Want a snapshot on how to invest globally? Here’s a ten step process of how to invest across borders and overseas.
Remember no two transactions are a like, so be sure to ALWAYS find a strong, and resourceful team to surround yourself with when pursuing an international acquisition. Need help with this? Shoot us an email HERE.
Step 1: Purchasing As An Individual or LLC
You have the option to buy as an individual or through an LLC. You could have more protections when purchasing through a legal entity. It could provide safeguards from estate and gift taxes. It can also provide protection if an accident occurs.
Step 2: How to Pay For A Global Property
Will you be paying with cash, or utilizing a mortgage? If considering a mortgage, lending institutions may require a higher down payment ranging between 30 to 35 percent (US). See Step 3.
If you are planning to use cash, be sure to learn the local laws and requirements for transferring funds. It will be important that upon searching and/or offering on a property that your funds have arrived, or are on the way. This is important to provide proof of funds to the owner/seller upon offering. Best to be provided within a familiar bank or institution to the seller. Highly suggested to make sure the funds are transferred prior to beginning your search.
Step 3: Choosing A Mortgage Lender.
So you’ve decided to go the mortgage route? Contacting a lender that has experience working with foreign nationals will be very important to understand all of the moving parts. It will help simplify the process and help you understand further needs to get the job done.
Step 4: How To Search For Property
Depending on where you search, the process can be very easy, or very challenging. Unlike the United States, many countries are still developing a main database for all listings within their respective area. This could leave you searching multiple resources that can contain different results, leading to different outcomes.
Its always best to start online. Once you have narrowed down your preferred search areas it is very important link up with a Certified International Property Specialist (CIPS). These specialists will be able to assist with your search, and can introduce you to other resources to help with the process.
Step 5: How Long It Takes
No two processes are alike; no matter where you purchase. After offering on a property, the time frame differs from country to country on how fast you can “close” on a property. Funding terms come into play, however in the United States it is typical for it to take anywhere from 30-45 days. Contact a CIPS to find out how long a process may take within your search area.
Step 6: Closing Costs
In most cases, the list price of the property will not be the only costs and fees that are associated with the purchase. From title insurance, taxes, recording and legal fees, you will want to plan for this at the beginning. Again all transactions and terms will be different, but you will want to inquire more about these “add-ons” with you international transaction manager / advisor.
Step 7: Study, Study, Study
Depending on how you fund the purchase of the property this can also lead to additional (transfer / lending) fees. Property location will also come in to play. If acquiring a property near the ocean, or other body of water, additional insurance coverage may be needed as well. Be sure to research and understand how these fees may play into your potential purchase.
Step 8: Follow The Rules
Be aware of all local tax and zoning laws pertaining to property ownership. Depending on how you structured your purchase (Individual or LLC), and what type of property you will be buying, will determine how you will need to report and handle usage of your asset. It is very important to have a reliable resource that understands these laws.
Step 9: Residency Laws
Be aware of laws pertaining to residency and legal visitation to the country your property is located. Most people invest outside of their country to have an asset that they can visit. Be sure you check with local authorities / resources in order to understand the laws around legal visitation and residency.
Step 10: Find Value in a Certified International Property Specialist.
Consider contacting an International advisor, otherwise know as an Certified International Property Specialist (CIPS) who will be able to help set you up for success. This expert will have access to all of the resources and tools that you will need in order to effectively and intelligently pursue property outside of your country.
There are many opportunities to diversify your portfolio and reap that benefits of international real estate. Hopefully this helps organize your thoughts, and if you need any further assistance from one of our advisors, and Certified International Property Specialists, send us an email HERE.
Thank you to the Florida Realtors® for their resource and United States version you can find below.