3) Choose the property wisely
Once you’ve narrowed your search to a particular area, you’ll need to determine what kind of property best suits your investment goals. If you’re looking to rent to vacationers in an area with a bustling tourism trade, you will need something that sets your property apart from the competition, such as a pool, hot tub, or boat use.
It’s also a good idea to find out what the property is like year-round. Is it completely unbearable during the hot season or summer months? Buying a vacation rental close to the beach sounds great, but perhaps something on a mountainside will have the benefit of trade winds, which will not only save you on electricity bills, but also offer your renters fabulous views.
If you’re buying a new build then do some research on the developer, find how long they’ve been in the business, what kind of track record they have, how long previous projects have taken to be completed, and get some references.
4) Rules and regulations
Once you’ve determined the ideal location to invest, then the next step is to familiarize yourself with the local rules and regulations. According to Sharpley, many Canadians are comfortable with the English-speaking islands in Caribbean because the buying process is similar to Canada.
If you’re buying in a country where you don’t speak the local language make sure you deal with someone that translate the information into English so you understand exactly what the local laws and regulations are.
And if you’re renting out the property you need to determine what licenses you need to obtain, and what your responsibilities are as a landlord.
As well, you’ll need to be aware of what is required in terms of passports, visas and residency permits.
Contacting an international real estate company that is regularly deals with Canadians can also help you to understand the differences in the buying process between Canada and the country of your choice. You want an agent that will represent your best interests. Sharpley describes a recent situation in which a Canadian buyer got burned by a deal that was perfectly legal but very advantageous to the vendor. “I got a phone call from an agent who had a client who was buying in the Bahamas and said can you take a look at their offer before they sign? So he sent me their offer and within five minutes I called him back and said tell them not to sign this off because the way it is worded it’s going to cost them a bunch of money. And they called me back, but they had already signed. And they had bought a distressed property. It had been over $300,000 and they were getting it for about $200,000. However, because of the way the offer was written it ended up costing them $23,800 in additional fees that were added to the closing costs because they didn’t have somebody looking out for their best interests. They got excited, they got anxious, they dealt with a local sales person, but the local sales person was representing the vendor. So that’s the way the offer got written.”
6) Legal advice
Investors should obtain legal advice from an independent English-speaking solicitor who is not connected to the developer, vendor, or real estate agent. A solicitor who speaks the local language and knows the local system is preferable. Never sign any documents or make any payments upfront without first consulting your solicitor. Buyers need to ensure that the person selling the property is actually the owner and there are no outstanding payments on the property. You will also need to establish that the agent can legitimately authorize the deal.
Depending on the country in which you are buying, you may find that you can work with a Canadian affiliated bank. For instance, Scotiabank and the RBC operate throughout the Caribbean. Mortgage rates vary widely and you are best off paying for international property in cash, or leveraging off the equity in your Canadian property. According to Sharpley, mortgage rates in the Caribbean can be anywhere from 6-9 per cent – significantly higher than Canada.