Tuesday, August 4, 2015

Tips On Buying International Real Estate

JULY 31, 2015
A strong U.S. dollar isn’t just making vacations overseasmore affordable; a brawny buck puts foreign real estate on sale, too.
Jason Kumpf, real estate expert at USForex, says their clients are “absolutely” using dollar strength to justify buying international real estate, particularly in continental Europe and the U.K. Even Canada is attracting more Americans now that the loonie is at about a 20% discount to its U.S. counterpart, says Kumpf.
Wei Min Tan, a residential condominium specialist at Rutenberg Realty’s Castle Avenue, says select buyers will always want to invest in a top-tier city like London, but a wave of buyers is also favoring countries with lower costs of living, including Malaysia, Thailand, and Costa Rica.
“They may see it as a place to retire in the future. Here [retirement] can cost so much, there it’s a fraction,” Tan says.

Risks, Always Risks
But before you shell out for a beach house in Rio de Janeiro, the experts insist buyers need to do their homework and enlist international real estate specialists for a host of reasons.
First, Tan says, find out whether the country allows foreigners to own real estate. Thailand, for instance, allows foreigners to own apartments with certain restrictions, but not landed properties. Also, make sure the buyer gets permanent residency privileges; the alternative is staying on three-month tourist visas.
Both Kumpf and Tan stress that tax implications are a major consideration. That includes taxes owed to the home country and/or the U.S. You could face a bill from both, so be mindful.
Kumpf said some international buyers think of buying property as investment income; they may plan to put the place up for rent on Airbnb or other services. It’s wise to have a lawyer in the home country tell you what to expect, and to work with your accountant before shopping.
Cash is king, too. Some countries allow only all-cash deals, and even in places where mortgages are possible, they can be more expensive than a U.S. consumer is used to, Kumpf said.
Unlike in the U.S. where purchasers get the deed to the property after closing, in some countries, a clean title may take one to two years to properly transfer, Tan said.

Moving Target
The dollar is strong relative to its major global counterparts now, but will it last?
“If you chart the euro/dollar, you see it does fluctuate. One dollar used to get you 75 [euro cents], now it’s getting you 90 [euro cents]. That’s huge,” Kumpf says.
There’s more to consider. Kumpf says some buyers he works with are locking in exchange rates on potential transactions because they find the dollar/euro favorable. By working with a foreign exchange specialist they likely get a better rate, too.
While some buyers won’t lock in exchange rates since it can be a little complicated, it’s something for all U.S. property buyers in foreign lands to consider, he says.

Wei Min Tan is a New York property broker focusing on global investor buyers.  He can be reached at tan@castle-avenue.com

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