U.S. Markets closed

Tips for Buying International Property

OFX Global Money Transfers

Almost everything you need to know about buying an overseas property*

*You’re on your own for deciding between tiles or hardwood.

OFX – What are the best places for international property investment? How do you get a home loan for an overseas property? What are the tax implications of investing in the global property market?  How can currency rates affect your purchase? Whether you want to own a second home or diversify your investment portfolio, we’ve got the answers you need to help make your investment a success.

In this guide, you will learn:

  • How to decide on a location for your investment
  • What are the best international real estate companies?
  • How to get a mortgage for a property abroad
  • International property tax implications
  • Managing International currency rate fluctuations


Where Should You Purchase Property Abroad?

Buying property abroad is a substantial, long-term investment. Therefore, it is imperative to research various overseas real estate markets before deciding upon the one that you want to invest in, because there is always an opportunity cost to allocating substantial resources to one particular investment. Purchasing an oceanfront property on an island might seem like a great idea, especially if you are looking for a vacation home, but if the market is weak, you might find it difficult to sell that property later on and get a good return on your investment.

  1. Start by looking into areas that you are hoping to invest in, but always make sure you’re comparing apples to apples. A swanky two-bedroom flat in central London might cost the same as a four-unit apartment complex in Latvia. One may have higher vacancy rates, while the other is in high demand. In one location, you might be able to manage the rental yourself, but with the other you may need an agency. Decide beforehand how much time you want to dedicate to your investment. If you think you’ll be using an agency to manage the property, whether commercial or residential, you’ll need to factor in the costs. While buying a residential property overseas may seem ideal, many investors broaden their scope to investing in commercial property like warehouses, office buildings, or storage centers. It’s important to put parameters in place to guide your focus, because an accurate assessment of the opportunities depends on properly controlling for the relevant risks.
  1. Analyze the long-term real estate trends of the past decade to see how property prices have fluctuated. Remember that different markets will have different trends during the same time period even if they’re in fairly close proximity. For example, Geneva, Zurich and Bern all have localized factors that influence the property market, so what you’ve seen in one may not apply to the others.
  1. Research the real estate market forecasts. Changing economic and political landscapes can have a profound effect upon the housing market especially when it comes to central bank policy and interest rates in particular.
  1. Look into the laws regarding your ability to hold the title of a property, and what you need to do to secure that title. The policies for foreign investment into real estate vary from country to country. Most countries allow overseas investors to purchase property, but often this will not grant you the right to live, work or stay in that country.
  1. Limit the foreign currency exchange rate risk you may have when purchasing property abroad. Jason Kumpf, Real Estate specialist at OFX, reminds us that; “If you are paying a mortgage, you may have payments in Euros over time, but if your income is in US Dollars, and if the EUR gains against the USD, you may end up paying more for your property than you initially thought.” Methods to manage that will be shared.

Deciding where to invest in real estate will depend on your personal financial situation and ambitions. That said, there are always some hotspots for international property investment. In an article titled “Why The Best Investment In 2016 Might Be Global Real Estate” on Forbes.com, Kenneth Repoza reports that “London, Paris, New York, San Francisco, Tokyo and Sydney are the main targets for direct cross-border real estate acquisitions over the next 12 months.” As 2017 unfolds, emerging markets have seen a lot of interest from international investors. Eastern European economies like Poland, Latvia and Estonia have attracted foreign capital and are a just a few of the interesting options for real estate as well. (You will need to check your local tax office website for more details.)


What are The Best International Real Estate Companies?

In addition to having access to the most interesting properties that are in line with your budget, the right international real estate company can guide you in terms of what areas are best for foreign investors and what risk/return profile suits your personal financial situation best. While OFX does not endorse any particular company or agency for overseas investments, here are a few to consider:

  • Colliers International Property
  • Sotheby’s International Real Estate
  • Cushman & Wakefield
  • Your Empire
  • Mayfair International Realty
  • Christie’s International Real Estate
  • Leverage Global Partners
  • The Agency
  • Leading Real Estate Companies of the World
  • International Consortium of Real Estate Associations

You may also want to consider hiring an independent attorney who can look out for your best interests and steer you in the right direction. Even though the majority of local real estate transactions will not need a lawyer, when it comes to buying property overseas, it is best to work with an experienced lawyer who can represent you legally and point out any flaws in your purchase contract before you sign it. Plus, the right independent real estate attorney will also be able to help you thoroughly understand every legal document that comes your way when you are ready to finalize a purchase overseas.

