Rent vs Buy When Retiring Abroad: 5 Important Considerations

Rent vs Buying
by Mrs. Rover // August 18 // 0 Comments

Will we buy or rent when retiring abroad? This is a regular debate between Mr. Rover and me. We’ve moved within the United States several times throughout the years and the story is always the same. We promise ourselves for each move that we’ll rent for a year to get to know the city and then buy. But, that never happens.

Well...almost never. The one time we rented first, we found the house of our dreams about two months later and had to get out of our lease early. We started looking at model homes almost immediately after moving. Shame on us for even looking...but we really love real estate!

But for a retirement destination, I’d like to think that we can have more self control. Our plan is to rent prior to buying to make sure we like our new area. Especially if we choose to retire outside of the U.S.

Obviously we’ve had a hard time with deciding between renting vs buying and really, there is no definitive answer. 

Do you know the country, city and culture well?

Some people choose to retire somewhere where they’ve been vacationing for many years. They know the country, city and the culture very well and feel very much at home. But others do some research on places where they can afford and also think they’ll enjoy and choose to move sight unseen.

Both approaches are fine but you may want to consider whether you rent or buy. If you haven’t spent a lot of time somewhere, consider renting. You can read all you want about a place and think you know what it would be like to live there. But nothing can replace actually being there.

For instance, Panama City in Panama is a very popular retirement destination for expats. It’s got amazingly good and affordable healthcare, inexpensive real estate and a stable economy.

But the slower pace and lack of customer service may really bother some people. It can be a frustrating experience just trying to get your cable installed. If you rent for a year, you’ll know whether you want to truly invest in a property for the long term. 

Have you spent time there?

I recently spoke with someone whose lifelong dream was to retire in Maui. In this case, he had been there on vacation many times and felt at home. He bought a condo and a year later put it up for sale. He had island fever.

Because he was ocean-locked on an island, he started feeling trapped. He wanted to be able to explore other areas and experience new things which is a lot harder when you’re on an island in the middle of the ocean. He’d never even heard of island fever until he lived in Maui.

Vacations are great but they aren’t always the best way to really get to know a place. Moving to a new country is a huge deal. Renting is the perfect choice that won’t lock you into a particular spot.

But...if you are hell bent on buying a property in your retirement destination, why not go stay for 30-90 days? Rent an AirBnB which can be very affordable for long-term stays. This way you’ll be doing the daily mundane things like going to the grocery store, dealing with the local weather, finding activities to keep you busy and communing with the locals.

And if it’s a large city, you’ll be able to test out the different areas. You discover things like how the traffic is, will you be able to walk or take public transportation to everything if you don’t want to buy a car, is it quiet or loud, etc.

By AirBnBing it you’ll get an authentic experience of living there without any of the commitment. It’s a win-win situation. 

How long are you planning on being there and is it a good investment?

Maybe you want to stay for a couple of years or maybe you’ll want to spend the rest of your life there. If you really see yourself retiring there and staying long-term, buying may be the right choice. 

Investment-wise, you'll want to think about the length you plan to stay as well as current market conditions.

  • Will you be there long enough to build equity? 
  • Are you buying in a bubble that could burst and put you in an upside-down situation?
  • What's the average percentage that real estate increases every year? There are some locations like in the Caribbean where real estate prices don't increase as fast as other places. 

You just need to know what your end goal is. If you're planning on staying for many years, these things aren't quite as important as when you'll be in and out in 2 years. 

Do You Know what the Property Ownership Laws Are?

Retiring abroad may be confusing because of the property ownership laws in different countries. Some countries heavily restrict foreigners from buying real estate. Other countries have some restrictions that are more of a hassle and take more time to complete the purchase. And of course, there are those countries that have no restrictions. 

It’s important to know what the laws are for the country that you’d like to retire. For instance, Croatia does not restrict anyone from the EU. If you are a U.S. Citizen, there is a reciprocity agreement for residents of most states except for Arkansas, Hawaii, Kentucky, Minnesota, Mississippi, New Hampshire, Oklahoma and Vermont. Residents of those states must acquire permanent resident status in Croatia before real estate can be purchased. Once you find the house you want to buy, The Ministry of Justice will need to approve the sale which can take several months. 

This is one example of the intricacies of buying real estate abroad. If you’re interested in Europe, here are the countries with no restrictions:

  • Belgium
  • Bulgaria
  • Czech Republic
  • France
  • Germany
  • Great Britain
  • Ireland
  • Italy
  • Monaco
  • Netherlands
  • Norway
  • Portugal
  • Spain
  • Sweden

If Southeast Asia is your top destination, only Malaysia is restriction free and Thailand has the strictest laws. Other countries such as Singapore, Vietnam and Indonesia have restrictions as well so do your research.

As for the Caribbean, you should be good with buying a home in most places. Though each island has their own processes and timeframes so again, do your island-specific research. 

Bottom Line 

Whether you choose to rent or buy depends on your individual circumstance. Property prices may be too high to buy or you may only be interested in staying a short time so renting makes more sense. Or, you know the place is your forever home...maybe you have family in the area or it’s the one place where you feel at home so buying makes more sense.

Whatever you choose, do your research. And hopefully you’ll be able to stick with your decision...unlike Mr. Rover and me. 🙂

Evelyn (AKA, Mrs. Rover) has a few passions in life: real estate, traveling and dreaming about retiring with Mr. Rover. She's excited to share her ideas, thoughts and experiences and hopes to help anyone else looking for their dream location.