Fsbo

Much has been made about the growing number of foreigners buying real estate in the States.

No one knows exactly who is buying what or how much. But nearly one in three U.S. realty agents report working with customers from other countries, and almost half of those worked with three or more international clients — some with more than 10, according to the National Assn. of Realtors.

But there’s another, albeit smaller trend that hasn’t received much attention — that of Americans buying property in prime vacation and retirement spots outside the U.S.

Americans had always been able to buy property in other countries at a fraction of what it would cost for a similar place in the States, especially in the Caribbean and Latin America. But with the sagging dollar, money doesn’t go as far anymore. However, when currency-exchange rates return to normal, if they ever do, U.S. citizens looking to live in another country are likely to find it a far less adventurous task than it was just a few years back.

"Right now, most international activity is from foreigners buying in America, but soon it will begin going the other way," Michonski says. All the infrastructure for buying real estate is in place for what he expects to be a "mega-trend."

For one thing, brokers in 32 countries now belong to the International Consortium of Real Estate Assns., which has created a transactional referral system and has adopted a code of ethics that members in all nations have agreed to follow.

There also are numerous websites where would-be buyers can search for property. GlobalPropertyGuide.com, for example, offers research and information on buying residential property in 131 countries.

"It’s important for a residential investor to be able to see what his likely return on investment will be. What his taxes will be. To be able quickly to check whether the laws are landlord-friendly. To survey the inheritance laws," says publisher and editor Matthew Montagu-Pollock of GlobalPropertyGuide.com. "All this is now available, for almost every country in the world, on our site, without any marketing material or any attempt to sell you anything — just the facts."

And now, Deutsche Bank is offering American-style financing for people who want to own a beachfront villa in Belize or a house in Honduras.

"This is clearly the trend of the future," Michonski says. "Deutsche Bank won’t be the last to do this."

International buying by U.S. residents has always been limited by the inability to secure familiar terms. "The No. 1 reason people don’t pull the trigger," says Nicholas Farina, business-development manager in the global investment bank’s cross-border lending department, "is they can’t find the friendly financing they are used to getting here in the States."

Deutsche Bank has created a cross-border lending program in which people who are citizens of one country can get permanent and construction-to-permanent financing for properties in another nation.

Terms include 30-year amortization with no balloon payments, competitive rates based on country risk and loan amounts up to $6 million per borrower. Still, hefty 30% down payments are required, and rates are fixed for only five years and then are reset on an annual basis thereafter. But no life insurance is required, there is no limit on the borrower’s age, there is no need to pledge other assets and no collateral is encumbered by the loan other than the subject property.

By Lew Sichelman

This entry was posted on Monday, July 28th, 2008 at 11:57 am and is filed under FSBO. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.

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