It almost goes without saying that if you are planning on purchasing property in an overseas market where you do not speak the local language fluently, you will need to hire a translator or work with a reputable agency who can translate all legal documents before you sign them.


How Currency Fluctuations Impact the Global Real Estate Market

As you do your research into where to buy property abroad, one of the primary factors affecting the viability of your investment will be the exchange rate. Aside from doing a quick currency conversion, you may want to review the current economic standing of a foreign currency against historical rate charts.

Keep in mind that currencies will fluctuate, sometimes quite dramatically, over time. And sometimes currency exchange rates will change rapidly over a short period of time.

After the Brexit vote in the U.K., for example, the pound’s value fell 10% against the USD in one day. On Telegraph.co.uk, Rhiannon Bury reports that in the three months following the Brexit vote, 78% of commercial property sales were paid for by foreign investors swooping in on a bargain.

In a similar way, President Trump’s policies against Mexico caused the peso to fall in value dramatically, however, real estate in tourist areas continues to attract foreign investors looking for a good deal.

Aussie real estate is another hot target for foreign investors looking to profit from exchange rate fluctuations. Because of the international demand for housing in major metropolitan areas, assets in capital cities like London, Sydney and New York may be protected to some degree from declines due to demand fostered by currency fluctuations.

Jason Kumpf, recommends keeping an eye on the currency rate of where you are thinking of buying and possibly using an FX firm like OFX to manage that exposure.


What Taxes Will You Need to Pay On an International Property Investment?

The amount of tax you’re required to pay on your international property investment should be factored into your decision-making process. Some countries do not impose property taxes; others do. Some countries or cities may levy taxes if you leave your property vacant for a certain percentage of the year.

If you are planning on renting out your property, you might be required to declare that rental income to your home country and the country where your investment is located. Unless there are double taxation treaties in place, you could be on the hook for taxes in two countries.

When you are ready to sell, you’ll need to be aware of both local and foreign taxes on capital gains.

International taxes are complicated and penalties can be steep for failing to declare assets that wouldn’t otherwise be taxed. Finding an accountant with sound international expertise could lower your your tax bill substantively.


How Can You Get an International Mortgage?

When purchasing real estate in another country, it could be difficult to find the appropriate financing option, especially since some countries might not have any financing options for foreign buyers at all. In some countries, banks cannot take a foreign asset as a security for the loan, so you may not be able to get a standard mortgage from your domestic bank the way you would for a local purchase. Still other international regulations may prohibit banks from even initiating a conversation to a client about a mortgage if the client is based overseas–even if you’re a citizen of the country in which you want to buy. So how can you get a mortgage for an overseas property purchase?

While traditional bank financing might not be available for overseas assets like it is in your home country, developer financing may be available when there aren’t any other options for foreign investors.

Other payment methods might include using the funds in your retirement account or pulling equity from your primary residence in your home country. You may qualify for business or personal loans that you can use to pay for your down payment overseas. Certain banks, like HSBC, offer mortgages for international borrowers, if you can maintain a minimum bank balance at a designated threshold.

Here is a breakdown of some banking policies related to international mortgages in Australia, the United Kingdom and the U.S.A.

  •  Australia

As of April 2016, two major home lenders in Australia have opted out of offering mortgages for non-residents. Westpac and the Commonwealth Bank no longer accept mortgage applications from foreigners. Other banks have also reviewed foreign lending policies and, in some cases, reduced loan sizes and borrowing limits.

  •  United Kingdom

There are a number of things to consider if interested in purchasing a property in the UK as a foreigner. For example, Australia’s Corporations Act creates barriers for Australians looking to purchase in the U.K. which can be surprisingly difficult to overcome. Some lenders base their decision on visas, including spouse visas. Not having credit in the U.K. can also hinder the process.

  •  United States of America

In the United States of America, getting a mortgage can be influenced by:

  • Availability of property in the region
  • Plans for the property
  • If the borrower has an accessible credit history
  • The type of visa the foreign buyer has in the United States
  • The loan size requested
  • Available funds for a down payment.

