Renting vs. Buying: Housing Options for Expats

Today, we're going to be diving into one of the biggest decisions you'll face as an expat or immigrant: should you rent or buy your new home abroad.

Whether you're looking at a colorful apartment in Guadalajara, Mexico, or a little casita on the beach off of Costa Rica, we'll talk you through the pros and the cons and the in-betweens. That way, you can feel confident about your next move.

Part 1: Understanding Your Timeline

First things first. How long do you intend to stay in your new destination? If you're not sure whether this is a one time adventure or one-year plan or longer, that can affect a lot of different things in your plans.

If you're just dipping your toes into expat life, renting gives you flexibility. You can test out different neighborhoods, different parts of cities, towns, or even full countries, without being locked into a mortgage or long-term lease, or other risky legal contract that you might not be familiar with.

But if you've already fallen in love with a city, then buying might offer more stability and long-term savings for you.

Part 2: Financial Pros & Cons

Let's talk about money. Renting abroad often means less upfront costs. You might need a deposit and first month's rent, and maybe a small agent fee, but compared to a down payment and closing costs on a house, it's much more accessible. For example, in the United States, the conventional wisdom says you want to put down 20% when you go to buy a home on a 30-year mortgage.

Well, if the average home in the United States is what, 300,000, 400, 500 grand and north. You might have to lay out a hundred thousand dollars cash. I don't know that many people have that kind of money lying around. So renting, as I said, security deposit, one month's rent. A place in Tucson, Arizona could be around $1,000 a month, that's $2,000. That's a lot more doable than a hundred grand.

On the other hand, if you could swing it, buying a home could help you build equity over time. For example, in 2019, I sold my home in Phoenix, Arizona to one, pay off my student loan debt and two, move my son and I closer to his vocational school on the other side of town.

That would give us more time in our days and less mileage on the car. Shorter commute.

Properties in places like Mexico, Columbia, or Portugal can be surprisingly affordable. Prices as low as $100,000 USD. But what's the catch? Foreign ownership laws vary, and plus property taxes, maintenance, dealing with repairs, that's all on you.

And for example, in Belize, I learned that you don't need to be a real estate agent in order to sell property in Belize. And there is no MLS, no multiple listing service. So you really need to do your homework in a country like Belize. Know who you're dealing with. If any old person could just hang out a sign that says, yeah, I sell property, then it's up to you to vet them thoroughly.

And then one piece of advice I got in Belize was, there's a wet season and a dry season. You want to visit your future home or land or property, whatever it is, visit that during the wet season and see what it's like during that time of year, versus only visiting during the dry season and then getting surprised when the wet season arrives.

You don't want to be that person. But bottom line is if you're going to buy a piece of real estate abroad, hire an attorney. Get a good real estate lawyer. Don't mess around. In the US, you don't need a lawyer. No attorney really required. At least not in Arizona. Just get a good real estate agent to help you out.

But in foreign countries where you don't know all the laws, you don't know the culture, it's all very different. Yeah, don't mess around. Don't cut corners. Hire a good lawyer to help you out.

Part 3: Legal Stuff Expats Should Know

Let's talk about red tape. As a foreigner, can you even buy property in the country that you're moving to? Some countries limit where non-citizens could buy property. For example, like in Mexico, the government requires you to get a fideicomiso if you want to buy property that's within, I believe, 50 kilometers of the coast and a hundred kilometers of the US border.

So if you want beachfront property or a piece of land near Tijuana, for example, then you need to get that. And what that is in Spanish is a bank trust. The Bank trust holds legal title to the property. While you get full ownership rights and privileges, you could live in the home or on the land.

You have ownership rights. You could live there, you could rent out the land just as you would in the United States, but legally, the bank trust holds the title to the home.

Plus, if you're not fluent in the local language, renting is a much better option, especially if you're working with a bilingual real estate agent.

Plus, some landlords even accept digital nomads and long-term tourists without having to get long-term residency.

Part 4: Lifestyle Considerations

Think about what type of lifestyle you want in your new country. Renting in the city might mean walkable neighborhoods, cafés, and easy access to nightlife and culture. Buying in a quieter town could give you more space, a garden, maybe even chickens. Also, remember that owning might tie you to one place.

Renting lets you be nimble, try out new places, or go home for a few months if needed. For a lot of us in the empty nest stage, that kind of freedom is priceless.

Part 5: Tips to Help You Decide

Still not sure. Here are a few questions to help you get started. How long do you plan to stay? Do you want the freedom to move around more easily? Are you emotionally and financially ready for owning a new home abroad? Do you speak the local language? Or can you have someone to help you navigate legal things?

Do you want to invest, or do you just want to keep your life simple for the time being?

Part 6: My Personal Take

Personally, I'm a big fan of renting first, especially talking about another country buying a piece of real estate. It's hard enough here in the United States, imagine doing that in a foreign country now. Renting is definitely the gateway.

Once you've been in that country for, I'd say, probably a year or two years, then you could look into buying a place. That's just my personal opinion. This lets you get a feel for the area, make some connections with locals, like real estate agents and repair people and things like that. This also helps you avoid rushing into a very big decision.

Long term, I could see myself buying a place, I think about Western Belize, the Cayo District, owning a home with some property by a river with a horse, a cat, and a dog. That's a lot of poop to clean up, though, but it's fun to think about. But whatever it might be for you, start planning now.

Figure out where you want to live and how you want to live. So that way you could start at the end, begin with the end in mind as the old saying goes, and work your way backward.

Wrap-up

So finally wrap things up. I want to ask you what you think. Are you leaning towards renting or buying in a new home, in a foreign country?

Which do you want to do first, let me know in the comments. I'm curious if you're just getting started on your expat journey. Don't forget to download my two free relocation guides that are at spendchannel.com/resources. Just enter your name and email and a comment, and I'll respond with your guides.