Going on vacation is one of life’s biggest pleasures. Taking a flight somewhere long haul to those sugary beaches where the weather stays bright and the drinks are always flowing is a time out of life. The best kind of time out, really, when you consider how much you hated it as a child. It’s only when you get older and you take more time to think about your own future that your mind may turn to those vacations that you love so much. For some people, buying property abroad is just a clever way of having somewhere to stay whenever they want to board an airplane to the adventure in the sunshine. More often than not, though, a property bought abroad is a savvy investment, there to earn a crust until one day it can be sold as a tangible asset and benefitted from.
Overseas property can provide far more for someone than buying at home, but it’s not an easy or clear process. There are a lot of considerations and questions that you have to ask yourself before you go for it with buying a townhouse overlooking the ocean. You must be sure that when you plough your money into a vacation property, you will know how to manage it and know the local laws enough that you can visit and understand the courtesies of renting it out in the right seasons. So, with all that in mind, what questions should you be asking yourself before you sign that contract for the vacation home you’ve been admiring for years.
Where Should I Buy?
Your property purchase abroad is rather like dating. Think about it; you visit a few times, enjoy everything that there is to offer and after you’ve enjoyed the area casually, you want to make it a permanent commitment and feature in your life. Choosing where you should buy your property will be largely dictated by the places that you’ve visited, where you currently live and whether you would be able to rent it out during the times that you are not there, so it doesn’t just sit empty and waiting. You should be deciding whether you want to buy a vacation home that you can at least drive to a couple of hours away, or whether you won’t mind being half a world away and have to fly out there to be able to see it. You should also probably consider whether the location that you choose will suit you should you one day choose to move into the home yourself. On top of all that, you need to think about whether you would one day be able to sell it on; there’s no use buying in an ‘up and coming area’ if the area never ups and comes, you see.
Will I Spend Time There?
Having a second home is going to be a big purchase and you need to know whether you are going to really get a chance to spend time in the new house. You should, of course, expect there to be gaps where you rent out to vacationers and other long-term tenants out of season, but what about you? Will you get any use? If the answer is no, then think about the investment rather than the scenery in your own opinion. You must choose early whether you will spend much time there or not, as this can dictate everything from the décor to the location.
Is This Financially Viable?
We’ve all done that thing; searching for homes we can’t afford on imaginary budgets. The thing is, when you buy a vacation home, it’s not imaginary, you are doing this for real and you need to know whether you can afford it properly before you actually sign anything. Crunching the numbers should be done twice. The first to include a potential rental income that will help you to afford the mortgage, and the second without a rental income. What would you do if you have a few months without a tenant or holidaymaker who wants to rent from you? How would you cover those insurance, mortgage and utility costs? If you don’t consider these items, you could find your dream quickly turn into a nightmare, and that’s the last thing that you want to happen.
Is This Smart?
For every large financial decision that you make, you have to ask yourself whether it’s a smart investment for you and your future. Your vacation home may not be somewhere that you can visit very often to enjoy as a vacation spot, so therefore it does have to be worth your time. You need to look for something that you actually like for the times that you can use it. You should also use time spent looking around properties to interview management companies. If you live too far to be able to meet and bring in tenants and holidaymakers, you will need to put that task in the trust of someone else. They will be able to do all the paperwork and vetting for you, so that you reap the rental rewards without any of the actual stress.
What’s My Exit Strategy?
With any large financial decision, you need to have an out. You need to be able to know what happens for your home when you decide enough is enough. No one will own a vacation home forever, and while you could choose to pass down ownership to children or pass it to another family member, you may even decide to liquidate one day. Sometimes, selling a second home can take a little longer to sell on than the ones where you live. Give yourself a plan with time to get out of the deal when you want to stop being a homeowner to a vacation home, and make sure that you have given yourself enough space financially while you sell.
Owning abroad is going to change your financial future, make it a good decision and enjoy the ride.