Once you have determined where you would like to purchase your international property and you are ready to buy, it will be time to set up your payment method in the appropriate foreign currency. Whether you are planning on making your payment in one lump sum or you are planning on making mortgage payments, your currency will need to be converted every time a payment is made. Do be aware that many banks charge a 5% margin on the daily exchange rate, so to send $100,000 overseas, you could be paying as much as $5,000 (on top of hefty fees) every time you make that transfer.

With a good FX Platform you can:

  • Lock in an exchange rate for up to 12 months, so you always know what you’ll be paying no matter how the currency markets move.
  • Use a Limit Order to set a target exchange rate, so you won’t miss out on profitable exchange rate fluctuations.
  • Save substantially on bank margins and fees.
  • Set up recurring payments to make monthly mortgage payments simple.

Are You Ready to Buy Property in a Foreign Country?

As with all investment opportunities, to make the wisest financial investment into foreign real estate, you will need to do your research and speak to your advisors. Locations, currencies, taxes and political environment can all have profound effects on your bottom line. With the right advice from professionals, you’ll be able to diversify your portfolio and maybe even sip a mai-tai while you do it.

Post by Jason Kumpf OFX

  • Can AMD Stock Go on a Bull Run Once Again?
    Motley Fool

    Can AMD Stock Go on a Bull Run Once Again?

    Advanced Micro Devices (NASDAQ: AMD) shares have fallen off a cliff over the past month, as investors are probably concerned about whether it can sustain its rally in the face of a fading tailwind and rising competition. The chipmaker has minted a lot of money thanks to cryptocurrency mining, but that catalyst is fizzling out and rival NVIDIA (NASDAQ: NVDA) has launched a new generation of graphics chips to reclaim its lost market share. AMD blames weak GPU sales to the cryptocurrency market for this slowdown, but recent developments indicate that it could easily surpass the low-balled guidance.

  • Which Canadian Marijuana Stock Will Enjoy a Bigger Bump From Its NYSE Listing -- Aphria or Aurora?
    Motley Fool

    Which Canadian Marijuana Stock Will Enjoy a Bigger Bump From Its NYSE Listing -- Aphria or Aurora?

    Maybe Wall Street should be called "Weed Street." Big Canadian marijuana grower Canopy Growth listed its stock on the New York Stock Exchange (NYSE) earlier this year. Aurora Cannabis (NASDAQOTH: ACBFF) begins trading on the NYSE on Tuesday, Oct. 23. Aphria (NASDAQOTH: APHQF) filed last week to list its stock on the NYSE.

  • Better Buy: Ford Motor Company vs. General Motors
    Motley Fool

    Better Buy: Ford Motor Company vs. General Motors

    Both Ford Motor Company (NYSE: F) and General Motors (NYSE: GM) have been investor favorites in the not-too-distant past, and both pay good dividends. Ford has a slew of new products on the way, starting with a brand-new Ranger pickup early next year. Ford and GM have both had a rough year in the stock market.

  • Kamala Harris proposes new tax credit
    Fox Business Videos

    Kamala Harris proposes new tax credit

    “Bulls & Bears” panel discusses how Sen. Kamala Harris (D-Calif.) is proposing a new tax credit, which would provide families making less than $100,000 a year with an extra $500 a month.

  • This Warren Buffett Stock Is Dirt Cheap Right Now
    Motley Fool

    This Warren Buffett Stock Is Dirt Cheap Right Now

    Warren Buffett has amassed a large portfolio of bank stocks for Berkshire Hathaway (NYSE: BRK-A) (NYSE: BRK-B) with major holdings in Bank of America (NYSE: BAC), Wells Fargo (NYSE: WFC), and American Express (NYSE: AXP), just to name a few of the most well-known and largest investments. Synchrony is a major issuer of store-branded credit cards and also operates a rapidly growing online banking platform.

  • 3 Top High-Yield Tech Stocks
    Motley Fool

    3 Top High-Yield Tech Stocks

    A mere decade ago, it would have been unheard of to search for high-yielding investments in the technology sector. In the years since, the technology sector continues to boast high-yielding stocks. Read on to determine why our Motley Fool contributors chose Cisco Systems (NASDAQ: CSCO), Uniti Group (NASDAQ: UNIT), and Verizon Communications (NYSE: VZ) as three high-yielding tech companies for your portfolio.

