PPOT experience on financing/purchasing property abroad?

[Deschodt]

Wondering if people on tis illustrious board have experience they could share..

We're looking at a small house/big lot in the south on France or Italy near the border. Retirement option. Bugout backup... I'm struggling with the financing aspect. If you can do cash, you're golden but I'm not a Kardashian...

- We have a HELOC that would cover this, but from the fine print you cannot use a home equity line to buy another property, they seem to frown upon that. Let alone abroad..

- Borrowing in the US to buy in another country appears to be a non starter, I've asked and the banks look at us like we're trying to set up a heroin distribution business using kidnapped children...

- Borrowing in the host country: Also appears to be a non starter as a US resident, not to mention complications with having have a foreign bank account...

Is this a non starter if you don't have cash to throw around? We have the money in equity in our US house, but not in cash.. Would you /could you withdraw the entire line of credit and dispose of it as you will, fineprint be damned ?

[look 171]

Can't help with the overseas purchase but I have used my HELOC for down payments many times but this is buying in CA. I haven't done it in the past couple years, so I am not sure if rules are changed? Good luck with the adventure, sounds like fun.

[stomachmonkey]

One of the things that may not help is generally countries want to make sure you are solvent / self sustaining if you are going to be a long term resident or acquiring property.

They don't want you "moving in" and becoming a burden on their social systems.

[jwasbury]

Originally Posted by Deschodt

- Borrowing in the US to buy in another country appears to be a non starter, I've asked and the banks look at us like we're trying to set up a heroin distribution business using kidnapped children...

Curious what financial institutions you have looked at. No first hand experience, but I'd think that one of the global banks (thinking HSBC, Santander, etc.) might be better positioned to assist in something like this than Wells Fargo or BAML.

One of my French friends was able to borrow from his bank in France (Societe Generale, I think) to purchase a flat in Miami.

[MBAtarga]

Originally Posted by Deschodt

- We have a HELOC that would cover this, but from the fine print you cannot use a home equity line to buy another property, they seem to frown upon that. Let alone abroad..

I did a search on this - since I was unaware of limitations on using HELOC funds for a second home. This is from Zillow:

https://www.zillow.com/mortgage-learning/reasons-use-not-use-heloc/

Investing in a new home. A HELOC is a great tool to access equity in your existing home to buy or put a down payment on a new home, such as a second home or investment property. Home buying can take months, so if you did a traditional cash-out loan to obtain funds for a new purchase, you could be paying for use of those funds long before you ever invested them. Because you only pay on the HELOC when you use it, you can leave the HELOC at a zero balance while you shop for homes, and only use the HELOC funds (and therefore start paying interest and a monthly payment) when you find a home to buy.

[wilnj]

I don’t have any personal experience with financing a purchase but I would expand your search to Portugal.

I’m not sure what you’re looking for but the Algarve region would be the place to look if you’re interested in warm and sunny. I’ve been to Portimao in the Algarve many times. Large expat community, and very welcoming and your money will go far.

There’s an airport in Faro with service to all major European cities.


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[MRM]

In your situation you would do well to enter into a long term lease rather than buy. Far fewer legal issues and much less risk. If you can afford the mortgage payments you should be able to afford the lease payments. If not, you shouldn’t be doing it. Also, living in France is very difficult if you don’t speak the language. Italy might be easier.

But if you want to buy, you can get houses in Italy for a dollar (really a Euro). You can read about the various programs if you google it a bit. Supposedly it works very well for Americans who want to put down a little roots Here’s an article that gives you an introduction. https://www.travelandleisure.com/travel-news/old-homes-in-italy-selling-for-one-dollar

[petrolhead611]

A dollar home in Sicily would require a complete restoration to bring up to a standard acceptable to Americans. You would be dealing with builders etc from a distance, a recipe for a ripoff.
Inheritance laws in some countries,eg France, are problematic.
Title in some east European countries can be a bit uncertain too, but the properties ARE cheap enough to buy for cash

[look 171]

This got me thinking today on my way home as we are looking into another purchase. All the times I pull money out of my HELOC, there were never question asked what the funds were for. Ever. I basically rote a check to escrow. Not sure how it applies to other states or country?

