To Rent Or Buy?

Almost without exception, we recommend that you rent first, at least during your first six months living in a new place.

Maybe your chosen haven won’t turn out to be all you imagined it to be (which is not the end of the world… maybe it turns out to be just the springboard you needed to get you to your true paradise). Or maybe you’ll find that the country suits you fine, but the neighborhood where you’ve settled for your trial living experience doesn’t.

We’ve yet to meet a single expat retiree who regrets having made the move overseas. However, we have known a number who weren’t happy with their initial location choices. That’s no problem—as long as you haven’t invested in the purchase of a home. This is the first and primary reason why we strongly recommend renting first.

Another reason might be to do with financing. In Europe it is possible to qualify for a local mortgage, but you’ll be required to obtain local life insurance for the entire term of the loan. In the United States, you can buy a life insurance policy that will cover you through age 100. That’s not true anywhere else. Typically, in the rest of the world, you won’t be able to obtain a policy to cover you beyond age 70 or 75. If you’re 65 years old at the time you apply for financing, therefore, you’ll be offered, at best, a 10-year loan. Better than no loan at all, but perhaps not good enough to make the idea of borrowing sensible.

In some cases, you may want not only to rent first, but to rent, period. Property, especially land, especially productive land, is one of the soundest investments you can make in the current global climate. On the other hand, property as a place to live, in retirement or otherwise, might best be rented rather than acquired. Certainly, again, you want to rent first.

But renting rather than owning your retirement dream home overseas also has long-term advantages, specifically:

#1: You’re mobile and flexible. No matter how much you enjoy your new location, maybe, sometime down the road, you’ll decide you’d like to find out what it’d be like to spend time someplace else. Maybe you’d like to move again… or perhaps eventually you decide you’d like to divide your time among two or three destinations each year—springtime in Paris, summer in Portugal, and winter in the Greece, for example. It’s easier than you might imagine to organize a wandering retirement along these lines… especially if you haven’t invested in a permanent residence in any one place.

#2: You avoid the carrying costs of home ownership. A residence of your own means maintenance and repair expense. It requires home-owner’s insurance and care-taking. In some places, it obliges you to pay property tax. And, if you buy with financing, it necessitates, in much of the world, an investment in life insurance. Renting, you have none of this expense. Only rent.

#3: Investing in a home in a foreign country means you need a will in that country. Otherwise, what happens to the asset when you die?

#4: If you buy a home, you’ve got to furnish it. Investing in your own place means investing, as well, in tables and chairs, beds and dressers, throw rugs and flowerpots. Rent furnished, and you simply show up and settle in.