Kathleen Peddicord: Should You Buy A Home Overseas?

When you decide to take your retirement global, one of the first big questions you face is, where? Not only where in the world (as in, what country might be best for you), but also where to reside, as in, in a house? An apartment? A gated community?

In fact, though, the question at first shouldn't be where to buy a retirement residence overseas. The question at first for the would-be retiree overseas should be: Should you buy a retirement residence overseas at all?

Maybe it's not a real estate purchase you want -- but a rental.

For each of my three international moves -- from Baltimore, Maryland, to Waterford, Ireland; from Waterford to Paris; then, most recently, in 2008, from Paris to Panama City, Panama --my husband and I rented first and were glad we did. Because, in each case, we discovered that the place where we settled initially wasn't the place where we really wanted to be. In Waterford, we realized we didn't want to be in the city but outside it, so we could savor Irish country living. In Paris, it was a matter of a dozen blocks or so, but that distance made the difference between being at the heart of the chaos come tourist season each year and being hidden away and removed from it while still having the best of central Paris on our doorstep. In Panama City, we've relocated three times before finally finding the neighborhood where we feel most comfortable.

Panama City is a good example because, for such a small city, the diversity of lifestyle options is great, and neighborhoods just a mile or two away from each other make for dramatically different living experiences. Buying before giving yourself a chance to understand this can mean the difference between loving your new life overseas and regretting it. Thinking more practically, depending on the country where you're retiring, the costs of buying and reselling property can be significant, meaning that buying wrong can be expensive.

On the other hand, I can imagine circumstances when you might choose to ignore my Rent First caveat and buy from the start of your retire overseas adventure. If you're retiring to a place where property values are appreciating, waiting a year before buying means you could be passing up healthy gains. Remember, the market dynamics that attracted you are attracting others, and early buyers enjoy the greatest rates of appreciation.

Buying real estate overseas is fundamentally about diversification. This is true whether you buy for investment or for retirement and argues in favor of buying for retirement rather than renting, if not right away then eventually, once you're more certain of your situation. Buying your new retirement residence overseas means moving money out of the United States and putting it into another market and, potentially, another currency. Moving all your money out of the States and into a new retirement residence overseas doesn't alone bring you the diversification you should be seeking right now. However, using some of your capital to purchase a retirement residence in the place where you want to live and putting other of your capital to work in another market (that perhaps uses a different currency) gets you not only diversification but also what amounts to a rent-free retirement.

Another advantage of buying your retirement residence overseas rather than renting it is that it helps you to "take the plunge." It allows you to move your life forward, unequivocally, embracing the new adventure. Many who rent before they buy do so in order to maintain a property back home, "just in case." While this can be sensible, it's also an anchor, a drag. It can divide your attention and keep you looking backward instead of ahead to your new life. Keeping one foot on the pier and the other on the departing boat can land you in the drink. You may remain only partially committed, which will be a handicap.

The bottom line if you're considering launching your retirement in another country is to follow your instincts, not only with regards to what to buy overseas but also when answering the question, should you buy at all? You know yourself, your motivations and preferences, and how well you've researched your chosen destination. You know your level of commitment, your level of readiness, and your tolerance for risk.

If you decide to invest in a new home of your own for your retirement overseas, here are 10 things to consider first:

How To Buy For Retirement Overseas Tip #1

How much space will you need? Do you want an apartment or a house? One bedroom or two? (You probably won't need more than two.) Two levels or only one? A guest room or even a guest house? Will you have guests often, for example? Will you want them to be able to stay with you, or would you prefer if they came and went from a hotel nearby?

How To Buy For Retirement Overseas Tip #2

Do you want a front yard, a back garden, or a swimming pool? All of these things require care and maintenance.

How To Buy For Retirement Overseas Tip #3

Do you want to be in the heart of downtown or out in the country?

How To Buy For Retirement Overseas Tip #4

Do you want a turn-key, a renovation project, or something in-between?

How To Buy For Retirement Overseas Tip #5

Do you like the idea of living in a gated community, or would you prefer a more integrated setting, such as a neighborhood where you could become part of the local community? This is a key consideration. Going local means you have to learn the local language (if you don't speak it already). Or perhaps you'd prefer to be off on your own with undeveloped acres between you and your nearest neighbor. In this type of rural setting you will need to build your own in-case-of-emergency infrastructure.