[WPOZZZ]

Originally Posted by look 171

This got me thinking today on my way home as we are looking into another purchase. All the times I pull money out of my HELOC, there were never question asked what the funds were for. Ever. I basically rote a check to escrow. Not sure how it applies to other states or country?

Exactly what I was thinking. Can't you deposit it a HELOC check into your acct, the spend from there?

[look 171]

We live in the same state so I don't see why not?

Only issue I see is the loan company will see that you haven taken out a big chunk of money out of your HELOC so that may have some effect on your final loan. That has nothing to do with what you do with the HELOC

[LWJ]

I too, am interested in a euro getaway.

I have a buddy who bought 1.5 hours from Paris for 75k 10 years ago. He says it's worth 76 now!

Joking aside, I very much like Italy, France and Portugal.

Supposedly the Italian 1 euro deal is not so bad. Usually about 25k US after remodel. But you just bought in the middle of nowhere...

I would love to talk, discuss, and scheme how to make this happen. My plans need to have a place that is airport accessible and interesting enough that people want to use the place as well as visit me when I am there. Starts to increase cost with these variables added in.

Great topic! Keep it going.

[Deschodt]

Originally Posted by WPOZZZ

Exactly what I was thinking. Can't you deposit it a HELOC check into your acct, the spend from there?

That was the plan initially... But I recall seeing fine print about it not being used to purchase another property. As I said, I might do so anyway ! Was just wondering if there were obvious other options I was missing.

The risk there is my HELOC is interest only 10y and variable rate, so it could be too short and get expensive and I'd rather have a true locked down mortgage instead... can't get that though... Oh well, we'll take a chance...

Our target is 40min north of St tropez/Nice in France, hilly area with lakes and olive trees. Italy is a possibility too but less likely, Spain is #2 actually. I know all about portugal and how good a deal it is, but we speak French and Spanish as well, and not a lick of portuguese so that would be a lot easier ;-)

[wilnj]

Originally Posted by Deschodt

I know all about portugal and how good a deal it is, but we speak French and Spanish as well, and not a lick of portuguese so that would be a lot easier ;-)

Pinch your nose while speaking Spanish to get the right affect and you’ll be fine. Honestly, the Algarve region gets so many Brits and Northern European visitors that you’ll never be in a real bind.

And if you already know 2 Romance languages, any others will come very quickly.



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[Captain Ahab Jr]

I lived in Italy for 7 yrs, my family and I loved it!

it's one of the best places if not the best country in the world to visit on holiday but I'd never consider buying a home in Italy unless I had family there to help navigate through everything.

As a foreigner and especially as an American living a long way away you will have your pockets emptied at every opportunity in ways you couldn't dream of. If you are struggling to raise capital then I'd advise not to do it.

If you retire there and become resident the Italian government will tax you on your world assets, Italian tax is not cheap

If you are serious I can recommend a very good 'Commercialista' or otherwise know as a tax account to properly explain the process and the tax implications

A left field suggestion but have you considered buying in Slovenia? It's a beautiful, well developed, clean country, full of friendly/helpful people, has mountains, lakes and warm sea, has both an Alpine and Mediterranean climate, a perfect location for exploring Europe, excellent value for money. Like a cheap, smaller Austria or Switzerland

We bought in Slovenia and was one of the best things we've done! Still not done it yest but in one day I could have breakfast in Slovenia, apple strudel in Austria, lunch in Italy and seafood evening meal by the sea in Croatia. Driving, Vienna is 4hrs, Munich is 4hrs, Venice 3hrs, Budapest 5hrs, Zagreb 2.5hrs, etc etc