Buying a Second Home in the Tropics
A practical guide to running off to an island
How to choose
So just how should Americans begin investigating these foreign destinations? For some, the research begins with a vacation trip; but today, Internet search engines make it much easier to seek one’s own slice of paradise - without ever boarding a plane. In addition, many foreign locations becoming more popular with U.S. citizens have American realtors, who can put you in email contact with others who've gone before you.
Once you've narrowed down your options, though, experts agree that it's time to get your passport in order and book some flights. Photos on a computer screen, no matter how high the resolution, rarely give you a full picture of a property's problems or potential. You'll also have a better chance of interacting with current residents to get their thoughts on the area's appeal.
"I think your best bet is to just walk around and talk to people who live there," Hunt says. "If they've had a bad experience, they'll be very open to talking about it."
If arranging such a journey seems overwhelming or intimidating, companies such as International Living offer group tours that are put together especially for those who want to investigate real estate opportunities. Keep in mind, though, that such groups often earn referral fees from developers who sell properties to the tour organizers customers. International Living is very open about its arrangements with other real estate pros.
Hunt says Panama is safe enough and is home to enough English speakers to make a tour unnecessary. A guide may be helpful, though, in other countries, he adds.
"I would definitely not go alone to Honduras," he says.
Understanding the process
As is to be expected, the process for buying a property may be a bit foreign to US homeowners. Here are some factors to consider before signing on any dotted lines:
Although mortgages are available in much of Panama, both Hunt and Simon say that financing may not be available in other countries.
Some countries have restrictions on foreign property ownership. Mexico, for one, doesn't allow foreigners to own land along its coastline or borders. In these cases, you may be purchasing a long-term (99 years or longer) leasehold.
Be sure to get references from the realtors and lawyers you're working with when investing abroad. Check credentials to make sure you're working with people you can trust. "You do want to work with licensed professionals," Hunt says. "Everybody from your cab driver to your busboy will try to sell you real estate."
Don't expect inspection contingencies to be a part of your negotiations, Hunt says, unless you're purchasing new construction. In that case you may be able to work with your developer on a punch-list of improvements.
Prepare for renovations
Finally, if you're purchasing an existing home, there's a good chance the property will need extensive renovations to bring it up to American standards.
"Their houses all have to be rehabbed for us," Hunt says of the local residences he's seen in Boquete. Many of these homes lack basics, such as hot-water heaters or an adequate number of electrical outlets. In some cases, wall slits, rather than actual windows, are used for fresh-air ventilation, he says.
"Right now, we're bringing them forward 50 years," he says.