Home » A Guide to Finding and Financing Property Abroad

A Guide to Finding and Financing Property Abroad

Buying property abroad seems like such a good idea for a while - until you realize the challenges of getting it financed. While the banks abroad are asking preposterous down-payments and interests before they agree to anything, the ones at home are reluctant to finance a project like this and mortgages are generally unavailable.

The dream falls apart before it has even started; yet, many US citizens have still been able to finance their plans. Here is how they did it and what they wish they knew before embarking on the real estate journey, making yours a bit easier to navigate.

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Why buy property abroad?

There are a lot of reasons to buy a property in a foreign country, and while some do it to have a holiday place they can return to a couple of times per year, others use it exclusively as an investment opportunity. However popular it has become the last couple of years, one thing is for certain; the process can be a minefield, and you should think as far ahead as possible before making a decision.

This includes figuring out an exit plan, meaning whether you’d like to sell it later or on if someone should inherit it. There are a lot of tax implications to the process of investing in properties abroad, and you need to consider the ownership as well as the various fees related to the transfer.

Thinking ahead implies that you should also consider the property value. Even if the value is rising at home, you won’t necessarily experience the same rise in the country you’re purchasing is. Although global trends do occur, the market goes through independent cycles, and you’d want to make sure it’s not going to dip back down by the time you plan on selling.

Have several thorough looks at property sites in the country you’re considering, such as http://rumahdijual.com/jakarta-pusat/apartmen-murah and figure out what you can expect to pay. Read up on enough articles to form an impression of its future value as well, and talk to an estate agent if you’re unfamiliar with the country.

How can I find the best market abroad?

As mentioned above, it’s difficult to predict exactly what the property markets are going to look like in foreign countries - and although we may be able to pinpoint what it looks like this year and next year, it could change and take a turn for the worse. It’s like this all over the world, though, and your best bet is to find a country you enjoy and locate an area where property investments seem like a good idea.

With this in mind, you can find a couple of countries with a particularly bright future for their property markets; the demand in Germany, for example, has been very strong due to lack of investment alternatives, and they expect the prices to keep rising. There have been new building developments recently, on the other hand, and with more property available, you never know when the value dips.

Romania has a growing economy and real estate experts find that the country’s real estate market is bulking up across all sectors. This includes the office spaces, retail, as well as the regular housing market; when the economy grows stronger, the demand rises, and supply will most likely follow. Have a look at www.globalpropertyguide.com for more advice on property investment in specific countries.

Developer Financing

Luckily, many property developers abroad are in need of people like you - and they too have noticed the difficulties with financing properties for foreign citizens. It depends on the country you’re planning to invest in, of course, and it usually applies to pre-construction property, home sites, and land lots.

While banks back home would normally require you to take out a life insurance if they’re even to consider giving you a mortgage, developer financing comes with no age limits or life insurance requirement.

This is good news for older buyers as well as anyone who prefer transactions to be made without all the paperwork. Keep in mind that there are different types of developer financing, so you should try to find an agreement that will work for you.

These agreements may require you to make payments on fixed dates, such as 10 % when you sign the developer financing agreement, and another 10 % after six months, et cetera. The other alternative is to make payments according to construction stages - or, as a third alternative, you may be asked to make monthly payments instead.

It’s a win-win situation for both parties, as you avoid the ridiculous fees and interests of the foreign banks - and you don’t have to take out a life insurance to convince the banks at home either. The developers in the country you’re purchasing property in are able to complete their project and find a buyer before it’s even done, bypassing all the nonsense on the way.

Go for cash

When you have it at hand, cash is always the best option when it comes to buying property abroad. It’s usually the way to go no matter what you’re buying, though, but perhaps particularly relevant in this situation. First of all, you won’t have to make any down-payments to banks or property developers at all - just pay up, and it’s yours.

Secondly, you’ll be able to close the deal a lot faster and will usually get a much better price as well. This may come as a discount since you’re able to pay in cash - or an upgrade to the property. It may even be both; a foreign property investor who would like to pay in cash is everything property developers could ever dream of.

Remember that this kind of arrangements is a lot safer and sensible when the property is fully developed. Don’t offer to pay in cash for something that’s not fully completed. You never know if they run out of money at one stage or other challenges that keep the project delayed - or never even completed at all.

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Talk to a lawyer

Buying property abroad is embarking into unknown territory - and you never quite know what to expect. Many prospective real estate investors have backed out at the last minute or ended up in legal wrangles with those abroad; make sure you have a decent lawyer to guide you through the process.

If something should go wrong or you find yourself in a situation that is beyond your knowledge, the advice of a lawyer will be invaluable and could even enable you to get out of the situation with the upper hand.

Depending on the country you have your eyes on, you might need to get the documents translated as well. This is a standard procedure, though, but you have to do it before signing anything. Many naive homeowners to-be have signed documents with the intention of having them translated, only to realize later that they signed something they would never have agreed to if they understood the document.

It may seem obvious, but it’s important to mention nonetheless to ensure you’re completely up to date on what you agree to.

Buying property abroad is an exciting process and, if everything is done correctly, you’ll soon be the happy homeowner of property in your country of choice. Talk to professionals before you make any investment decisions, investigate the market, and find the best financing solution, first of all, and it will be a lot easier to avoid any implications.

 

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