  • 3 Dividend Stocks That Pay You More Than Coca-Cola Does
    Motley Fool

    3 Dividend Stocks That Pay You More Than Coca-Cola Does

    With a better than 50-year history of paying dividends, Coca-Cola (NYSE: KO) is seen as an icon of stable, strong, secure payouts. Although Coke and its dividend are not in trouble, there are better investments to be found. Three stocks that these Motley Fool contributors particularly like are Dominion Energy (NYSE: D), AbbVie (NYSE: ABBV), and MGM Growth Properties (NYSE: MGP).

  • Hate Taxes? 37 States Make Social Security Tax Free
    Motley Fool

    Hate Taxes? 37 States Make Social Security Tax Free

    Over the course of your career, you'll probably have tens of thousands of dollars in Social Security payroll taxes withheld from your paychecks. Workers are confident that by paying those taxes up front, they'll be able to collect Social Security benefits

  • With crude around $70, it’s time to sell your oil stocks

    With crude around $70, it’s time to sell your oil stocks

    The energy sector has been whipsawed by headlines lately, and many investors can’t decide whether to buy or sell oil stocks. When oil (CLX8) raced up to a new 52-week high of more than $76 to start October, many thought things looked great. Then as U.S. oil supplies rose and as OPEC production rose, things didn’t look so hot.

  • Better Buy: Aurora Cannabis Inc. vs. Canopy Growth Corporation
    Motley Fool

    Better Buy: Aurora Cannabis Inc. vs. Canopy Growth Corporation

    Canadian marijuana producers have entered a new era. After several years of supplying medical marijuana nationwide, they have begun moving into Canada's recreational marijuana market, which opened on Oct. 17. Canopy's share price has soared three times higher than Aurora's has.

  • Suze Orman has a killer question for your retirement

    Suze Orman has a killer question for your retirement

    Suze Orman is one of those singular personalities in the financial business who seems to be right on the pulse of everyone she meets. She’s written books, starred in her own television show and made innumerable appearances in person. Like Oprah

  • Sears Holdings Hopes to Live On After Bankruptcy. Here's Why It Won't
    Motley Fool

    Sears Holdings Hopes to Live On After Bankruptcy. Here's Why It Won't

    The bankruptcy filing everyone saw coming finally arrived. Sears Holdings (NASDAQ: SHLD) announced early Monday morning it was seeking Chapter 11 protection and had arranged financing that would allow it to keep operating, at least through Christmas. While other businesses have reorganized and emerged successfully while under the protection of the bankruptcy courts, including retailers like Payless ShoeSource, True Religion, and Gymboree, don't expect the same of Sears.

  • How the Heck Did Netflix Stock Go Down Last Week?
    Motley Fool

    How the Heck Did Netflix Stock Go Down Last Week?

    Everything seemed to go right for Netflix (NASDAQ: NFLX) last week. It has another hit on its hands with The Haunting of Hill House, an eight-part horror series based on Shirley Jackson's novel that has even won the praise of the immortal Stephen King. Netflix is killing it, but investors are unfortunately singing a different tune.

  • 3 Energy Stocks You Can Buy and Hold for the Next Decade
    Motley Fool

    3 Energy Stocks You Can Buy and Hold for the Next Decade

    North America needs to build $23 billion of new natural gas-related infrastructure annually through 2035, according to a recent report. Three of the best positioned to capture this growth are Kinder Morgan (NYSE: KMI), Williams Companies (NYSE: WMB), and TransCanada (NYSE: TRP), making them great stocks to buy and hold in the coming decade. Kinder Morgan is already the largest natural gas pipeline company in North America, operating roughly 70,000 miles of pipeline.

  • The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs

    The ‘smart money’ says it’s time to buy the Chinese internet giants and the U.S. FAANGs

    When the media and investors turn negative on stocks but the “smart money” is bullish, it’s a good time to think about buying. After all, exactly what is the smart money, and how do you know? Lately, several fund managers who pass this test have been pounding the table on Chinese internet names.