How To Buy For Retirement Overseas Tip #6

Consider traffic patterns and transportation. Where you base yourself determines whether you'll need to invest in a car, which is an important budget consideration.

How To Buy For Retirement Overseas Tip #7

Consider the convenience factor. How far is it to shopping, restaurants, nightlife, parking, and the nearest medical facility?

How To Buy For Retirement Overseas Tip #8

Do you want a furnished home? You may have no choice but to buy unfurnished (unless you buy, say, from another expat who's interested in selling his place including all contents). Buying unfurnished means you'll need to purchase furniture locally or ship your household goods from home.

How To Buy For Retirement Overseas Tip #9

What's your budget? This is the most practical guideline of all, of course. Be clear on your finances before you start shopping, and, if your budget is strict, don't be tempted to consider properties outside your price point. You'll only be disappointing yourself unnecessarily.

How To Buy For Retirement Overseas Tip #10

Finally, ask yourself what kind of view you'd like from your bedroom window each morning. This can be an effective way to focus on something important that might otherwise be overlooked until it's too late.

Earlier on Huff/Post50:

• Ecuador

  Ecuador may be one of the most inexpensive places to live for retirees on a budget. Not only is the <a href="http://www.huffingtonpost.com/2012/06/20/fortune-magazine-best-places-to-retire_n_1609136.html#slide=1115326" target="_hplink">cost of living extremely cheap</a>, according to Fortune magazine, but the South American country also uses the U.S. dollar. One couple interviewed by International Living lived on <a href="http://www.huffingtonpost.com/2012/04/17/affordable-overseas-retirement_n_1429436.html#s874483&title=Vilcabamba_Ecuador_From" target="_hplink">$600 a month</a>, spending as little as $1.25 per month on gas and $1.70 per month on water. (<a href="http://www.flickr.com/photos/palegoldenrod/4081854019/" target="_hplink">Image via Flickr</a>, Carly Lyddiard) <em>Correction: A previous version of this slide said that Ecuador was in Central America.

• Panama

  Easy accessibility and <a href="http://www.huffingtonpost.com/2012/04/17/affordable-overseas-retirement_n_1429436.html#s874491&title=Santa_Fe_Panama" target="_hplink">excellent health care</a> are two major draws for retirees settling in Panama. According to <em>U.S. News & World Report</em>, the cost of living is not the cheapest -- especially in Panama City -- but the great <a href="http://money.usnews.com/money/blogs/On-Retirement/2012/03/19/the-18-best-places-to-retire-overseas" target="_hplink">retirement benefits</a>, <a href="http://www.aarp.org/home-garden/livable-communities/info-07-2010/best-places-retire-panama-boquete.html" target="_hplink">travel and entertainment discounts</a> and country-wide use of U.S. currency make up for the extra expenses. (<a href="http://www.flickr.com/photos/francesco_veronesi/4406579094/" target="_hplink">Image via Flickr</a>, Francesco Veronesi)

• Philippines

  Since 1985, <a href="http://www.globalpost.com/dispatch/news/regions/asia-pacific/philippines/120703/retirement-expatriate-community-economy" target="_hplink">25,000 foreign retirees</a> have settled in the Philippines, <em>Global Post</em> reports. <a href="http://finance.yahoo.com/news/most-tax-friendly-places-retire-211248505.html" target="_hplink">Taxes are minimal</a>, so living is very comfortable on a pension of $3,000 per month. Post 50s may have to share the beach with younger folks since the minimum age <a href="http://www.globalpost.com/dispatch/news/regions/asia-pacific/philippines/120703/retirement-expatriate-community-economy" target="_hplink">for ex-pat retirees is 35.</a>. (<a href="http://www.flickr.com/photos/stoto98/5254792052/" target="_hplink">Image via Flickr</a>, SToto98)

• Belize

  For a <a href="http://money.usnews.com/money/blogs/On-Retirement/2012/03/19/the-18-best-places-to-retire-overseas" target="_hplink">tropical climate</a> where <a href="http://www.aarp.org/home-garden/livable-communities/info-07-2010/best-places-retire-belize-corozal.html" target="_hplink">English is the official language</a>, retirees should look no further than Belize. The coastal country offers <a href="http://finance.yahoo.com/news/most-tax-friendly-places-retire-211248505.html" target="_hplink">no tax on foreign retirement income</a> and minimal sales and property taxes, according to <em>U.S. News & World Report</em>. (<a href="http://www.flickr.com/photos/hickatee/6324853508/" target="_hplink">Image via Flickr</a>, Ian Morton)

