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Real Estate Realism: The Pros and Cons of Buying a Holiday Home Overseas

samos-931200_640Thinking of buying a home overseas? You have your work cut out for you. Unfortunately, buying a home in a foreign country isn’t the giggle it used to be. You have a lot of laws, regulations, and red tape to get through before you see any profit. And, this all assumes you understand the language in the country you’re buying in.

Most real estate investors, even when they’re buying a holiday home, get in over their head. Here’s what experts can tell you about buying a second home overseas.

Finding A Good Market

Find a market where there’s a strong tourism demand. This may not help you immediately, but it will eventually if you want to sell. Think Spain, for example, rather than Bulgaria. That’s just an example. Not too many people want to buy a home in Turkey, but they might in the UK, or even in Hong Kong or The Caribbean.

When you’re scouting, it might help to have a vehicle. Instead of bringing your own, comb through listings on

Picking The County

Pick a country where your home won’t be nationalized or repossessed at a dictator’s whim. It has to be said. Some countries just aren’t worth buying in because of the political unrest. Select a nation where the manufacturing industry (or other major industry) is stable, and where you are reasonably certain that the economy will be stable in 10-20 years.

Make Sure Transportation Is Abundant

Make sure the country you choose has a stable infrastructure. Stability in infrastructure means that the economy is fairly sound, that you’ll be able to get around, and that you will not have problems getting to and from your residence. For example, you wouldn’t buy a property in Brazil if you want to rent your home to a lot of people from the U.S. or UK. It’s not that Brazil is a bad place to buy, but not many British or American families go there for long periods of time.

Know What Your Property Will Cost Over Time

People often buy real estate without a full picture of what the costs will be. This is a huge mistake. A property isn’t just the initial cost. It’s the ongoing costs of maintenance, insurance, and taxes. You also have to figure in the ongoing mortgage payments — much of which is interest paid to a lender.

When things break or go wrong, and they will break more often than you think, you will be on the hook for the costs. So, you may need to reroof the place, have it cleaned professionally, reline the pool, or buy a new HVAC system when you least expect it.

You need financial reserves to do this. And, many real estate investors don’t.

Pay Attention To Taxes

Every country has different laws regarding taxes. Know them. Accept that you will have to pay them and plan for them.


Another fact of life is the bureaucracy in every country. Bureaucrats exists to make people’s lives more difficult. And, that’s just the way it is. It can be worse in a foreign country, so again, plan for it.

Plan For No Cash Flow

You really need to make a plan for no cash flow for months at a time. Even if it’s a popular rental, you need to plan for times when it sits empty. Have a cash reserve that will get you through the lean times. The reality of no income and potentially higher expenses kills a lot of real estate investors.

Don’t let it kill you.


Tenants are sometimes more hassle than they’re worth. But, check the eviction laws where you buy, because they may favor the tenant. Management companies can also see more expensive than you think they should be. But, they’re often worth the cost to manage all the headaches.

Buying A Property As A Holiday Home

If you’re buying the property as a holiday home for you and friends, you might find your friends taking advantage of you. Be prepared to lay down the law and set expectations in the beginning. This will protect you financially. Do it before you hand over the keys. Those who play by the rules aren’t going to be offended. Of course, people who are out to take advantage of you will get mad and raise a fuss. Know this in advance and save yourself the headache.

In the end, you’ll know who your real friends are.

Be sure to check these out:

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James Compton is the founder and owner of Home James Morocco, a Marrakech based luxury car rental company.

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