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Winning Strategies for Retirement Abroad (cont.)

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RENT VS. BUY. Buying a home in a foreign country is complicated, even more so than before. That’s because North American title companies that provided title services in Central America and South America pulled back in the past 6 years because of high costs and a lack of a guarantee of clear title, or a title that has no lien or levy from creditors, according to Tuey Murdock, who is an attorney and title coordinator who lives in Quito, Ecuador. She says title insurance, which is intended to protect an owner from unknown liens or fraud, still is an unknown concept in the region. Murdock says title insurance is easier to obtain in Europe and Australia than it is in Central America and South America.

Consequently, Kathleen Peddicord, who runs the Live and Invest Overseas website, recommends that retirees “rent first and maybe rent forever.” That way, you can be flexible if you decide to change locations or even countries, and you won’t have to deal with maintenance costs, she says.

Most buyers pay cash, according to Rita Santos, who is a real-estate agent, because mortgages typically are more difficult to attain for foreigners. If you can obtain a mortgage, you’ll find that the terms are stricter. For example, in Europe, you might get a 20-year mortgage with 50 percent down instead of the more familiar 30-year term with 20 percent down. In Panama, we found that if you’re age 60 or older, you can get only a 15-year mortgage, with 30 percent down.

However, even if you pay cash, consumer protections that Americans take for granted, such as required disclosures in real-estate or financial transactions, or the option to file a lawsuit when something goes wrong, often are nonexistent in Central America and South America, as well as parts of Europe and Asia, according to four of the experts whom we interviewed.

“Nothing’s transparent” in Central America or South America compared with the United States, Rayman says. That includes finding what people paid for a property, how long they owned it, what their mortgage amount was or records of taxes and liens.

“Your money is at risk, and you’re not a citizen of that country, so it’s very, very difficult to get your money back” if you can’t secure a title, Rayman says. She recommends that you have an attorney check on a property’s title and not rely on an agent.

What else can you do if your purchase goes sideways? Unfortunately, the answer often is “nothing,” experts with whom we spoke tell us.

Renting often is more affordable and simpler. According to cost-of-living comparison website Expatica, a 900-square-foot apartment that’s in Quito, Ecuador, rents for less than $900. Comparison website Numbeo says you can buy a similar-size apartment that’s in Quito for $91,970–$133,470, depending on the location. That means that if you stay about 9 years, buying would be less expensive.

In Southeast Asia, deals still can be made in Malaysia and Thailand, and we talked with expats who found inexpensive rents in Cambodia and Vietnam. For example, Wendy Justice, 62, and her husband David, 56, rent a fully furnished, 2,700-square-foot, five-story home that’s in the Embassy District of Hanoi, Vietnam, for $625 per month, and they live on a budget of just $1,200 per month. Many Asian countries have restrictive property-ownership rules for foreigners, so renting often is a better bet, Justice says. Stevens agrees, citing both Cambodia and Vietnam as attractive and affordable destinations.

Renting won’t help you to build equity, of course, but it also doesn’t put as much of your money at risk at once.

STAYING HEALTHY. The cost of health care for those who retire abroad almost always is less expensive than in the United States, says David G. Vequist IV, who is the director of Center for Medical Tourism Research at University of the Incarnate Word. However, health-care costs abroad are rising.

According to Aon Hewitt, health-care inflation was 5.3 percent in the United States in 2015, but health-care costs increased 16.7 percent in Latin America and the Caribbean. In Asia, health-care inflation was 10.4 percent. For 2016, Aon Hewitt projects that health-care costs will rise 20 percent in Latin America. Aon Hewitt specifically calls out the Bahamas, Costa Rica, Ecuador, Malaysia, Panama and Vietnam, which are popular retirement destinations for expats, as places where health-care inflation outstrips overall inflation by double digits. It’s unlikely that health-care costs ever will reach U.S. levels, but health care abroad won’t be as inexpensive as it used to be, according to Vequist and others.

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