The idea of acquiring a holiday home abroad is tempting for many people. Owning a pied-à-terre in a sunny country can allow you to spend unforgettable moments with your family. It's also a great long-term investment. However, before you take the plunge and make this dream come true, you need to be vigilant. From the search process to the signing of the deed of sale, find out 5 important things to consider before buying a holiday home abroad.
1- Destination and location
The choice of destination and location is an essential step when buying a holiday home abroad. It is important to think very carefully about where you want to invest and why you want to invest. If the goal is to have a holiday home to use personally, without necessarily making any financial benefit or return, then choose the place you like the most. If, on the other hand, you also see an investment dimension, the destination and location will be at the center of your project.
In both cases, take into account your personal preferences like; climate, accessibility from your primary residence, activities available in the surrounding area, and proximity to essential services. Do not hesitate to visit the region several times before buying a property on site. Also, speak with locals, expats and people who already own a holiday home on-site for top-notch information and advice.
2- Legislation and regulations
Laws and regulations relating to the purchase of real estate vary from country to country. You must therefore, learn about the subject before committing to the project. Familiarize yourself with the land laws of the country in question, property taxes, restrictions on foreigners, inheritance taxes, and any laws related to renting to third parties.
Some countries have specific rules regarding the right of foreign citizens to have full ownership of real estate. For example, you may be limited to buying a single property in the country or, you may be allowed to own the property but not the land on which the property is located.
Moreover, regarding the legal systems and the process of registration of deeds of ownership, they also differ from one country to another. You should know the laws of the country where you want to buy a property and do some research and title deed checks before buying a holiday home abroad. If necessary, hire a lawyer who specializes in overseas real estate to make sure you understand all the legal aspects of the purchase.
Never sign an agreement or promise to sell without the help of a lawyer and without having seen the valid and up-to-date authorizations and title deeds of the current owner.
3- Budget and costs
Establishing a clear and defined budget is crucial before buying a holiday home abroad. In addition to the purchase cost, also take into account any additional associated costs; such as monthly credit payments, taxes, lawyer fees, condominium fees (if applicable), management and maintenance costs, electricity, water and gas bills, home insurance. Don’t forget to count for travel expenses to get there!
In general, the annual maintenance cost of a holiday home is between 5 and 7% of its value. The purchase of a second home allows you to invest in 'brick and mortar’, an investment that remains a safe haven. However, make sure you have a realistic view of the total costs of buying a home abroad before making a decision.
4- Property management
If you plan to not occupy your holiday home yourself all year round, you may need to consider commissioning a company to manage the property in your absence. A property that is not used also deteriorates, so it must be maintained regularly, just like the property that you do live in year-round. Housekeeping, maintenance of the interior and exterior, oversight and remodelling of various installations and chattels will still be required for the vacation home. You will not be able to escape this aspect, but it will be worth it for you to fully enjoy your vacation home.
If, during your absence, you are thinking of renting the property, think about hiring a local property management agency. It's even considered essential, because you can't manage everything remotely. The property management agency will take care of rentals and tenants, maintenance issues and security of your property. Be sure you understand the fees associated with these services and choose a trusted agency. Renting your holiday home when you are not there allows you to collect payments that help with the fixed costs of the property....and why not have additional income!
5- Investment prospects
Buying a holiday home abroad can be a great investment, but it's important to assess the long-term financial outlook. If your goal is to make money on this property, learn about real estate trends in the area, market developments, and the tourist appeal of the destination.
Also keep in mind that the value of the property can fluctuate, and if you plan to resell it in the future, it's essential to understand the potential timeline for appreciation of the property, to get a return on investment.
Buying a holiday home abroad is a real adventure that requires careful planning and thorough research. By keeping in mind, the five things to consider discussed in this article, you will be better prepared to make an informed decision and succeed in your real estate acquisition project abroad. Do not forget to consult local real estate agents, as well as financial specialists to accompany you in the purchase of your holiday home and realize the best possible outcome of your dream home.