Rent First, Then Buy
When trying a place on for size, to determine whether it might be the overseas retirement haven with your name on it, we say: Rent before you buy.
Maybe rent, period. In the wake of the tumble and even collapse of property markets around the world, maybe you don’t want to mess with investing in real estate at all as part of your retire overseas plans. Renting long-term, rather than owning, leaves you mobile and flexible. No maintenance, no repairs, no property taxes…
Understand, though, that even renting abroad can come with complications you may not expect.
Here are 11 things to know before you sign a lease to rent overseas:
1. What’s included in your monthly rent? Make sure the lease establishes clearly what’s included in your rent and what’s not–building or homeowner’s association fees, water expense, utilities, phone, Internet, etc.
2. If you’re liable for utilities, find out previous renter’s average costs. Sometimes, they can be a shock.
3. Understand what’s included with “furnished” versus “unfurnished.” In some places, “unfurnished” means no refrigerator and no stove. Does “furnished” include air-conditioning units? Years ago, when we were shopping for a house to rent in Waterford, Ireland, I was confused by ads that indicated, “All Mod Cons” (that is, “All Modern Conveniences”). Finally, I came to understand that this meant the house had central heating. Many in Ireland at the time still didn’t…
4. Understand how, where, and who you pay what each month. Maybe you deposit the rent directly into the owner’s bank account. Maybe you pay a rental manager. Maybe you have to hand-deliver the check to your landlord. In Europe, rent is often paid by direct debit to your local bank account…which means you need a local bank account. And, often, building, homeowner’s association, etc., fees are paid to a different person or organization and by a separate check than the rent.
5. Check for a sales clause in your lease. What protection do you have against the owner selling the apartment and giving you limited notice that you have to move out? The lease should include a compensation allowance in case the place is sold while you’re renting.
6. Understand who is responsible for setting up the utilities. Will they remain in the landlord’s name…or will they be switched to your name? There are pluses and minuses in each case. Understand, for example, what your liability is if the electric bill is transferred into your name.
7. Understand what documentation you’ll have to produce to be able to rent. In France, you need to satisfy the landlord that you can afford to become his tenant…and, because it’s France, you do this by creating a thick dossier of financial documents, bank statements, pay stubs, reference letters, bank letters, guarantor letters, etc. It’s a serious effort that you can’t undertake lightly.
8. What repairs and maintenance are you responsible for? In some countries, as the renter, you can be responsible for structural repairs.
9. Document any existing damage and the current condition of used fixtures or appliances. Take photos.
10. Understand when the rental period begins. The start date of your rental (that is, the date from which you’re paying rent) doesn’t always coincide with the date you take up occupancy. Here in Panama City, for example, we paid rent for two weeks in advance of our moving in. The market was so competitive that we had to agree to pay half a month’s rent in advance of the first of the month we moved in.
11. Don’t sign anything until your lawyer reads it first.