A Few Notes on How to Buy Real Estate Overseas

May 10, 2013 • Posted in Individual Investing, Real Estate

Kathleen Peddicord, publisher of the Live and Invest Overseas group, opens her 2013 book, How to Buy Real Estate Overseas, by stating: “The idea of diversifying your investments, your assets, your life and your future overseas can seem frightening, intimidating, even paralyzing. Could you really do it? Yes, you could. I say that based on 30 years of experience at this.” The book takes the perspective of a U.S. citizen seeking to diversify assets via direct ownership of non-U.S. real estate. Using examples based on her experience investing in real estate in 20 countries and operating businesses in seven, she concludes that:

From Part I, “Launching Your Overseas Property Adventure” (Page 23): “The point of diversification is to make sure you are not at the mercy of any single market, economy, political landscape, government, or currency. …it must include investments in at least two (and preferably at least three) countries, ideally each with its own currency.”

From Part II, “How to Target Where to Buy: Five Strategies for Choosing a Property Market Overseas”

(Page 43): “The most interesting overseas real estate opportunities today are to be found in countries in crisis.” [Argentina, Ireland, Spain, Nicaragua]

(Page 74): “A market in these growth stages of development offers an abundance of opportunity.” [Panama, Columbia, Mongolia, Brazil]

(Page 95): “…I recommend three productive land investments that you can participate in without having to learn much of anything about how to grow and harvest crops…” [Panama (teak), Brazil (coconuts), Uruguay (farming)]

(Page 105): “If the agenda for your adventure overseas is driven more by your heart than your calculator, here are recommendations to help focus your thinking and further your plan. …I would classify these 20 countries as the world’s top live and invest overseas havens.” [Argentina, Belize, Brazil, Chile, Columbia, Croatia, Dominican Republic, Ecuador, France, Ireland, Italy, Malaysia, Mexico, New Zealand, Nicaragua, Panama, Philippines, Romania, Spain, Uruguay]

From Part III, “You’re Not in Kansas Anymore: Eight Unexpected Realities of Buying Real Estate Overseas and How to Prepare for Them”

(Page 135): “In much of the rest of the world, it is not possible for a foreign buyer to borrow money locally for the purchase of real estate…”

(Pages 139, 141): “The other thing that doesn’t exist in most of the world is comparables. …Multiple listing services do exist in a few localized markets of Latin America.”

(Page 143): “Whatever information you find online to do with the state of a market, with sample property listings or with current pricing, will be confused and confusing. Often it will be plain wrong…”

(Page 148): “…if at all possible, negotiate directly with the owner of the property you’re interested in buying.”

(Page 151): “…although you can purchase rights of possession property, you don’t own it.”

From Part IV, “How to Buy Real Estate Overseas: Eight Easy Steps”

(Page 169): “One common denominator of those investments I’ve made that have proven disappointing or downright disastrous is that I didn’t get on a plane to go see them in person myself before buying.”

(Page 175): “Your attorney is your most important ally when buying, selling, or renting real estate in any overseas market. …before you do anything else, [find] a local attorney you can trust who speaks real English…”

(Page 186): “…ask your real estate attorney for a complete outline of the local purchase process. He should have this in writing in English.”

(Page 191): “To make the right choice for how to hold the title for a piece of foreign property that you intend to purchase, you should consider two things: taxes and your estate.”

(Page 197): “Taxes are the first potential ongoing management concern for any piece of property you own overseas. The other is property and rental management if you intend to rent the place out when you’re not using it.”

From Part V, “What Every Overseas Property Buyer Needs to Know about Moving Money around the World”

(Page 201): “The most important thing to understand before wiring money to another country is whether that country imposes any currency restrictions.”

(Page 205): “…it’s getting harder all the time for an American to open a bank account in many parts of the world.”

From Part VI, “Where Not to Buy: Markets Perhaps Better Avoided” (Page 212): “I highlight Costa Rica in this way…to make the point that, unless your considering buying real estate purely for personal and lifestyle reasons, not everywhere in the world makes sense as a place to diversify…” [also Bulgaria, Asia ("foreigners can't own property in most Asian countries")]

In summary, individual investors will find a range of opportunities, and many obstacles to exploiting them, in How to Buy Real Estate Overseas.

Cautions regarding findings include:

  • As noted repeatedly in the book, trading frictions for real estate are generally high, quite variable across countries and sometimes arcane.
  • As implied in the book, but not addressed directly, search costs for real estate opportunities around the globe are high, involving considerable travel and cross-cultural due diligence.
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