Through the Looking Glass
Date: 10/14/2005
International Living Postcards– Saturday Edition
Saturday, Oct. 15, 2005
Paris, France
Dear International Living Reader,
You’re not in Kansas (or, in my case, Arizona) anymore.
As you look beyond U.S. borders for real estate opportunities, whether for fun or for profit, you’ll come across people and situations that seem comfortably familiar, and those that seem strange. The trick is to know the difference.
Financing in emerging markets can be difficult (or impossible) to get…at least from the bank. Owner financing, common in the States, may not exist in these markets either. In fact, if you ask for it, they may not even know what you’re talking about…but that doesn’t mean you shouldn’t ask.
When I was looking for an apartment in Croatia last year, I was hoping to find local property owners open to the idea of carrying back a note for the sale, despite various experts telling me it didn’t work that way. At least two owners of properties I viewed were willing to take down payments and finance the balances personally. One had specific numbers in mind (she was looking for enough cash up front to allow her to buy another, smaller place to live); the second seller I spoke with on this subject didn’t fully understand how the idea would work but was open to offers.
In this scenario you’re looking at high down payments (30% to 50%) and a short term (three to seven years), but it’s better than 100% cash out of pocket.
Elsewhere, particularly in Latin America, don’t assume the real estate franchise you recognize from back home will offer the same level of service you’re used to from that franchise in the States. The sign on the door may look the same…but there the similarity ends.
No, this doesn’t mean that all branded real estate agents are bad guys…but they’re certainly not all good guys. As an IL Postcards reader, you already know how to handle yourself in these markets. Specifically:
1. Always get title insurance. If the real estate agent tells you anything except "that’s a good idea," move on.
2. Buy what you see. As we remind you often, do not believe a real estate agent (or developer, or property owner) who says a marina is planned…or a pool…or clubhouse. Don’t believe him if he promises electricity is coming…or a paved road is on its way. If the road is paved, you’re investing in a piece of property accessed by a paved road. If it’s not…you’re not.
3. Get a signed contract. Do not hand over a deposit to a real estate agent (or anyone) unless you have signed a contract that guarantees return of that deposit within a specified period should you discover a problem with the piece of property in question…or just change your mind.
4. Don’t go it alone. If you don’t know a real estate agent (or anyone) you can trust in the country where you’re looking to buy, ask us. We probably do. Here’s a good place to start.
And, finally:
5. Be wary.
Lief Simon
Real Estate Editor, International Living
P.S. Best way to make sure that you’ll always have an edge in every real estate market? The International Real Estate Investment Forums I’ve put together with my key contacts and preferred experts for every type of land deal. We’re in Washington D.C. Nov. 3-4, and Panama City Nov. 7-8. I hope to see you there.
