detail confirming from the size and location
of the plot, the size of the property with each room broken down, detailed
floor plans with the location of windows, doors and integral items (from air
conditioners to kitchens), the finish on doors, walls, floors, bathrooms,
kitchens, external areas etc. And get some idea of the build quality. You might
expect the quality to be on a par with what you have back home but you could be
mistaken, what if there is no damp course or no cavity wall for example?! If
possible visit other sites that the particular developer or builder has already
completed to see the standards to which he builds to, and have all important
site completion details written in to the contract with a clause stating you do
not hand over final monies until you are 100% satisfied. Please don’t
assume anything! So many people get caught out because they don’t ask the
right questions at the right time.
7) Overseas Mortgages
If possible have any mortgage agreed in principal before jetting off to
find your dream home in the sun. You need to know exactly how much money you
are going to have before making any form of commitment to buy – even if
that is a verbal commitment. In some countries such a commitment is as legally
binding as a final contract! Furthermore, make any real estate agent aware that
you will be seeking a mortgage for the purchase of any property before setting
out. Then, if you find a house you like make sure the purchase contract is
conditional to you securing the finance you need.
8) Investment
Potential
If you’re looking to buy investment property abroad
make sure you research the property market of the country you’re
examining. Look at it from the points of view of stability, growth potential
and the liquidity of the resale market – after all, it’s all very
well buying a property that then increases by 30% but what if you cannot then
sell it?
9) Tax
Find out about both the local and
overseas taxation liabilities relating to foreign property purchase, rental,
resale and gains. As taxation issues and liabilities change on a country by
country basis you have to make sure you do your own detailed research but
expect to face purchase tax in the country you’re buying in, gains tax if
you sell within a given period and profit from the sale, also expect to pay
some form of income tax either ‘back home’ or in the country in which
the property is located if you rent it out for an income.
10)
Property Purchase via an Offshore Company
The option to establish
an offshore company for the purchase of real estate abroad is an option
available to most people, but whether it is an appropriate course of action to
take depends on many factors. Such factors include where in the world you wish
to purchase, the value of the property and the laws relating to foreign
ownership of real estate in that country. By using an offshore company to buy
abroad an individual can sometimes avoid or reduce their taxation liability,
avoid certain expenses and even laws. But the applicability of this option is
something that can only be determined on an individual, case by case basis.
Rhiannon Williamson is the publisher of
www.shelteroffshore.com/ - the online resource for
expatriates, international investors and those dreaming of a new life
abroad.
Shelter Offshore features three main channels - offshore
investment, property investment abroad and overseas lifestyle.
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