Lew Sichelman
It happens every election cycle: “If that guy wins,” one side or the other vows, “we’re moving to Canada.”
There’s no way of knowing how many dissatisfied people actually leave the good ol’ U.S. of A. because their candidate didn’t win. For most, it’s likely an empty threat. Still, one Florida couple I know recently purchased a house in Cabo San Lucas, Mexico, so they’d have a place to escape to if their candidate loses in the 2024 presidential election.
Either way, interest in real estate in foreign lands is keen.
According to a recent study by Home Bay, a partner company of Clever Real Estate, 1 in 4 Americans would prefer to live in another country. Some want a better quality of life whether that means a lower cost of living, better health care or a safer environment while some just want to start over.
The study didn’t ask where people wanted to live, but a search of realty-related keywords by Point2 found that Mexico draws the most online interest, followed by Canada, Costa Rica, Puerto Rico and Belize. For the most part, people are looking for vacation places. But some are hunting for permanent residences.
Don’t Get Lost in Translation
Of course, buying property in another country isn’t the same as it is in America. A few years back, D.C.-area Compass agent Veronica Seva-Gonzalez bought an investment property just outside Barcelona, Spain, where she was born. She didn’t lose her shirt, she said but she didn’t make any money, either.
Seva-Gonzalez said that when all the buying and selling expenses were added up, she “probably” lost money.
“You need a lot of cash” to buy abroad, she told me, noting that she put 30 percent down on the place. “And you can’t ask the seller to help pay for anything like you can here.”
That’s why Dallas broker Ed Eakin, NAR’s Global Ambassador to Barbados, Belize, Trinidad and Tobago, said it’s essential to find an American agent who has earned the Certified International Property Specialist designation. That specialist, in turn, can help you locate a realty professional you can trust in the location where you intend to buy.
“That’s the majority of what I do every day,” said Eakin.
He refers U.S. buyers to local experts who can help find the right agents, attorneys and other local partners.
“Before I let my client spend anything, I do my research to make sure they are working with the right people,” he said.
In some places, buying is fairly simple. In Belize, Eakin tells me, “They do things the British way: easy and precise.”
But in Mexico, if you want to purchase something within 50 miles of a coastline or a border with another country, you must buy it through a 50-year trust created at a local bank. Once the trust is established, though, “you can do anything you want” with the property, including reselling it or renting it to someone else.
Do Your Homework
NAR has an excellent resource on its website that offers detailed information about buying and selling real estate throughout the world.
In Australia, for example, foreign buyers face any number of restrictions. Permission must be obtained by the government, for example, and the house must be the buyer’s principal residence. In Turkey, you can’t buy any property in rural areas or near military land. But in Costa Rica, the laws are fairly friendly. In fact, the Central American country maintains a land registry where buyers can confirm that a property maintains a clear title.
Eakin and other experts advise people to do as much homework as they can about local laws and financing. But he also warns that buyers “cannot possibly know everything,” which is why connecting with local experts is key.
And don’t necessarily take someone at their word, especially if you were not referred to them by a real estate pro in the U.S. For example, “a lot of [international real estate agents] call themselves Realtors, which means they are NAR members, but they are not.”
Beyond that warning, here are two things you should learn about before buying in another country: related costs and financing.
Depending on the country, there may be acquisition taxes, surveying fees, foreign office permits and double tax treaties, among other charges. And don’t forget your legal fees and real estate commissions.
In some cases, these net costs add up to a significant amount, so do not make decisions based on a rough estimate. Know the full amount before signing anything.
And, as Seva-Gonzalez found out, large down payments are normal in other countries. Also, mortgages through a local bank might be required, as might a separate life insurance policy so that your local taxes and fees will be paid off should you die.
“Financing,” she said, “is a real challenge.”
Lenders in this country do not finance property purchases in other countries, just as lenders abroad don’t back loans for their citizens who buy here. And foreign lenders have different rules for evaluating applicants. But financing your purchase still may be the way to go.
Paying all cash for an existing property may be OK, but paying cash in advance for something that’s merely planned or under construction puts your money at risk. Delays are the norm, not the exception. The builder could fail, and refunds are rare.
Local lenders have a greater knowledge of the rules for buying in their countries, and you may be able to secure favorable financing rates. Then again, you could be charged more which is one more reason to work with a recommended local expert.
Lew Sichelman has been covering real estate for more than 50 years. He is a regular contributor to numerous shelter magazines and housing and housing-finance industry publications. Readers can contact him at lsichelman@aol.com.
