25 things we wish someone had told us before we moved overseas

by Kathleen Peddicord

We fill these pages every month with tempting details of opportunities abroad. Places to visit…adventures to consider…ideas for fun and for profit.

In 25 years of pursuing these kinds of opportunities ourselves, we've accumulated some hard-won wisdom, which we'd like to share. Please…leverage our investment of time and money.

Don't buy a home in a new locale until you've spent at least six months living there. We know many who've broken this rule. In fact, we recently ignored it ourselves…and bought an apartment in Paris having spent no more than two weeks at a stretch in the city. We love our new pied-à-terre and still believe we bought in an area (the 7th arrondissement, behind the Musee d'Orsay) that makes sense for us long-term…but investing in real estate in a place you've only visited or passed through is risky. Selling and re-buying is costly in some parts of the world.

Don't ship your belongings with you. Again, we've ignored this caution ourselves-twice. First when we moved to Ireland seven years ago…and again recently when we invested in an apartment in Paris. By way of explanation for our weakness (and what I've come to consider in each case a miscalculation) I can offer only my own sentimentality and my husband's willingness to indulge it. I shipped a container-load of antiques from Baltimore, Maryland, to Waterford, Ireland, only to discover I could have bought nicer, older antiques for much less money in the Emerald Isle. Then I shipped my newly purchased Irish antiques to Paris…only to have many of them damaged in the process. My husband has my word: Never again.

Sentiment aside, don't ship electronics or power tools unless you're sure they'll work in your new home.

Don't believe any emerging market real estate agent who stands you on a stretch of sand and points out where the marine…the clubhouse…the pool…the dock…or the hotel "will be." Buy what you see. If all you see is sand…you're investing in sand. If, someday, that sand is improved with roads, electricity, and maybe a day spa…great. But don't pay for the possibility.

Don't make a down payment on a piece of real estate in a foreign country using your American Express card. Don't believe the developer when he tells you the land has clear title…no need to check. Don't buy the first house the agent takes you to see. Don't buy on your first visit to a new country. The sea may be sparkling…the palms may be swaying…and the tequila may be flowing…but that's no reason to leave your brains at the border. When buying real estate overseas, invest in more due diligence than you would back home…not less.

Don't make a move overseas (or even plan for one) without the full participation of any loved one who might be making the trip with you. And be honest with each other. What's most important to you? The weather? The cost of living? The cultural offerings? What do you prefer-beach living or city life? Do bugs bother you? How about snakes? Are you willing to learn a new language? Answer these questions truthfully and together. Deal with differences of opinion as early in the process as possible.

Don't move overseas in search of comfort or convenience. No place in the world is as comfortable or as convenient as the good ol' US of A. If those are your priorities, stay put.

Meet with an international tax planner in the country where you're planning to move…before you take up residence. When we were preparing for our move to Ireland seven years ago, we got in touch with the tax guys at Ernst & Young in Dublin. Lucky for us we did this a few months before we were planning to become full-time residents of the Emerald Isle. For, as Ernst & Young advised us, we had choices as to how we might organize our assets and income for our stay in Waterford. One, though, was far more appealing than the others…for it allowed us to reduce our taxable income (in the eyes of the Irish tax authorities) considerably. However, the plan had to be in place before we became Irish residents…otherwise Irish tax law would look upon our assets in a very different (and more taxable) way.

The details, regulations, allow- ances, possible deductions, and potential structures vary country by country and according to your own circumstances as well. My point is, seek expert help…and seek it as far in advance of your move as possible.

Furthermore, remember that you need not only a tax adviser in your new country of residence but, as an American moving abroad, one back home in the States, as well. You never lose your tax obligation to Uncle Sam. You may not owe U.S. taxes every year living abroad… but you must file a return as a non-resident American. The best adviser we've found in seven years of hard searching is a former IRS agent, himself now an American abroad, Richard Leonard, website: www.richard-L-Leonard.com.

(We have also, this year, published our "Expatriate's Tax Bible." This is, we don't mind saying, the best resource in print on this subject. You won't find another guide as current, complete, comprehensive, or user-friendly. We prepared it with Richard's help. For details, go to www.agora-inc.com/reports/120SEGTA/ I120F5B1/.)

