International real estate investing helps you build wealth. You can reap the financial rewards of a vacation rental property. In addition, you have a destination for your vacations. Many people enjoy the process and purchase additional homes to increase their revenue. Here are some things to think about before your first purchase.
Get Access to Cash
While you are still looking for the ideal location, you will need access to cash. Use an international money transfer app to pay vendors. You can also use the app to send cash to yourself. Transfer apps make it easy to move funds with your phone or computer. You immediately receive transaction confirmation. The client typically has immediate access to the funds.
Create a Budget
Your budget dictates the location and type of home you can purchase. Understand how much you can afford to pay for a home. Domestic banks have additional fees for international mortgages. Local banks often charge inflated interest rates to non-residents. Some banks expect a downpayment of at least 40% of the purchase price. You may want to consider purchasing the home with cash.
Hire Professionals
International real estate purchases come with their own unique set of rules and regulations. As a first-time investor, protect yourself with a team of service professionals. They can help you wade through the red tape of purchasing your property. Take some time to interview for the following services:
- Real estate broker
- Translator
- Real estate attorney
- Notary
- Appraiser
Understand Ownership Regulations
Before you sign the real estate contract, be sure to understand if there are any limitations to how you operate your property. The Homeowners Association may have strict guidelines regarding home modifications. They can also restrict you from using the property for short-term rentals.
Research Zoning Ordinances
Be sure to reach out to the local governing body for the property. They also have authority as to how you can use the property. Zoning ordinances may also have declared the property as historical. This designation can make it difficult to change the property’s exterior.
Prepare for Weather
Research how severe storms or flooding have impacted the property you are considering. Speak with your insurance agent to make sure you can get adequate property coverage. Save money to pay for premiums or property upgrades. If you plan to rent the property during storm seasons, hire a contractor to secure the home before the predicted storms.
Invest in Security
Your guests will appreciate the measures you take to protect the property while they are renting. Monitor the home while still protecting the privacy of your guests. Consider investing in a private security company to monitor your home.
Understand Tax Implications
You will be responsible for paying taxes on income received in the foreign country. Hire an accountant and take advantage of as many tax laws as possible. They can help claim tax deductions for management fees, insurance premiums, maintenance expenses, and repair fees.
Investing in international property helps diversify your portfolio. It is an enjoyable way to build revenue.
