Demand for international properties in markets like Costa Rica and Panama is skyrocketing. More and more Americans are realizing their dreams of moving permanently, or owning a second home, in the country of their dreams.
Finding that perfect home or investment can be incredibly rewarding. But it can also end up being a frustrating and expensive process. Although the specifics of finding and buying a home will vary greatly depending on the country and even specific town or region you’ve chosen, there are a few common things to do to make the process as smooth as possible.
Should I buy or should I rent?
The answer to this question is, always rent first! If you have the time and work flexibility, we recommend living in a few different regions or towns of your chosen country so that you can truly get a feel for the place. It can be hard to really understand how a town or community will feel to live in just through internet searches or a weekend-long trip.
While purchasing primary residences or second homes in a country like Costa Rica, Portugal, or Canada can be great investments, you should always take into account the following before making any investment decision:
Understand the landscape before putting money down. While it may be possible to own in many countries, the process can be full of pitfalls. Some countries have labyrinthine bureaucratic requirements, land-ownership issues that need to be resolved, water rights’ issues, or any other number of challenges which can take you from investing in your dream home to getting bogged down in an expensive quagmire.
Connect with people you can trust. Navigating the home-buying process in a foreign country can be stressful. Having someone in your corner who really understands the landscape can provide tremendous peace of mind. You can consult with a company like StartAbroad to help navigate the on-the-ground realities of investing in a specific country, or you can conduct due diligence online. There are also likely local-level and national-level Facebook groups of locals and expats who are often more than happy to answer questions and provide a helping hand. We recommend connecting with a trustworthy in-country real estate lawyer to make sure you have a very clear idea of what it will take before making any investment decisions.
Make sure you like the life you’re signing up for. Sometimes people fall in love with the idea of owning a home in an exotic foreign country and don’t love the reality of it. You should plan to live somewhere for at least six months before making a big investment.
Pick the right spot. Some people pick out a lovely beach community for their second home before moving. Then, once they’ve already bought a home, they realize it’s too buggy, too developed, or not developed enough. Make sure to live the life you want in a rented house before you have a life you don’t want in a house you own.
Carefully consider whether you want an investment or a home. Demand for real estate in specific countries can vary dramatically. Just because a country is hot today does not mean it will be hot when you’re ready to sell your second home. Investing internationally can reap dividends, but if your priority is to turn a profit from a property investment, it is generally safer to find that investment in the U.S. If you’re thinking of renting out your home for short or long-term rentals, peruse Airbnb and Vrbo listings in the area, and connect with property managers in the area, to understand the landscape, and understand how to make your property as attractive to renters as possible.
Understand if the realtor is actually working for you. The real estate agents you might connect with through online listings or in-country store fronts may not actually represent your best interests. In some countries, the real estate agent makes his/her fees from the seller, or have a deal with a specific management company, and so might have incentives that do not necessarily align with your best interests. Be wary of an agent who only shows you development properties, or pushes you too hard on a specific property, before really understanding what you are looking for. In some countries you might be better served by engaging a buyer’s agent to represent you rather than a realtor. Buyer’s agents generally charge an upfront fee, but if you find the right property and the buyer’s agent can negotiate a good deal, spending that money up front can end up saving you money in the long run.
Make sure there’s no unwelcome surprises. If you have only visited a potential investment house once or twice during the day, you could be setting yourself up for some unwelcome surprises once you move in. It can behoove you to visit the place at night, especially on the weekend. If you bought a beautiful home in a quiet seeming area, there’s nothing like an extremely loud bar or hotel nearby, or an especially bark-y dog next door, to make you reconsider your new life in paradise.
And last, enjoy the process! If you’re in a position to relocate internationally, or own a primary residence or second home abroad, you’re living your dream!