How to buy real estate abroad

Investing in property abroad and in a different currency is a successful way of diversifying your portfolio and hedging against inflation. As a real asset, it retains a real value independent of paper currency and let's face it -- it's fun. You can use your real estate as a personal vacation home, part-time residence or watch it appreciate while generating a revenue stream.

Resist the urge to buy a property on impulse. Instead, do your homework and do it smartly. For example, when you buy a property in Dubai, you automatically receive a visa that permits you to do business there, however, some countries will not allow non-nationals to purchase property at all. Investing in Europe is a good idea because the euro has been strong against the dollar since 2003.

The most important aspect of making such an important purchase outside of your own comfort zone is not to do it alone. Find a reputable property consultant to help you through the process. It's best to find a person or firm who is well-versed in both your own culture and the one in which you will be making the investment -- someone you can trust.

Determine your financial capacity before you consider where and what you will purchase. Ask your financial advisors, talk with your banks and scope out mortgage possibilities. Knowing how much you can and should invest is the starting point for any intelligent investment.

"Location, location, location" is and always will be the rule in smart real estate, so get to know the area, learn all you can about what constitutes a better investment over another and again, work with agents or consultants you can trust to provide the truth.

Learn all you can about the differences in the systems -- the one with which you are familiar and the one in which you are about to invest. Everything could be very, very different from what you are used to. Knowing what to expect means avoiding the pitfalls along the way.

Don't forget to bone-up on the local politics. Changes in regulations or changes in the political environment could greatly affect your property's value or potential income. In some extreme cases, the government may exercise the right to repossess your property.

Tax and estate laws are important concerns. Every country treats taxation and inheritance differently. Look before you leap or you may find yourself with hefty property taxes, expensive capital gains taxes or inheritance laws that restrict the ability to bequeath the property as you wish. Go even further in your quest to learn more about tax residency so that you don't wake up one day in your home-away-from-home with income taxes to pay in your second country on earnings from your native country.

How properties are marketed could be very different and lead to mistakes. The multiple listing system in the U.S. does not exist in Europe and therefore the real estate agents do not have access to all properties. The agents work for the seller exclusively, so 'buyer beware.' Again, this is another reason to work with a property consultant who has your interests in mind.

Then, there may be the issue of language. If you are not fluent in the language of the country in which you are making the purchase, you will want to employ professionals or translators to ensure you fully understand the documents. This can also be an added expense.

Currency exchange is another issue. Getting the best rate of exchange can be ensured by working with currency specialists who take less of a commission in the 'spread.' In addition, timing of when the transfer is made can greatly affect the outcome of the value to value as the rates change every minute and can fluctuate greatly.

If you are purchasing a very old property, historical restrictions may be imposed affecting your ability to make changes or repairs without authorizations, and consider security, regular maintenance and management -- how will you arrange it from afar?

Purchasing property outside of your native land has its challenges...and its many rewards. It's an expensive adventure with large potential, so once again, don't make the mistake of trying to do it without professional advice and assistance.