Welcome to my website. Here I am going to share my experience to help you avoid the many pitfalls that you may encounter when you are looking to find a property abroad. I have helped a lot of people realize their dream of a vacation home in the sun. I have also seen how that dream has turned into a nightmare for some buyers who have been preyed upon by property scam artists. On this website, I am going to share everything I have learned through my own experience buying and selling houses in the tropics. And from my experience trying to help people who have been scammed.
I am also going to share some of the experiences that I have been told by the people who have been scammed. I am doing this in the hope of being able to help you have a safe transaction and to make life harder for the scam artist that is preying on good people.
I am going to talk about what to avoid, how to finance your purchase and how to protect yourself from being scammed. A lot of my advice might sound paranoid but a property transaction involves a lot of money and it can be good to be a little paranoid. An honest real estate agent will not take offence to you using these practices to be safe. Your guiding principles when looking to buy a property abroad should be, “buyer beware” and “trust but verify”.
All information on this website is general in nature. Feel free to contact me if you want advice on your specific situation.
With that said. Let us talk about your dream.
Are you sure you want to live there?
I recommend that you make sure that you want to live in a place before you buy a vacation or retirement home there. I have worked with a large number of ex-pats that have fallen in love with a place while on vacation and bought a house there to retire. When they later move down to their retirement property they find that they don’t really like living there. It is a wonderful place to vacation in but when you are looking for a place to live you will be looking for different things. They often end up leaving again within 6 months.
This is very expensive since they need to restart their life again once they get back home. It is not unusual that they sold everything they owned before they moved and when they move back they have to buy everything again. This includes finding a place to live. Some families end up leaving a lot of stuff they have bought abroad since it is too expensive to bring it back home.
This is the reason that I strongly recommend that you make sure that you will enjoy living in a place before you move there permanently. Ideally, I recommend moving down there and living in a rented house for 6 months before you buy something. I do however realize that this might not be possible. In that case, I recommend that you visit the area multiple times during a couple of years to see how you like it when you get to know the area better.
It is very important that you visit the area at different times of the year. You need to make sure that you like the area during the wettest rainy season and the hottest summer months to make sure that you like an area. It is not enough that you like the area during the high season when the climate is at its best. It is important that you visit an area during its hottest period. Most people can tolerate the rain but they might find it very hard to stand temperatures above 100-110 degrees.
Financing your purchase
If you are certain that you want to live in a certain area then it is time to consider how to finance your purchase. I always recommend that you arrange to finance at home before you go abroad to look at properties. This way you are going to know how large your budget is. I recommend that you borrow the money in your home country. It can be hard and expensive to borrow money in another country.
One exception from this rule is if you see a house with owner financing. In this case, you might want to contact the owner and go look at the house even if you have not prepared additional financing. You will usually still need to be able to pay a down payment. Owner financing often requires you to pay the full amount in less than 5 years. If you need a longer credit period then you will usually have to find alternative financing.
The best way to finance your purchase of a house abroad is always to tap into any equity you might have in your house. You can read more about different financing options here. No matter what house you buy or where you finance it, you should always compare loans and interest rates before you make your choice of finance.
What to avoid
There are two types of properties I recommend that you should avoid when buying a property abroad. One should never be bought and the other should only be bought if certain conditions are met.
The type of property that you should never buy are timeshares. You can read about why that is here.
The type of property that you should normally avoid is the fixer-upper. Fixer-uppers are not a good purchase if you are unable to live there to supervise the renovations or if you do not speak the language. Any construction project needs supervision and it is very hard to find someone who can do this for you. Local contractors usually have very different views of what is important and not. A good example of this is that Mexican and Central American builders often only parch and paint the front of a house. The sides are left exposed and unpainted.
You could use a fellow ex-pat to keep an eye on things but then you need to be certain that you can trust them.
It is usually a lot more expensive to do a renovation if you can not be there yourself. There will be more waste and the work will progress slower if you are not there to supervise. The builder will assume that you are rich and charge more than he otherwise would.
Fixer-uppers are great if you can move there or if you can do the work yourself. They are not a good buy if you are looking for a vacation property or a property to rent out until you eventually retire there.
Finding good agents
It is usually rather easy to find a good broker if you are looking to buy a property in a more mature market such as the Bahamas, Barbados or southern Europe. If you on the other hand are looking to buy a property in a less developed market such as Central and South America, Africa and parts of Asia you will find it a lot harder to find agents that you know that you can trust.
The best option can often be to shop around. Many less developed countries do not have exclusive listings. By looking at the same property with several agents you can learn a lot about the way they conduct business. Pay particular attention to the information they give you if they tell you about potential problems with the property and what price they give you for the property. A good broker will give you a low price and will tell you about potential problems with the property. This way you can choose to do business with the agent that gave you the best info.
I often hear the advice that you should talk to the locals in bars to find a good agent. I think this is really bad advice. This will tell you a lot about which brokers spend the most time being social in bars but it says very little about his qualifications.
Many ex-pat communities are full of gossip and a lot of this gossip has nothing to do with reality. Listening to people in a bar will often lead you to a broker that spends a lot of time drinking and is friends with the local drunks. The ex-pats that have retired to drink beer on the beach.
A better way to find out about a broker is to talk to people that have purchased their house through him.
You should always get your own experts and never use the ones the real estate agent recommends. This will help make sure that everything is what it seems to be.
Going with a broker that is part of a large franchise chain is no guarantee that he will be honest or provide you with the best price. You can often get a property cheaper through a smaller real estate agent that charges a smaller commission.
Can I make money on my property?
Yes. It is possible to get a positive cash flow from your property abroad by renting it out. How much you can earn depends on where it is and what type of property it is. Some properties such as buy to rent properties can be very profitable. It is not unusually for properties abroad to make more money than what you are paying for the mortgage on that property.
With that said. I strongly recommend that you never put yourself in a situation where you are dependent on income from the house to be able to pay the mortgage. You should always make sure that you can make your payments even if the house for one reason or another isn’t getting rented as much as you had hoped. The rental markets can be unpredictable and you should therefore not rely on them. Benefit from the income you get from the property but never be dependent on them.