Posted by As thousands of people start to think about jetting off for their summer holidays, I wonder how many of them secretly wish they owned their own overseas holiday home?
How many of them will spend time on their holiday gazing at properties, before sneakily looking online and trying to turn that dream into a reality?
If you’re one of them, then you should know that it’s never as easy as it looks! It’s important to consider a few key factors before you embark on such a venture. Trust me – I own and have owned in many places other than Ireland, so I like to think I know what I’m talking about.
Whether it’s for investment or lifestyle purposes, here are my top tips to help you make informed decisions and avoid potential pitfalls.
Know your motivation
Before you dive into purchasing a property abroad, ask yourself why you want to do it. Are you actively looking for an investment opportunity, or have you just returned from a lovely holiday somewhere and want to continue the lifestyle? Separate emotions from facts and ensure that any decisions you make align with your long-term goals.
Cold, hard logic needs to drive your decision – something that you’re really thinking through and doing the numbers on. Ask yourself (and be honest) Do you want something because you can profit from it, or do you want it because you want it?
Beware the green-eyed monster
Don’t let envy get in the way of your ability to think rationally.
If one of your friends has bought overseas, it’s all too easy to want what they have, or feel that you need to compete with their lifestyle – which is actually worse!
Honestly, I can’t say this enough. If you’re considering an overseas property purchase, don’t get swept up in the perceived glamour of it all. The chances are, your friend won’t have told you any of the downsides they’ve experienced, just the good bits.
Seek local knowledge…
Don’t rely solely on a brief holiday experience to inform your buying decisions: thoroughly research the area you’re interested in. Do some fact finding from unbiased, reliable sources, and don’t get swayed by any advertorials you’ve seen – they exist solely to press your buy buttons, after all.
I’ll say it again – don’t rush into any decisions. You wouldn’t buy in an area in your home country without checking it out thoroughly first, so don’t do the same on foreign soil.
But “local knowledge” now means something much broader than it used to. You need to understand not just the immediate area, but the broader regional picture. That gorgeous coastal property in a peaceful seaside town might be perfect – until a conflict three countries away sends refugees streaming through the region, completely changing the local dynamics.
Research the entire region, not just your specific location. Understand the economic relationships between countries – how would sanctions on a neighbouring country affect your property’s value? What would happen to tourism (and rental income) if regional tensions escalate?
Don’t just talk to estate agents who have a vested interest in painting a rosy picture for you. Seek out expat communities, read local newspapers (translated if necessary), and understand what the locals are genuinely worried about, and what could be just over the horizon for the area.
… But watch out for changing local sentiment
Recently, a lot of overseas property buyers have been caught off guard by the rise of anti-tourism: locals getting fed up with tourists, and particularly short-term rentals forcing them out of the larger cities. There have been major protests in places like Barcelona, the Canary Islands, and Portugal, with residents literally marching in the streets holding signs saying ‘Tourists go home.’
Why does this matter to you as a property buyer? Because local governments are listening. They’re introducing caps on short-term rental licenses, banning new Airbnb registrations in city centres, and in some cases, making it nearly impossible to rent your property to tourists at all.
Before you buy, research not just the current regulations, but the local political climate. Are there anti-tourism movements gaining traction? Are local politicians promising to crack down on short-term rentals? That beautiful apartment near the beach might not be such a great investment if you can’t legally rent it out the way you planned.
Don’t assume that because short-term rentals are legal today, they’ll still be legal (or profitable) tomorrow. Local sentiment can shift quickly, and when it does, the regulations usually follow.
Understand the market
An easy trap to fall into is to look at overseas property prices and marvel at how cheap it is. If you’ve been priced out of the market at home, the temptation to buy somewhere affordable (in an exotic location) might be especially hard to resist.
But be careful: compare local market prices and evaluate whether a seemingly cheap property is truly a good deal in the given area. Assess the value within the local context – is it really good value, or has someone seen you coming a mile off, and decided you’re ripe to be ripped off?
Consider as well my previous point about local sentiment – whilst an area may have welcomed foreign owners in the past, think about whether you’re contributing to locals being unable to rent or buy in their home city.
Be wary of external influences
If you’ve taken on board everything I’ve said so far and have gotten to the point where you’re dealing with local agents, remain vigilant. Understand their motivations and approach their advice with a critical eye.
What’s in it for them? Do they have your best interests at heart?
Remember that local agents might be working on high commission, in which case they’ll tell you anything you want to hear in order to complete a sale. They might put you up in a hotel, show you all the good bits and tell you about some fantastic opportunities you’d be crazy to miss.
If they’ve got a percentage of the sale at stake, take anything they tell you with a massive pinch of salt and do your own research.
Grasp the unknowns
There are lots of unknowns you’re going to come up against when you’re buying in an international market, and often the first stumbling block is communication. Do you speak the language? If not, you’re going to struggle, and your Duolingo probably won’t be able to help you!
If you don’t speak the language, you’re automatically excluded from important conversations and that can be tough to experience – do you fully understand what’s going on and what’s being said to you?
Make sure you understand the legal system in whichever country you’re considering buying in. Don’t assume that solicitors, taxes or legal documents will be the same as they are in your home market. Do you understand how do mortgages work there? Are there any hidden fees that you haven’t accounted for? How long does the process take? The first time I bought in Spain, it all took far longer than I was used to and I nearly lost my deposit because I’d underestimated the time scales involved.
Also consider the practical financial hurdles that can derail your purchase mid-process. Currency fluctuations can be brutal and that “bargain” property suddenly becomes a lot less attractive when the currency swings against you.
Remember that international money transfers aren’t always straightforward, and some banks have tightened restrictions on overseas property purchases. You might find yourself needing to jump through hoops you didn’t expect, or discover that your bank won’t transfer the amounts you need without extensive documentation. Plan for this to take longer than you think.
The lesson here is simple: factor in extra time and extra money for all those unknowns. What seems like a straightforward purchase can quickly become complicated when you’re dealing with different systems, currencies, and regulations.
Embrace the learning curve (but don’t get cocky)
Take the time to educate yourself about the market you’re entering. You might think you know your way around things (see my previous point), but you’re safer to assume that you know nothing.
Don’t get overconfident. What could happen if you end up (for example) in a legal dispute? You definitely won’t be an expert in a foreign system, and that’s going to be a situation where ignorance is definitely not bliss!
Partner with a reliable local expert
If you’re really serious about buying overseas, the best way to invest is in a partnership with a reliable market player who knows their local market inside and out. Someone with a good reputation, and resources to put skin in the game with you. It’s a major red flag if you’re looking to invest in a foreign asset but your partner isn’t putting any money into the deal.
Make sure you have good chemistry and always sense check what they tell you – don’t just believe everything they say! A good partner is worth their weight in gold, but a bad partner could lose you all your capital, after all.
Don’t get me wrong – owning a property abroad can be highly rewarding, but it’s not a decision you should be making on a whim. It demands careful consideration and due diligence. Don’t rush the process: remember (as with everything), to play a long game. Ensure your motivations align with your goals, gather accurate information, and always, always seek professional guidance.