Remember that your U.S. health insurance probably won't cover you abroad. You need international health insurance. We have BUPA, which is reasonably priced ($640 per adult per year), relatively comprehensive, and covers us anywhere in the world. Dan Prescher and Suzan Haskins, our man and woman in San Miguel de Allende, Mexico, report that you can get IMSS (government insurance) in Mexico for about $250/year. However, they've opted for private health insurance, which offers better coverage than typical U.S. insurance, including coverage for international travel, and costs one-fourth what Dan and Suzan were paying for insurance in the States.

Don't leave home entirely. That is, maintain a "virtual" U.S. address-a street address, not a P.O. box -of a friend, parent, or whomever. You can use this as your credit card address, when ordering from mail-order catalogs, when shopping online, and for many other such day-to-day activities that are more easily managed with a U.S. address.

You'll need to get mail sent to this U.S. address to you somehow, in your new home. Use a mail-forwarding service, such as UPS. We have our U.S. mail forwarded to us once a month, by Federal Express. Whatever service you use, be sure you can manage your account over the Internet.

Don't underestimate the challenge of learning a new language. If you're moving someplace where they speak a language you don't…you'll want to learn it. And you can't count on "picking it up as you go along." If you're not up for focused language study…maybe better think instead about somewhere they speak English. Belize is nice.

Don't expect a multiple listing service in the market where you're shopping for a new home. The idea doesn't exist in most of the rest of the world. To understand what's available for sale in the area where you're interested, you'll have to meet with every real estate agent operating there. They'll all have different listings, some proprietary. Some properties may be listed with more than one agent…but at a different price in each case. No real estate market in the world is as efficient as that in the U.S.

Don't expect to walk into a bank and open an account on the spot. It's not that simple. You may need to be a resident of your adopted country before a banker will speak with you. Non- resident accounts aren't possible in some parts of the world. And, even as a resident, you may need an introduction. In France, for example, as a foreign resident and certainly as a non-resident, you will have trouble establishing an account without a personal introduction from someone else already doing business with the bank.

As soon as you have one, carry around a copy of your electricity bill with you everywhere you go. In some countries, it may not be an electricity bill that does the trick but some other piece of paperwork that proves you have a place of residence in the country. In Ireland and in France, a copy of your electricity bill works magic when dealing with bankers, attorneys, immigration officials, and other bureaucrats.

A confident, reliable recommendation for a tradesman (a carpenter, a plumber, an electrician, or a stone mason, for example) is one of the most valuable gifts you can be given in a new country. Treat it with respect. We called at least six plumbers (whose numbers we'd gotten from the phone book and the classifieds section of the local newspaper) when renovating our home in Ireland before we found one who'd agree to come to the house to give us an estimate on the work to be done. The guy showed up, took one look at the bathroom, and told me it'd cost about $2,000 to do the work I was asking for. All I was asking for was someone to install the fixtures on my new bathtub. Finally, a friend recommended a plumber…who charged us about $200 to hook up our tub.

Remember there are two real estate markets at work in many of the countries where we recommend you spend your time and money: the local market and the gringo market. Your challenge as a foreign buyer is to penetrate the gringo market and deal at the level of the locals. The difference in pricing can be phenomenal. Work through a local you can trust-an agent, a friend, a partner.

A tax is a tax by any name. Some countries don't impose property taxes…but they charge local "rates." Some countries don't charge "capital gains taxes"…but, you may be disappointed to discover, they tax capital gains on real estate at regular income levels. In some places you pay stamp duties…in others transfer or acquisition taxes. Be careful when inquiring about the tax burden in a new country. Don't ask about specific taxes…instead ask (an expert) for details of any and all taxes you may be liable for as a resident, property owner, investor, etc.

Use an independent attorney when investing in real estate. Never use the developer's attorney. Best to find one through the recommendation of another local expat you trust (or, in places where we have them, our International Living Local Office).

If you buy a piece of real estate in another country, you may want to purchase it in your name…or you may not. Investigate the options before you sign the contract. Depending on the jurisdiction and your personal circumstances and priorities (considering taxes and inheritance issues, for example), you may do better to own property through a corporation or a trust…or perhaps jointly with an heir.

