Over the last decade we’ve encountered a host of opportunities to acquire various assets in multiple countries. The acquisition process as well as the assets all came with their own unique set of circumstances and conditions rendering buying most of them less desirable. One thing was certain for us, if we did not have previous relationships with a local diligence team, we may have endured some costly lessons. Take that into consideration when conducting your search to invest in the US or any country, as well as, knowing that 40% of the 195 countries have some sort of restrictions on foreign buyers.
Before buying a home abroad, it’s important to be aware of your legal rights and obligations. Putting together a local “boots on the ground” team to be your eyes, ears and resource directory providing everything from legal advice to local laborers is critical to the success of your purchase.
Our top considerations before taking the plunge into investing abroad:
Foreign Ownership Laws
As previously alluded to, countries may have restrictions on non-citizens who want to own properties. Some may only allow partial ownership; others may base it on nationality (like Croatia or Turkey) while Egypt only allows 99yr leaseholds.
There are 78 countries that Do Not allow foreign ownership. Remember, if you don’t know what a particular country’s rules are, you can always contact a real estate attorney who knows how to execute foreign transactions. You should also check your own country’s rules about owning property in another country!
Financing
If you’re planning to go through a foreign bank to get a mortgage, be prepared to shell out a big down payment and potentially pay a high interest rate. One of the trickiest aspects of buying a home overseas is figuring out the financing. You may even be required to purchase a separate life insurance policy so that your mortgage can be paid off if something happens to you.
Many have taken out home equity lines of credit to make the purchase, though we frown against using your current residence and putting it at risk in case of default.
If you need fast cash, you could also consider tapping into your self-directed IRA. But you wouldn’t be able to live in your new home. So, unless you’re satisfied with using the house you’re buying abroad as an investment property, you’ll probably have to investigate other options.
Your Tax Liability
Before moving into a foreign country, it’s best to consider any tax rules that might apply. It’s not uncommon to be charged taxes when you buy a home and again when you sell it. There may also be ongoing tax payments that you’ll need to make throughout the year, like U.S. property taxes.
Before you commit to buying a house overseas, you’ll need to know how it’ll affect your tax situation.
Your Exit Strategy
Buying a vacation home or a retirement home abroad may seem like a dream come true until you’re ready to unload it. In certain countries, homes can stay on the market for months or even years. Factoring in local market conditions as you develop your exit strategy can ensure that you don’t get stuck with a house long after you’re ready to move on.
We’ve made investing internationally easy & invite you to check out HIS Capital Fund III. Fund 3 is a vehicle for investors at any level in any country to partner with us and take an ownership position in a strategic portfolio of performing assets.
Providing a hedge against economic turbulence, our diversified investment approach combines the benefits of a high yield Growth Fund with the consistent performance and broad asset class exposure of an Income Fund: https://hiscapitalgroup.com/fund3