  • 3 Top Stocks Under $5
    Motley Fool

    3 Top Stocks Under $5

    If you're looking for cheap stocks, focusing too much on share price is a mistake. Companies like Zynga (NASDAQ: ZNGA), Chesapeake Energy (NYSE: CHK), and Ascena Retail Group (NASDAQ: ASNA) have mounted impressive comebacks over the past year, and the future could hold even further gains if the industry conditions that they face take a turn for the better.

  • 3 Great Stocks Under $10
    Motley Fool

    3 Great Stocks Under $10

    Among the stocks you can currently purchase for less than $10 per share are Sirius XM Holdings (NASDAQ: SIRI), Annaly Capital Management (NYSE: NLY), and Infosys (NYSE: INFY), and below, we'll take a look at how long they're likely to remain this cheap for would-be investors. Sirius XM was a pioneer in the satellite radio industry, and it's been an investor favorite for years.

  • Should Congress cut entitlement programs to combat rising deficit?
    Fox Business Videos

    Should Congress cut entitlement programs to combat rising deficit?

    Maya MacGuineas, Committee for a Responsible Federal Budget, and Wall Street Journal editorial page deputy editor James Freeman discuss America’s deficit problem and how President Trump asked members of his Cabinet to cut their departments’ budgets by 5 percent.

  • 3 Warren Buffett Stocks Worth Buying Now
    Motley Fool

    3 Warren Buffett Stocks Worth Buying Now

    Known as the Oracle of Omaha, Warren Buffett has collected both an incredible investment record and a deservedly vast following among investors of all types. Every move he makes is scrutinized in the hope of gleaning  wisdom from his investment choices.

  • 1 Top Stock to Buy Amid October’s Turbulent Market
    Motley Fool

    1 Top Stock to Buy Amid October’s Turbulent Market

    In the past three weeks alone, stocks have tumbled about 5%, which has many investors unnerved. One top option to consider amid the current turbulence is Magellan Midstream Partners (NYSE: MMP), which has lost more than 5% of its value in the past few weeks. Because of that, investors can get an even better starting price on one of the top master limited partnerships (MLPs), potentially setting themselves up to earn market-beating returns in the coming years.

  • 3 Stocks to Supplement Your Social Security Income
    Motley Fool

    3 Stocks to Supplement Your Social Security Income

    Social Security isn't meant to replace your entire paycheck. Enterprise Products Partners L.P. (NYSE: EPD), Duke Energy Corporation (NYSE: DUK), and W.P. Carey Inc. (NYSE: WPC) are three great options to consider. Enterprise Products Partners is one of the largest midstream energy companies in North America, offering a generous distribution yield of roughly 6%.

  • Here's Which Marijuana Stocks Investors Are Betting Against the Most
    Motley Fool

    Here's Which Marijuana Stocks Investors Are Betting Against the Most

    Canada's recreational marijuana market is now open for business. Some are confident enough that certain marijuana stocks will fall that they're putting a lot of money on the line expecting that's exactly what will happen. The marijuana grower's low stock float and wild swings over the last month have received a lot of attention.

  • Are the Bulls or Bears Right About Philip Morris International?
    Motley Fool

    Are the Bulls or Bears Right About Philip Morris International?

    Shares of Philip Morris International (NYSE: PM) rose 4% on Oct. 18 after the tobacco giant posted third quarter numbers that topped analysts' expectations. For the full year PMI expects its revenue to rise approximately 3% on a constant currency basis, and for its earnings to grow 8% to 9% on the same basis. What the bulls say...

  • Netflix to Investors: Get Ready For More Cash Burn
    Motley Fool

    Netflix to Investors: Get Ready For More Cash Burn

    Netflix (NASDAQ: NFLX) investors have been giving the streamer another round of applause since the latest earnings report. It was an all-around solid report: Total subscriber growth easily beat estimates, with the company adding 7 million members against a forecast of just 5 million. Netflix naysayers, however, will find more to complain about in the company's cash burn rate, as management gave them more fodder with its forecast.

  • Procter & Gamble Finally Has Some Good News for Investors
    Motley Fool

    Procter & Gamble Finally Has Some Good News for Investors

    It has taken some time, but Procter & Gamble (NYSE: PG) shareholders are finally seeing improving results out of the consumer products titan. P&G paired that positive revenue news with an uptick in profitability, too. P&G's expansion rate sped up significantly, with help from strong sales volumes and steady pricing.