Invest in title insurance. It doesn't cost much. And it forces important issues while there's still time to clean up problems…or walk away from the deal. A real estate agent in a developing market where we spend a lot of time once said to me, "Kathie, you've got to stop pushing this title insurance thing. It interferes with sales."

That's an insight into the point of view of the agents and developers and property owners you're doing business with. They have but one concern: Making the sale. Don't take their word that title is clear and clean. And don't (as I've already urged) use their attorney to check. Hard (maybe impossible) to do your own due diligence in a country where the language, the culture, and the protocols are foreign. But easy to buy title insurance. If a problem with the history of ownership of the property is discovered by the title insurance agent, it can be possible, with his help, to clean it up. If it isn't, walk away. You'll find something else.

We recommend First American Title Insurance (Tuey Murdoch), e-mail: tmurdock@firstam.com.

Once you've taken up resid-ence overseas, your phone bill can become one of your biggest monthly expenses…unless you take measures to control it. Internet telephony is a good and ever-more practical option. Try Net2Phone, website: www.net2phone.com, DeltaThree, website: www.deltathree.com, or Vonage, website: www.vonage.com.

Some real estate markets are highly negotiable…more so than you may expect. It can be possible to negotiate 30% or more off the cost of a piece of property…if you know what you're doing.

One explanation for the sometimes wide gap between asking and selling prices can be a practice called "net commissions." In developing markets, real estate agents sometimes earn their money not on fixed commission but on the "net."

Here's how it works: A seller approaches an agent and says, "I want to walk away with $100,000 from the sale of my property. You get whatever you can get for it…and keep the difference."

The agent then is motivated to sell for as inflated a price as possible, because anything over $100,000 goes into his pocket. No, this practice isn't illegal. However, neither is it typically disclosed to the buyer.

Another explanation for managing to negotiate a serious discount off the asking price for a piece of real estate is the old adage: Cash is king. Approach a seller in a developing market offering immediate cash in his hands, and your bargaining power increases dramatically.

A real estate agent who doesn't have an office, his own transportation, and business cards isn't a real estate agent. Don't work with him.

Many of the countries we cover do not regulate their real estate industries. Agents need not be licensed. Any old Joe can call himself an agent. And many old Joe's with neither experience nor your best interests at heart do.

Living overseas is not about cheap real estate and a low cost of living. If you don't like traveling in a country, don't appreciate the culture…or the food, aren't charmed by the frustrations of the local way of life, then you shouldn't make the move. Cheap real estate doesn't a happy life make in the long run.

Don't expect to get a mortgage. Nowhere in the world is it as easy to obtain financing to purchase real estate as it is in the United States. In certain markets it's possible as a foreigner to arrange bank financing for property (in much of Europe, the UK, and Ireland, for example); however, even in these more developed markets, the terms are inflexible and conservative. In Latin markets, it's all but impossible to borrow money from a local bank to buy a piece of real estate …and in the few countries where it can be done, the interest rates are too high to be appealing.

However, you have options. A home-equity loan on property you own back home can be the easiest. It can also be possible to use IRA or other retirement funds to fund an investment in real estate abroad. And sometimes developers in emerging markets without established mortgage industries offer their own financing-though, again, the interest rates are typically unappealing.

Be prepared for panic. It will set in…maybe three months after you've made your move…maybe 12. At some point, after the honeymoon period has passed, you'll wake up one morning and wonder what in the world you were thinking. Did you take complete leave of your senses? Leave home? Why would you leave home? The whole idea was nuts, and you want only to return to the States as quickly as possible.

Don't worry. This second-guessing is normal. And will pass.

When we moved to Ireland, our panic set in midway through our first winter. January in Ireland is miserable. We weren't prepared for it. We were gloomy and depressed and not sure why. Plus (we'd realized by this point), moving to a foreign country isn't easy. Suddenly, everything, even the smallest, should-be-simple things are a challenge and take time and energy. Having a telephone installed. Paying your electric bill. Shopping for a new washing machine. What had we been thinking? Life was much easier back home.

Then, though, winter ended. A little sunshine made a big difference. Suddenly, all the day-to-day struggles didn't matter. Our new life was a grand adventure again. IL