You want to buy your ‘dream’ vacation home overseas without being burnt. Easier said than done. Here’s how the world’s savviest real estate gurus do it.
What’s Your Reason?
The first thing you need to think about is why you’re buying. It will have a direct influence on everything else, from your budget to the type of insurance you need. If you’re buying a property for investment purposes, you’ll need to execute all financial decisions in line with your expected ROI.
Let’s say you’re looking at www.kensingtonmorocco.com for properties. If you want to live in one of these properties, you probably care more about practical necessities than you do about a rate of return. What you really want is a place with all the creature comforts you’ve become used to.
Now, if you’re buying as a rental, you might not want all the “bells and whistles,” or you may only want enough of them to sell a tenant on your property. But, you also need the property to be easy enough to maintain that you aren’t spending hundreds of thousands of dollars maintaining it.
Financing And Funding
Once you have a clear understanding of your motivation, select viable properties that suit your needs. This is pretty straightforward. Securing financing is the tricky part. This is especially true when you consider that it’ll be subject to international laws, and usually this is discussed in local currency. So, you have to be familiar with that too.
As a starting point, get an “Agreement in Principle,” before committing to any purchase. This will safeguard you if you’re not given the loan you need. You can get your initial deposit back.
Otherwise, deposits are non-refundable and you’ll be out the money.
Consider The Taxes
Everyone’s tax situation is different, which is why it helps to talk to an attorney. This is especially true in the diverse real estate market. Every country has its own unique body of tax laws and regulation. It might, for example, mean that you must pay stamp duty on your property. Sometimes, you have to pay title transfer tax, or even inheritance tax when you purchase it from someone else or an estate.
Some countries require homeowners to pay land tax as a condition of their mortgage. This is usually an annual tax.
Understanding Local Exchange Rates
Unless you’re a native, which most people won’t be, you need to know the value of the currency and any associated exchange rates. If you plan on bringing money from your own country, you may also need a Certificate of Importation and a new local bank account. It makes it easier to repay affiliated tax debts and legal fees. You can also quickly set up a series of standing orders to suit your requirements.
Get An Independent Valuation
If you buy a home in the UK, you would probably want a structural survey and an independent valuation before buying. Most foreign investors don’t do this when buying internationally, due to the cost and logistical challenges of pulling it off.
But, because so many homes in the UK are older, it makes a lot of sense to do it. You never know what you’re getting into with some of these homes. Getting an independent valuation and guaranteeing the integrity of the property is a basic and fundamental part of the real estate investment process. It’s important to remember that these costs are a small price to pay for such a large investment.
Get Over The Barrier
A language barrier can cause problems and it’s not something a lot of investors give too much thought too. If you’re in a country where you cannot read the contract, that’s obviously a problem. If you don’t understand what the seller is saying — also a problem.
While you can usually overcome a language barrier by taking time to learn the language, it’s usually easier to hire a legal professional that is bilingual (at least).
Getting Title And Ownership
Because you’re buying internationally, you need to develop trust with vendors and agents. This means you must be cautious about discussing issues like title and ownership. If a developer has borrowed money to finish the work, and not repaid this, you may be liable for the repayment.
The Exit Plan
Every good investment has an exit plan, and real estate is no exception. Know what the laws are concerning selling your investment — including tax implications.
Alex Peto was born in London and attended schools in England until 1991. Thereafter, he spent a year in Seville and Aix en Provence learning languages. Alex Peto started his working career in 1993 as an estate agent for the London based boutique agency, Aylesford International. There he remained for 21 years selling the best houses London had to offer. In a rising market, fuelled by foreign clients, Alex became accustomed to meeting a demanding clientele with high specifications. He also, while with Aylesford, looked after their foreign properties in Morocco, Europe and the Caribbean. In 2014. Alex moved to Marrakesh to continue working in the property market with Kensington International.