With the colder months fast approaching, we’re already dreaming of sunny beaches, mountain excursions, and sipping on drinks in a hot tub. Sure, you can book a vacation, but if you go down multiple times a year with the entire family, those costs can add up. Have you thought about buying foreign property to spend your winters down there? Or maybe to rent it out to friends and family as a vacation home? These tips will help make sure you weigh the pros and cons before jumping in with both feet when considering buying foreign property.
You can make a significant profit by renting out your vacation home.
Renting out your home to friends and family or turning it into an Airbnb is a great way to generate an income and help pay off your mortgage. This makes buying foreign property a better investment but be sure to choose a location that has a big tourist population to ensure you’ll have enough interest to make it possible. Just remember, you must factor in insurance, cleaners, and any damage that may happen by a stranger coming into your home.
Make sure you install solid security. Is it safe?
Do your research on different neighbourhoods. It’s easy to get sucked into a good deal and end up on the bad side of town. You’re most likely not going to live there permanently, so there are security measures you can implement to keep an eye on the property when no one is there. Security cameras have functions where you can control settings straight from your phone and will send you alerts if it picks up movement or sound. Alternatively, some will hire a local to keep watch on the property and be a contact on the ground for you if your renters run into any issues while they are there.
There is a lot of upkeep on a home, especially when you’re not there often!
If you are using your foreign property as a vacation home, remember that you are now budgeting and paying bills for two mortgages. It’s best to create a tax-free savings account (TFSA) to save money for housekeeping, gardening/pool care, general maintenance, bill payments, etc., and to create a proper budget before making an offer to ensure you can in fact afford the place, to begin with.
Ensure that the government has ties to the US and Canada.
Make sure the country is foreign investment friendly and that there are no restrictions on living or buying there. Some countries have a foreign tax when you buy a home if you’re not a citizen, which can get pricey. In addition, make sure the country is safe in general meaning that it maintains a stable democracy for your safety and the safety of your investment.
Understand the medical services there
Make sure you have travel insurance or local insurance and make it a recommendation to your guests that they invest in it as well. Research hospitals in the area to ensure they have excellent medical services close by and that you can get your prescription medications as needed. Knowing the cost of healthcare is important. You may need to consider local health insurance in case of an emergency and you don’t want to find out after you invest how much that will cost.
What does the future look like if you decide to sell your foreign property?
If you decide that owning a second home isn’t right for you, you can rest easy not worrying about losing money on the sale if it’s in a prime real estate market. But, if you do invest be sure to research how long a property normally sits on the market before jumping in. If homes usually take a long time to sell, then you may find yourself in trouble if your financial situation changes and you need to get your money back sooner rather than later.
Make sure you get approved for a mortgage before you search for your foreign property.
Check out my mortgage calculator located HERE to see if you’re able to afford a second home, or if you’re thinking about selling your current home and are planning to move out of the country. Don’t get discouraged if you don’t like the dollar amount though. As a professional mortgage broker, I have tons of options to help you get pre-approved for the mortgage you need that the banks don’t. I can also help you find the best travel insurance to help protect you while vacationing. Give me a call at 705-315-0516 to discuss how I can help make your second property dreams a reality today.