It’s easy to romanticize owning property abroad. Whether you’re considering investing in Asia, Western Europe, Central America, or anywhere beyond or between, the urge to travel, immerse yourself in another part of the world, and generate income while you’re at it is understandable.
In Thailand, I met an Italian woman who owned property and a pizzeria on the coast. She kept her front door open and sang to passing tourists to entice them into her business. She gave them free samples and made sure that everyone left having bought a pizza at four times the local cost. As simple as this lifestyle sounds, living by the beach while charging tourists too much for pizza, the reality is that she had to make important business decisions to decide where, how, and why she should buy property and start a business in a new country.
Like her, you will need to cover a lot of ground before living the (supposedly) simple life. Below are four steps you will have taken before investing in real estate abroad.
1. You Made Sure You Could Legally Buy Property in That Country
Before buying a vacation rental property in a foreign country, you knew that each country would have its own laws about buying, selling, and renting out property. In Thailand, for example, foreigners are not allowed to own property. That means our friend, the Italian woman overcharging for pizzas, probably either partnered with a local Thai businessperson or acquired her property through a limited liability company.
Instead of just trusting information you found online, you reached out and found legal representation in the area you planned to buy property in. “Having a good local lawyer is as important abroad as it is at home,” said Dan Prescher, senior editor of InternationalLiving.com in an article for the Washington Post. “If you’re not an expert on local legal and financial matters, hire one.”
2. You Visited the Country You Plan to Buy Property in
You immersed yourself in the local language and reached out to expat communities. Facebook groups were a great place to start your search for expats. Once you were local, you frequented areas popular with the expat community.
Most importantly, though, you took this opportunity to make objective observations on the market, the area’s economic and political stability, and how easy it would be to find associates you could trust.
“Schedule a two-to-six-week trip to the area you’ve chosen,” Gabi Logan with USA Today recommends. “Meet with real estate agents and visit potential properties, checking each for your own gut attraction, structural integrity and amenities.
3. You Planned For the Security of the Property
You knew that you would not be living in this new country all year long. And even if you were, you understood that there would be times when your property would be looked after by others.
You did not leave the country until you knew that you had legal representation, maintenance workers, and other local associates you could trust. Before officially buying the property, you also made sure to factor in any threat of political or economic instability in the area. Whether it is Asia, Central America, or even Europe, there are always macro-level problems that could hurt your investment.
4. You Had a Plan for Natural Disasters
Inflation and politics are always things to keep in mind both with domestic and international business dealings. However, you understood that a natural disaster was much more likely to impact your investment in vacation rental properties. Whether it is flooding or forest fires or monsoons, you did your research to understand what the most likely acts of nature would be in the areas surrounding your property.
You made sure you had as much coverage as possible under your insurance. You also factored these risks into your long-term financial planning.
These are some, but certainly not all, of the things you will need to consider before purchasing a property outside of the United States. Make sure you are never pressured to move too quickly to invest in foreign vacation rental property. Question business associates who may be trying to push you along quicker than you feel comfortable with. Even if you miss out on one property or miss the perfect moment to enter one market, another one is sure to come along soon afterward.