Vol 7 No. 5 - October 25, 2006

If you want a villa in France, learn the rules
By Louise Bolger
sun staff writer

So you think you live in paradise. Anna Maria is certainly considered paradise by those who live there, but it’s not the only place in the world described as paradise, and more and more affluent buyers and investors are finding that out.

According to a story in Forbes Magazine last month, purchasing international property is lending itself to not only bragging rights, but also to creating a diversified portfolio of investments. Forbes states that in the last couple of years, the international real estate market has seen a significant boost from affluent buyers looking for both a getaway and an investment.

Naturally, purchasing real estate in a foreign country comes with a whole host of negatives and caveats that can create a bumpy road to ownership. These are some of the recommended tips for buying abroad:

Hire a local lawyer, especially if you don’t speak the language. Since legalities and customs within the Unites States change from state to state, you have to assume that dealing with foreign governments will be that much more confusing. Likewise, research the buying process. Understanding local tax laws and fee structures is critical before making a purchase. Also, educate yourself on local zoning laws so you’re not stuck with a beautiful villa or farmhouse that may eventually be overlooking the local prison.

The first rule of real estate is to investigate and become familiar with comparable properties in the area in which you want to purchase. Don’t react in the heat of the moment by an exotic location or charming village without taking a good look.

Allocate at least 10 to 15 percent of the purchase price for extra expenses related to doing business abroad, including travel, communications and unexpected fees.

One of the biggest issues when buying property in another country is the currency exchange. Currency fluctuations can make all the difference between a property appreciating or depreciating. Research the history of currency fluctuations in the country you’re considering as well as the stability of the government.

Many foreign countries, especially Mexico and Central America, are attracting American retirees. If you’re considering one of the many new regions where homes are being constructed, a thorough investigation of the builder is required. Half finished projects and bankruptcies are common in developing countries. Purchase with a known entity.

Ownership regulations are also not as straightforward as in this country. Some countries will not allow a foreign national to own property, but will offer long term lease arrangements, which can limit your right to sell the property and possible future use of the property.

However, the most important thing to understand, if you’re lifelong dream is to own property abroad, is to embrace the cultural differences. Don’t fight the system; understand it and work within the framework. Whether you’re buying a ranch in Wyoming or a villa in the south of France, make friends with your new neighbors. They will ultimately be your best source for accurate information.

If you’re ready to start researching your international investment, I would recommend Sotheby’s International Realty. You can view castles in the French countryside and beach apartments on the Spanish coast. Paradise is in the eye of the beholder, and there are many in the world to behold.

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