Buy or Rent a House Abroad

Lots of people are choosing to move abroad nowadays – just read this blog post!  But when you make your decision to do so, whether it’s for business, pleasure, retirement or adventure, you have to make a rather important decision…where you are going to live and for how long?

The basic dilemma will be: rent or buy a home?

Of course, this decision will be pretty much based on factors such as the length of time you intend spending abroad and the affordability of each option. But there are other factors that should be considered, as well.

Here are 4 of the more important issues you need to think about before making your choice:

1. What is your long-term plan?

If you are planning on going for the short-term, then perhaps renting is your best bet.

That is, unless you would like to make a useful investment in your adopted country, have a vacation home; or even turn it into a BnB for additional earnings.  All these options are valid, but only you can answer that question.

There are, of course, a myriad additional questions to consider, such as: If you buy a house and decide to move abroad again (or rent it out), who will be responsible for maintenance or selling it to someone else? If you own a home in your country of origin, do you want to own two homes? If you rent, you only have to worry about paying the rent and utilities while you’re there.

Do you want to be able to walk away from the home at the end of your time abroad? Are you prepared for the pressure of selling the property before leaving the country or facing the challenges of trying to conclude a sale after you’ve left? If you keep it, ensure you have someone who can take care of maintenance and interact with your tenants.

2. Understand the local laws and ordinances

Make sure you understand the local laws and regulations. These can often be confusing and could create endless frustration and problems. This goes for both renting and buying.

Learn about all rules regarding property purchases by foreign residents. Some countries may restrict foreign ownership entirely. Other countries may charge foreigners higher prices or demand that buyers pay cash. There can also be resale restrictions—controls to prevent foreign sellers from taking the proceeds out of the country after a sale.

If you are renting, there may be less of a tax impact: property taxes can fluctuate and as an owner, you will be stuck with the bill. Insurance costs (for renters) are probably lower because you only need to insure the contents and not the structure itself. Budgeting may be easier. Rent is a fixed amount and may even include utilities. The renter has more mobility and flexibility to move since leases tend to be short-term.

But as a renter you should know your legal standing vis á vis local laws which do not always cover the conditions of leasing and tenancy agreements. The lease is legally binding and you should know exactly how local laws are interpreted.

As an owner, you will have much more personal freedom to redecorate, remodel, or make improvements as you see fit. You will have fewer restrictions such as on pets, children, and noise.

3. Evaluate economic stability

Before you put down your dollars on bricks and mortar, make sure you understand the economy and stability of your adopted country. If you’re moving to a Western country, this will be of less concern. But somewhere more exotic may present additional challenges. You don’t want to be an investor in a country experiencing severe fiscal problems. In such a case, renting will be a better option. But if you enjoy taking risks, then maybe purchasing in such a country will be advantageous: prices will probably be very low and as (if?) things improve, you may find yourself with a nice little growing investment.

Make sure that purchasing a property is in your best interest. Check with the U.S. State Department about the economic stability and safety of the country you’re moving to.

4. Seek expert advice

Always seek out a local professional to help you. A trustworthy local agent, whether he or she is a lawyer, accountant, estate agent or an investment analyst, should be able to familiarize you with local laws and customs and can be a valued adviser when negotiating the final contract, be it for buying or renting. Besides anything else, they know the local language.

If you are renting, then get him or her to outline the details of the security deposit on the rental property, including the conditions of the refund at the termination of the lease. If it’s in a foreign language, then your local professional will help you with this. You should also know which utilities are included in the rent, and the conditions under which you can terminate the lease.

In summary, here are a few more things to consider:

  • Owning a second home in the sun can mean spending $80,000 for a house on the beach in Brazil rather than $500,000 for a home on the beach in New Jersey. For many, buying abroad is what makes it possible to afford a second home at all.
  • Retiring abroad with a home of your own, means you can take advantage of a super low cost of living, as little as $2,000 per month or less, depending on where you choose to establish yourself. Check out this blog post for more information on that!
  • Owning a home of your own abroad truly makes you a local, resulting in a richer cultural experience.
  • Open the door to foreign residency. Owning property overseas can give you a “foot in the door” to the country where the property is located. It’s another place where you can hang your hat. And in many countries, owning real estate locally qualifies you for a residency visa.
Written by Einat Mazafi