The Essential Checklist for Buying Overseas Real Estate for the First Time

Purchasing real estate outside your home country can seem like an attractive proposition. You might save some money, have an investment to leave to the children, or simply take advantage of the lifestyle benefits. However, ensuring that your first experience with overseas real estate is also a positive one requires attention to detail. Use this checklist to guide the process.

Understand What You Can Actually Own

First, you need to clarify foreign ownership laws, which can vary more than you expect. For many countries, non-citizens are not allowed to directly own land. What they can own is a built structure on the land or a unit within a building such as a condominium or they can lease the land for a specified lease term usually 30 years with an extension option.

Over 10 or 20 years, the differences between leasehold and freehold become huge. Leasehold comes with renewal risk, difficulties in reselling property, and limitations in getting a loan, but these are often issues that first-time buyers overlook until they are trying to sell the property. Freehold – where you own absolute title to the property – can bypass most of these issues and generally has lower depreciation value in foreign-available markets.

Get it in clear writing from a lawyer before you start shortlisting properties. Don’t let your excitement over a particular property hold you back.

Run A Proper Title Search

Land or title deed verification must not be optional. In certain instances, the highest-grade title – a Chanote in Thailand, for example – certifies that the land has been properly surveyed and registered. Lower-grade documents don’t offer that certainty, creating potential boundary and legal disputes that, conveniently enough for you, could form after you make the purchase.

You’ll also require a local lawyer. Preferably one not procured via the developer or the selling agent. In real estate transactions overseas, conflicts of interests are common, and not always disclosed, so find yourself an independent legal representative. They’ll run that title search and check for existing liens or encumbrances but, crucially, they’ll also confirm that whoever is selling the property actually has the legal right to be doing so.

If you aren’t going to be present for every stage of the process, it’s also worth considering a local power of attorney, which is your lawyer’s formal right to act on your behalf during the transaction.

Do Physical Due Diligence Beyond The Surface

Many buyers come to see if the property is big enough, attractive enough, or has high enough windows. It’s not enough physical due diligence for tropical and/or emerging-market real estate.

Ask specific questions about monsoon drainage, especially if the property is in a low-lying area. Investigate soil stability if you’re buying on a slope or near coastal development. Check utility connectivity – water pressure, power reliability, and whether the building has a backup generator – because what’s acceptable to a local developer may not meet the standard you’re expecting to live in or rent out.

Infrastructure in the pipeline matters as much as what’s already there. A new airport, a highway extension, or a major commercial development nearby can shift capital values significantly over a five-year period. Conversely, a planned industrial zone or a new road that cuts through the view can do the opposite. Request planning data from your lawyer or a local buyer’s agent, not from the developer’s sales team.

Account For The Costs That Aren’t In The Brochure

The asking price is just a starting point. Closing costs – stamp duty, transfer taxes, legal fees, land registration charges – can tack on 5% to 10% to the final price in many jurisdictions. Know before you make your offer how much you can afford to pay total.

Then there are the carrying costs. Annual non-resident property taxes, mandatory local insurance, and international bank transfer costs are but a few. Don’t forget those recurring expenses when you translate them to an annual basis. International property buyers often have a median purchase price above domestic buyers in part because they are attracted to turn-key, professionally managed properties (National Association of Realtors) and the management charges impact your net rental return.

Put your deposit into a proper escrow account rather than paying directly to the seller or developer. A neutral third-party arrangement protects your funds if the deal falls through or the developer fails to deliver.

Check Whether The Investment Works Without The Upside

Often, people forget to consider capital gains tax on an overseas property sale upon purchase. Be sure to know what you’ll owe to the country where the property is located when you sell. Next, run the investment assuming no price appreciation whatsoever. If the rental yield – net of management fees, taxes, and vacancy – is enough to make the deal feasible on its own, you’ve got yourself an investment. If it only works assuming a gain, it’s a bet.

Off-plan purchases merit specific attention here. Developers in new markets often deliver late, deliver something else, or don’t deliver at all. If you’re committed to purchasing off-plan, structure your payments so that they correspond to construction stages, not a massive upfront check.

None of the mechanics of overseas real estate purchase are rocket science. They are simply rules to follow diligently at each step of the way. The buyers who get burned are almost always the ones who skimped on a step or two because the property seemed so right. That’s what checklists are for.