Winter is coming. This is one thing in Canada we can be sure of and many people will flock to their destination of choice to get away from the frigid cold. As this becomes a much-needed reality for a lot of families, you may ask yourself, is it a good idea to buy a foreign property?
If this is your goal then you will need to research ALOT and consider the following 7 things:
1- What is my intended use for the property? Will I be using it myself, lending to friends and family or renting it out as extra income? Maybe a little of everything. If it is for personal use, you need ask if it is justified for only a couple weeks a year. There are many responsibilities with owning a property and complications that can arise when you are not present. Will this put extra stress on your busy lifestyle and is it worth it? If you plan on renting as a income, then the answer could be yes. With sites like Air BnB and VRBO becoming increasingly popular, there is certainly some money to be made. There is also a great investment of time and organization to run it correctly, so make sure you factor this in.
2- Is it close to amenities? Whether you rent it out to vacationers, or live there yourself for part of the year, you need to know the proximity to attractions and amenities for food, transportation and emergency services. Do your research because this will certainly impact the ability to generate income and the potential for resale down the road.
3- How are you going to finance the purchase? Many banks will not lend on international purchases so a very common option is a Home Equity Line of Credit or using an International Bank that is associated with your domestic branch, using the purchase collateral. This is an important aspect to consider and talk to your financial advisor about. Both of these have upsides and downsides and you will need to have the documents translated in most situations so there will be additional fees that you may not consider as well as traveling back and forth for any issues that may arise during home ownership. Additionally, if you have investments or ready-cash available, this would be the best and easiest option.
4- If you have been visiting all-inclusive resorts and have considered a purchase because of the lifestyle, you need to be aware that the amenities on the resort would not be the same as ownership. Resorts are designed to make you want to come back because of all of the food, alcohol, clean pools, events and security. Many things happen behind the scenes to ensure a problem free vacation when you are visiting an all-inclusive resort. These are not necessarily available to you as easily in a residence without significant planning and additional expenses.
5- Who will be maintaining the property for you when your are not there? If you can hire somebody you can trust this is a great option, but you will still need to consider the issues of not being on-site and who will be authorized to deal with issues. Best-case scenario you are only a flight away, but the reality of being able to drop everything to travel and deal with a problem is not an option for everybody.
6- The economic stability of the country you are investing in is also something to consider. Will people want to travel there? How can resale be affected in the future? What are the potential risks and how can they be minimized?
7-Finally, the weather is also a big factor to consider. Of course there is nice weather there or you would not be considering it, but some areas have massive risks with hurricanes and tsunamis leaving devastation and tragedy. Can you get insurance and what is the premium? What are the risks of renting out the property during these times and how will that affect your bottom line?
If you are prepared, realistic and do your research beforehand, this may be a great option for you. And if it isn’t, you can always rent from someone else until it is!
Please reach out with any questions, I am always here to help.
Tanya Evoy- Broker
RE/MAX Affiliates Realty Ltd., Brokerage
Direct:613-285-4214 Office: 613-257-4663