Buying Property Abroad: Why & Where to Buy?

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|10 min read

FastExpert partner, Alina Aeby is a global real estate and proptech consultant based in San Francisco, CA. She is also the 2023 NAR Global Coordinator for Eastern Europe, the Middle East, and Africa. Read on to discover her invaluable insight into buying property abroad.

Click here to browse our Real Estate Agent Directory and contact top-rated agents in your area!

While you often hear statistics about foreign buyers investing in real estate properties in the U.S.A, there is also a growing number of Americans looking to buy a property abroad. The reasons that have been fueling this trend are certain and are only likely to grow over time.

Why Are Americans Buying Abroad?

High Cost of Retirement

Retiring in the U.S.A. could be costly. According to Numbeo, a world living costs database, a single person’s estimated monthly expenses are, on average $1,068.20, without rent or mortgage payments.

Choosing a country with lower living costs and property prices will make the dollar stretch longer and increase the quality of life. This is especially true right now when the dollar is relatively stronger.

Living on a fixed retirement income makes the value of the dollar even more important. Therefore, finding a location that provides a relaxed lifestyle at a relatively cheaper cost is extremely attractive.

Remote Work

In the past few years, working remotely has become the indefinite norm for some professions. With that, many people that had been tied to a specific location began to dream of life elsewhere.

In fact, a few countries have offered different attractive options, such as nomad visas, tax incentives, and even lending options to lure foreign buyers.

This is an opportunity to experience a new culture and lifestyle for a limited or prolonged period of time.

Investment Diversification

Buying property abroad allows for the diversification of a real estate investment portfolio and diversification in the type of investments within a portfolio.

When buying property abroad for the purpose of investment, there are options for buying properties directly or as an investor in a real estate investment fund.

Some investments, especially in developing countries, could yield higher returns or be good cash flow rentals, although they come with certain risks. 

Where Are Americans Buying Homes Abroad?

Top destinations countries for Americans buying second homes, investments, opening businesses, or retiring abroad:

Mexico

Mexico is a popular destination for US Americans due to its close proximity, warm climate, and affordable cost of living. The country also offers a relatively easy path to residency.

However, buyers should be aware of safety concerns in certain areas and ensure that they understand the local laws and regulations regarding property ownership, especially land purchase and coastal land in particular. 

Costa Rica

Costa Rica is another popular destination due to its stable political climate, beautiful scenery, and abundant wildlife.

The country also offers a range of affordable healthcare options for retirees. However, be prepared for a slower pace of life and the possibility of adjusting to cultural differences.

>>MORE: Message agents and get answers to your questions with FastExpert

Italy

Italy is a popular destination for those seeking a European lifestyle. The country offers a rich history, world-class cuisine, and stunning architecture.

Buyers should be prepared for a more complex real estate market structure and ownership obligations with high taxes and fees.

Portugal

Portugal is another European destination gaining popularity among US American buyers, offering a golden visa program.

The country has a lower cost of living, a relaxed lifestyle, excellent healthcare, and a warm climate for 300 days per year.

On the other hand, the Portuguese real estate market has become competitive in popular locations, and some bureaucracy can be expected when establishing residence in the country.

Panama

Panama is one of the top tax heavens destinations and a favorite of retirees, investors, and digital nomads alike.

The country has the most stable economy in Central America, with excellent infrastructure and a reasonably priced private healthcare.

A minimum of $200,000 real estate investment will grant a temporary residency, while a $300,000 investment will offer an immediate permanent residency. Foreigners can’t own land within 10 kilometers of borders. In addition, Atlantic and Pacific coastlands are off-limits because they are considered federal property.

Dubai (United Arab Emirates)

Dubai (United Arab Emirates) is famous for the tallest building in the world, Burj Khalifa, and its rapid economic development.

Lately, Dubai has become the financial, technology, and investment center of the Middle East and North Africa region, competing for talent with other big global cities.

Moderate property prices, good ROI’s, and an abundance of new construction have drawn people to Dubai. In addition, tax incentives, safety, and a regulated and stable economy make Dubai an attractive investment in addition to an alluring working and living destination.

Of Dubai’s residents, 92% are foreign residents. However, one must carefully select the right development and avoid fraud. Not all developers are alike.

Summers are sweltering, with high desert temperatures, and the city doesn’t have a lot of vegetation or natural parks. 

These are not the only destination countries. Other popular destinations are:

  • Belize
  • France
  • Greece
  • Thailand
  • Philippines
  • Japan

A growing number of immigrant U.S. citizens invest and retire in their country of origin, where they have family ties and can understand the language and culture. 

Pros and Cons of Buying Property Abroad

Pros of Buying Property Abroad:

Investment:

Property prices in some countries may be lower than in the U.S., offering an opportunity for investment and potential profit.

Rental Income:

If you plan to rent out the property, it can generate rental income in the local currency.

Vacation home:

You can use the property as a vacation home or second home, giving you a place to stay during your visits to that country.

Diversification:

Owning property abroad can diversify your investment portfolio and provide a hedge against currency fluctuations and economic instability in the U.S.

Lifestyle:

You may enjoy the lifestyle benefits of having a home in another country, such as access to different cultures, languages, and cuisines.

>>MORE: How do I buy a house overseas?

Cons of Buying Property Abroad:

Each country has different laws and regulations for buying and owning property, and it can be difficult to navigate the legal process.

Foreign exchange risk:

Fluctuations in exchange rates can affect the value of your investment and income.

Maintenance and upkeep:

It may be challenging to manage the maintenance and upkeep of the property from a distance.

Taxes:

Owning property abroad may subject you to additional taxes, both in the U.S. and the country where the property is located.

Cultural differences:

Cultural differences may affect how business is conducted and may cause misunderstandings during the purchase process.

It’s essential to weigh the pros and cons carefully before deciding whether to buy property abroad. Consider your personal goals, financial situation, and the risks involved before making any decisions.

Work With a Realtor You Trust

Hiring trusted and reputable local real estate professionals and attorneys is the first step before purchasing a property abroad.

For example, the National Association of Realtors has partnerships with 100 real estate associations in 76 countries. In addition, they are familiar with the US buyers’ requirements and ways of doing business.

Alina Aeby is a global real estate and Proptech consultant, speaker, and investor based in San Francisco, California. Alina is dedicated to helping buyers and sellers in San Francisco and throughout the Bay Area. She enjoys representing a first-time home buyer as much as she enjoys representing a seasoned multi-asset investor or a luxury property seller or buyer. Alina has a background in journalism and economic research and holds a PhD in Economics with an emphasis in globalization.

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