Strategies For Successfully Purchasing Property Abroad

The most successful investors have a set of goals in place to inform their decision-making. Overseas property investing is no exception. Unfortunately too many people get carried away and sign on the dotted line without doing enough due diligence or considering how an overseas property fits in with their life goals.

Part of the reason people seem to leave their brain at home when buying overseas property is because real estate purchases happen while ‘on vacation’. You know how it goes – you spend an idyllic weak in a charming coastal village, fishing, surfing and watching the sunsets and on day 8 you pass by a real estate agent’s window. By day 10 you’re hooked and before you know it you’re a local.

Stop. Take things more slowly and consider these five points on overseas investing, before your buy:

1) Real estate may not work in quite the same way as you are used to back home. In many overseas countries there is no Multiple Listing Service or central databases where you (or your agent) can review property prices. This means that reliable data is hard to find and you’ll have to rely mainly on asking prices to get a sense of value. (In our work tracking international real estate developments in Panama, Costa Rica, Belize and Nicaragua we work hard to try and improve the data on offer.)

2) You should tour with every agent active in your target area if you want to make sure you really have seen all the property on offer. There will be some overlap between the listings held by different agencies but many will be ‘pocket’ listings only available to individual agents. (This factor comes down again to the lack of an MLS in many countries).

3) It is prudent to rent before you buy. If you’ve visiting on vacation you’re likely to be in the country during the high season. You may find that you feel a little differently about the place when the rains come or the visitor numbers drop off.

4) Be prepared for the fact that in many overseas country life moves at a slower pace and you may not be able to access all the services and products you enjoy back home.

5) Don’t factor in the ‘new marina’ the ‘new airport’ or the ‘new golf course’ into your purchasing decision. Take the worst case scenario and assume these improvements will never take place. Do you still like the idea of purchasing? A great rule of thumb is to buy only what you see.

These tips are just the starting point. Once you narrow down a property option, your list of due diligence items will be longer. But most important, remember to proceed slowly and not rush into any decision while you are still in a vacation mindset.