• Southwestern France

  Some cities in France may be a bit out of the price range of the average retiree -- looking at you, Paris -- but the monthly expenses of other towns in the southwest are more affordable, notes the AARP. For Francophiles looking to settle in France, the <a href="http://www.aarp.org/home-garden/livable-communities/info-07-2010/best-places-retire-france-languedoc-roussillon.html" target="_hplink">history, culture, wine and food</a> are among the biggest enticements. (Photo credit: AP)

• Bali

  With consistently perfect weather and beautiful beaches, Bali joins dozens of other beachfront locations that make for great retirement living. According to <em>The Wall Street Journal</em>, retirees can settle down on the Indonesian island for <a href="http://online.wsj.com/article/SB10001424052702303877604577384070844533062.html" target="_hplink">about $1,000 a month</a> (not including housing), as long as they don't mind trading in a front door for a open entryway -- as is custom in Bali. However, medical care is not the best. (Photo credit: Getty)

• Costa Rica

  With <a href="http://finance.yahoo.com/news/most-tax-friendly-places-retire-211248505.html" target="_hplink">no taxes on foreign retirement income</a> -- according to <em>U.S. News & World Report</em> -- <a href="http://www.aarp.org/home-garden/livable-communities/info-07-2010/best-places-retire-costa-rica-central-valley.html" target="_hplink">Costa Rica</a> may be one of the ideal places to retire. Nestled between Nicaragua and Panama, the cost-friendly country boasts stunning beaches and rain forests. HuffPost bloggers Jeff Jones and Gay Haubner wrote about their experience <a href="http://www.huffingtonpost.com/jeff-jones-and-gay-haubner/house-hunting-in-costa-rica_b_1654711.html" target="_hplink">finding a house in Costa Rica</a>. (<a href="http://www.flickr.com/photos/dottieday/287835575/" target="_hplink">Image via Flickr</a>, Dottie Day)

• Italy

  No list of places to retire abroad could be complete without Italy, where Diane Lane's character traveled to in the 2003 film "Under the Tuscan Sun." Settling in Rome is not the most feasible option, but like France, there are several Italian cities that offer a <a href="http://www.aarp.org/home-garden/livable-communities/info-07-2010/best-places-retire-italy-le-marche.html" target="_hplink">comfortable life of leisure,</a> full of delicious Italian food and wineries, on a budget, AARP reports. (<a href="http://www.flickr.com/photos/yarwood/29308454/" target="_hplink">Image via Flickr</a>, Russell Yarwood)

• Campeche, Mexico

  Certain cities in Mexico are not the safest, especially along the U.S.-Mexico border, but there are still parts of the southern country that are increasingly popular with retirees. Campeche, located near Belize, boasts beautiful waterfront properties on the Gulf of Mexico and a low cost of living. A week's worth of market <a href="http://www.huffingtonpost.com/2012/04/17/affordable-overseas-retirement_n_1429436.html#s875023&title=Campeche_Mexico_From" target="_hplink">fruit and vegetables cost less than $10</a>, according to <em>International Living</em>. (Photo credit: <a href="http://www.flickr.com/people/malias/" target="_hplink">Flickr/Malias</a>)

• Argentina

  While <a href="http://finance.yahoo.com/news/most-tax-friendly-places-retire-211248505.html" target="_hplink">taxes are a bit higher in Argentina</a> than other South American locales according to <em>U.S. News & World Report</em>, the large country offers a <a href="http://www.aarp.org/home-garden/livable-communities/info-07-2010/best-places-retire-argentina-buenos-aires.html" target="_hplink">wide range of places to settle</a> -- from major tourism hubs to smaller, inexpensive villages. However, retirees should plan on spending a little more on monthly expenses, because of the <a href="http://money.usnews.com/money/blogs/On-Retirement/2012/03/19/the-18-best-places-to-retire-overseas" target="_hplink">rising cost of living</a> and devaluation of the U.S. dollar, <em>U.S. News & World Report</em> writes. (<a href="http://www.flickr.com/photos/lferna/5857732656/" target="_hplink">Image via Flickr</a>, Luis Fernandez)

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Source: http://www.huffingtonpost.com/kathleen-peddicord/retirement-overseas-should-you-buy-a-home_b_2481073.html

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