Why You Should Rent Before You Buy (Sometimes)
Last week we offered some insights into how to purchase real estate overseas and explained that when it comes to foreign property, there can be two conflicting agendas: personal use versus a straight-up investment buy.
If you’re buying for investment, then the decision to buy is simple; if the numbers make sense, go for it.
However, if you’re looking at real estate for personal use, things get much more complicated…
Finding a new home that suits you is best done on the ground in person. However, you can (and should) carry out some prep work in advance of your scouting expedition.
The fundamental question related to finding a place to lay your head has to do with renting versus buying.
To Rent Or Buy?
Almost without exception, we recommend that you rent first, at least during your first six months living in a new place.
Maybe your chosen haven won’t turn out to be all you imagined it to be (which is not the end of the world… maybe it turns out to be just the springboard you needed to get you to your true paradise). Or maybe you’ll find that the country suits you fine, but the neighborhood where you’ve settled for your trial living experience doesn’t.
We’ve yet to meet a single expat retiree who regrets having made the move overseas. However, we have known a number who weren’t happy with their initial location choices. That’s no problem—as long as you haven’t invested in the purchase of a home. This is the first and primary reason why we strongly recommend renting first.
Another reason might be to do with financing. In some of the places, financing for foreigners isn’t an option.
In some cases, you may want not only to rent first, but to rent, period. Property, especially land, especially productive land, is one of the soundest investments you can make in the current global climate. On the other hand, property as a place to live, in retirement or otherwise, might best be rented rather than acquired. Certainly, again, you want to rent first.
But renting rather than owning your retirement dream home overseas also has long-term advantages, specifically:
#1: You’re Mobile And Flexible
No matter how much you enjoy your new location, maybe, sometime down the road, you’ll decide you’d like to find out what it’d be like to spend time someplace else. Maybe you’d like to move again… or perhaps eventually you decide you’d like to divide your time among two or three destinations each year—springtime in Paris, summer in Portugal, and winter in the Greek islands, for example. It’s easier than you might imagine to organize a wandering retirement along these lines… especially if you haven’t invested in a permanent residence in any one place.
#2: You Avoid The Carrying Costs Of Home Ownership
A residence of your own means maintenance and repair expense. It requires home-owner’s insurance and care-taking. In some places, it obliges you to pay property tax. And, if you buy with financing, it necessitates, in much of the world, an investment in life insurance. Renting, you have none of this expense. Only rent.
#3: Investing In A Home In A Foreign Country Means You Need A Will In That Country
Otherwise, what happens to the asset when you die?
#4: If You Buy A Home, You’ve Got To Furnish It
Investing in your own place means investing, as well, in tables and chairs, beds and dressers, throw rugs and flowerpots. Rent furnished, and you simply show up and settle in.
Finding Rentals Overseas
The best way to source a rental most places around the world is by word-of-mouth.
You can search on the internet, but, as with property for sale, the rentals you find this way are typically the most expensive, certainly if you search English-language sites in a non-English-speaking market. Your chances of getting a better deal are increased if you reference sites in the local language. Still, going this route, you’re going to find only those properties for rent by locals with the wherewithal to advertise on the net.
You can also source rentals through local print classifieds. This can be an effective method, a way to penetrate the local market and to gain access to local pricing, but only if you read and speak the local language fluently.
The most efficient and effective strategy, certainly if you’re not fluent in the local lingo, is to ask around. You can begin this process before you arrive in your new home, but finding a suitable rental in the right location for you at a good price can be a difficult thing to accomplish from afar.
In addition, consider the parallel strategy of engaging the help of a rental agent. The downside here is that, even if you’re not the one paying it, the agent is working for a fee, which is typically based on the monthly rental amount. In other words, the agent isn’t going to knock himself out trying to find super-cheap options.
This “renting versus buying” issue is just one of the topics we’ll discuss live at our Retire Overseas Virtual Conference this September. Our experts and expats will also give you the lowdown on health care (and insurance) overseas… how to establish legal residency… how to fund your new life overseas… how to bring your pets… how to learn a new language (or where to go if you don’t want to)… and lots more…
Plus, we’ll take you on a virtual tour of the top havens we’ve identified for living or investing today… from old-world cities to laid-back beach towns to opportunities to go off the grid…
As the world reopens, this fall is the perfect time to start narrowing your focus and making plans to get out there on a scouting trip or two…
At our Retire Overseas Virtual Conference, you’ll get to put your questions to our far-flung team of experts… the same people who can help you through a smooth move.
We’ll be officially opening registration soon. And, as our biggest event of the year, seats go fast…
To make sure you secure your virtual seat at the best discount, pre-register here now.
Editor, Live and Invest Overseas Confidential