How to Buy Property Overseas for Retirement

Buying real estate overseas can be a fulfilling experience for retirees. Plus, having an investment property in the country where you want to live later in life allows you to set up a rent-free retirement. Your U.S. dollar-based retirement income is also better buffered against currency exchange rate movements that otherwise could increase your cost of living beyond affordability. However, foreign property owners don’t have the same rules and safety nets one has when buying real estate in the United States.

When buying real estate overseas, follow these guidelines:

— Decide on your budget.

— Hire an attorney.

— Find out what is included with the property.

— Determine how much space you need.

— Pay attention to zoning rules.

— Learn about homeowners associations.

— Find out if you can rent short-term.

— Calculate ongoing costs.

— Estimate proximity to day-to-day services.

— Consider the path of progress.

— Be cautious when buying into a private development.

— Understand that building a home overseas can be challenging.

— Evaluate environmental risks.

— Think about living overseas part time.

Decide on Your Budget

When buying property overseas, be clear on your finances before you start shopping. If your budget is strict, don’t be tempted to consider properties outside your price point. You’ll only be disappointing yourself unnecessarily.

In addition, remember that every international real estate investment comes with closing costs that must be included in your budget. Having $100,000 in your pocket doesn’t mean you can buy a $100,000 property overseas. Factor in all expenses and budget a little extra for unforeseen costs that may come up.

Hire an Attorney

Engage an attorney who speaks fluent English and is experienced in helping foreign buyers navigate the local purchase process. Some countries, including Mexico and Ecuador, may offer more English-speaking attorneys than others. If possible, try to find a reputable attorney through a referral from fellow expats. Don’t use the same attorney as the seller or the developer you’re buying from. You want to find an independent attorney who works for you.

Find Out What Is Included With the Property

Confirm what is included with the purchase. Sometimes furniture and appliances are included in the sale. But in many markets, it’s common for the seller to take everything with them, down to the lighting fixtures. This can be a negotiating point when deciding how much to offer. Some developers don’t include air conditioners, kitchen cabinetry or even the kitchen sink and countertops when delivering newly built properties. In this case, adjust your budget to allow for the cost of the new installation.

Determine How Much Space You Need

When choosing a home overseas, think about whether you want an apartment or a house, one bedroom or two, and two levels or only one. If you anticipate hosting frequent visitors, you might want a guest room or even a guesthouse. Even if you prefer not to host, you may want to choose a property with a decent selection of nearby hotels.

Additionally, your wish list might also include a front yard, a back garden or a swimming pool. All these things require care and maintenance and will add to your monthly budget.

[Is Your House Too Big for You?]

Pay Attention to Zoning Rules

If you’re investing in a gated community, there are probably rules about what owners can build. However, if you’re buying in an Ecuadorian mountain town and one day find that the house next door has been converted to a disco, you have no recourse. Ecuador doesn’t impose zoning regulations. With that in mind, find out what your neighbors are prohibited from doing with their properties before you commit to buying.

Learn About HOAs

In the United States, you might take for granted that any apartment building or housing development operates according to the rules of a homeowners association. Don’t assume the same rules exist when buying an apartment or house in a private community overseas. Ask to see the HOA documentation, including recent financial statements showing ongoing expenses and cash on hand, and have your attorney review it. If the HOA isn’t properly registered, the HOA rules are unenforceable. That can put your property value at risk.

Prospective buyers should also ask about HOA fees. You’ll want to make sure the HOA charges are high enough to cover related expenses. If they aren’t, property maintenance could be deferred, putting your investment at risk.

Find Out Whether You Can Rent Short-Term

If you buy a property overseas and rent it to tourists or travelers, you could offset some of the expenses. However, be careful not to assume that the property can legally be rented short-term. Check relevant municipality legislation and the rules of the HOA. Short-term rentals can be restricted or disallowed by the local government or building management.

Calculate Ongoing Costs

Put pen to paper to calculate the total carrying costs, including property taxes, utility costs, internet and cable, property management fees, and HOA fees. You’ll be responsible for these expenses whether or not the property is rented. Be sure that you can cover these costs even without any rental income, and take them into account when calculating your projected net rental yield.

If you need a car to live in this location, your monthly budget must include the expenses of owning one.

Estimate Proximity to Day-to-Day Services

As part of your property search process, take time to walk the neighborhood and explore the surrounding area to confirm services and amenities nearby. Look for the nearest grocery store, pharmacy, hospital or medical center, public transportation, bank, and hardware store. These things can be as important as the property itself.

Consider the Path of Progress

If you are buying property in a developing country, try to determine which stage of the path of progress it is in. The path of progress refers to infrastructure, gentrification and government incentives that improve the overall quality of life in that place. A new airport or highway, for instance, can make an area more accessible, opening up opportunities for further real estate development. It can be difficult to time your foreign real estate investment with the path of progress. You want to buy before the appreciation created by the progress occurs, but not so early that you have to wait a long time to see the progress’s effect on value.

Be Cautious When Buying Into a Private Development

Find out how security will be provided, what construction and design standards are in place, and whether the development company is financially sound. Understand which amenities exist and which are promised, but recognize that you’re buying only what exists. If there’s no marina when you buy, there may never be a marina, no matter what the developer’s nice brochures indicate. Consider whether you will be happy with your purchase if it’s never anything more than what it is at the time you buy.

Understand That Building a Home Overseas Can Be Challenging

If you’re buying land with the intention of building your own home, consider whether you will be in the country during construction. If not, someone will need to oversee the work for you. Keep in mind that you will need a contingency plan if the project takes longer and costs more than you’re planning.

[See: The Cheapest Places to Retire Abroad on $1K Per Month]

Evaluate Environmental Risks

Is the area prone to natural disasters? If so, are there measures in place to mitigate the impact of those disasters? If you’re investing in a place that’s prone to earthquakes, for instance, ensure that the construction meets local earthquake-resistance standards. The impact of certain natural disasters such as droughts and hurricanes is exacerbated by climate change. Try to predict how your area might be affected and determine your risk tolerance level early on. This may impact your decision on whether to buy property overseas.

Think About Living Overseas Part Time

If your plan is to live in the place only part of the year, you may need to hire someone to look after the property while you’re away. Consider whether you will be able to rent the place out while you’re elsewhere. If so, you could earn enough in rental income during the months you’re living somewhere else to cover the property’s annual carrying costs. It can be a good idea to engage a professional property manager to pay the bills, check on the property, supervise cleaning and oversee maintenance and repair work.

More from U.S. News

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How to Buy Property Overseas for Retirement originally appeared on

Update 04/10/24: This story was published at an earlier date and has been updated with new information.

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