Thinking of Buying a Second Home Here or Overseas? –Think Hard!

 

Investing in real estate can be profitable; if you know what you’re doing

In 2017, New York State residents Mr. and Mrs. ‘Smith’ bought a small house in Webb County, Texas. It seemed like more than a good idea; at the time. Real estate prices were stable or rising in much of the county at the time, and they’d had visited the region enough times to possibly consider retiring there. But then came the future, which included Covid-19.

Today the couple’s “investment/retirement home” sits idle, and while the retirement idea might still work out; but the events of 2020 took a massive chunk out of their retirement savings. Of course, the ‘Smiths’ signed on the dotted line and contracts are contracts. Acknowledging that they future is hard to predict and that sometimes you just get unlucky, the ‘Smiths’ – and many others – say they wish they had thought more, gotten more independent assessments and talked to more experts before making their “investments.”

If you’re buying a second place to immediately move into, alongside all the items listed below is the need to hire a good moving company. This might sound like a trivial matter, but as we aren’t quite out of Covid-19 woods yet, moving – even in the United States – is a tad bit trickier these days. It’s highly suggested you investigate more on dedicated van lines that offer services updated for these plague-ridden times. 

Moving on to buying as an investment or a retirement home: There are huge possible benefits to buying a second home; as a vacation home, a place to retire to or as a property you intend to rent or possibly flip. This is true both domestically and overseas. But alongside the potential benefits come huge potential pitfalls. If, however, you know what you're doing, and have done your homework well, you could very well earn money – even during these unstable times – by buying the right property in the right place.

For overseas buyers: think about the neighbors. And by ‘neighbors’ we don't mean the people living next door; although that's important too. We're talking about the greater geopolitical situation. Is the country you're considering in an area of the world that appears to be on a path towards political and financial stability? An example often cited is that of Panama. Panama borders the quite stable nation of Costa Rica, and the less stable Republic of Colombia, which perhaps puts Panama in a “best of both worlds” situation as its location means a good degree of stability, as well as very attractive prices. Two other oft-touted places in the region are the Dominican Republic and Brazil.

In Asia, Thailand is often number one on the list; however, Thailand does have restrictions regarding foreigners and property, which can be deal-breakers for many. In Europe, both France and Portugal have made top 10 lists, as both nations have been actively courting non-residents and offer mortgages to foreigners with highly affordable interest rates.

Both domestic and overseas buyers need to also think about the neighbors in the more literal sense. The property you are considering buying with a direct view of the coastline or a mountain range – but also a large tract of land in front of it – may look perfect, but there could be long-term plans for, say, a block of residential flats that destroy the view and reduce your property value. Getting a longer-term understanding of development plans for the neighborhood you're interested in is a must. Naturally, if it’s an overseas location, you're going to have to do some serious research into ownership laws. Some places put up so many roadblocks, rules and restrictions that the myriad of different permits and officially stamped papers required are simply be too onerous for most people to deal with.

As they say with a high degree of truth, the only certainty in life is death and taxes. What are the tax liabilities in the locale you’ve picked? Taxes are a very complicated mess– so unless you happen to have an intense knowledge of the tax codes, you going to need some professional help to figure out what you're going to be on the hook for.

Consider carefully what your motivation is for this purchase. As in the starting example of the ‘Smiths,’ many people consider buying a second property as either an investment or possibly as a second home. It's much better if you can narrow down exactly what you want. If the purchase is only investment, narrow down you’re thinking to money issues. If instead, you're considering perhaps retiring or relocating to that location – do you know enough about simple things such as schools and hospitals?

Finally, what's your Plan B? If things don't work out the way you originally intended, how will you back out of this situation while incurring the least number of penalties and problems? It’s a lot to think about; but these are essential things to consider to avoid expensive blunders.