An Investment, An Adventure, A Long-Term Retirement Plan
“But haven’t we done this already? Haven’t we already bought an old stone house surrounded by mud? Isn’t that what we just did in Ireland? Why do you guys want to do this again?”
In 2004, my husband Lief and I spent a week touring around the Istrian Peninsula of Croatia with our kids. It was a family holiday that, as has become typical for us, we were combining with a property scouting expedition, this one with a focused agenda. We were in the market for one of the old white stone houses you find across this region of this country. To that end, Kaitlin, 15, Jackson, 5, Lief, and I, in one car, followed our property agent, in her own car, from one stone farmhouse to another, up and down the narrow winding roads of these mountainsides, through the medieval villages, and past the ever-present fields of olive trees, grape vines, and sunflowers.
We had recently made our move, at the time, from Ireland to France, and, one rainy morning of that Istrian family adventure, standing in one more muddy Istrian farmyard, Kaitlin made the observation I share above, reminding us all of our still fresh experiences as Irish property owners.
Probably she wasn’t the only one wondering what in the world we were doing. Why had we gotten it into our heads that we wanted to buy a 200-year-old house on the side of a mountain in the middle of the Istrian Peninsula?
Because we liked it there. We wanted to stake our small claim to this beautiful and historic region that, during previous visits, in previous years, had captured our hearts and our imaginations. We believed in the future of Croatia, a country with an extraordinarily complicated past and an extremely open-minded, forward-looking population. We recognized, at the time, that Croatia was at another turning point in its long history, and we wanted to be part of it.
Plus, the Istrian Peninsula, we’d observed for some time, serves up some of the most delightful scenery on this planet. The land seems to rise up to embrace you. Everywhere you look, something nice is growing—olives, grapes, figs, tomatoes, pumpkins, blackberries, wildflowers… Even the buildings seem to be of the earth, built of its white stone and red clay. In some parts of the world, Nature outdoes herself. In others, that which man has built is impressive. In Istria, Nature and mankind have worked together over centuries, starting with the Romans, to create a land of delights you have to see to appreciate.
So, that rainy morning in that muddy farmyard, with Kaitlin (and I’m sure others, too) questioning our sense, Lief and I decided that we’d found the old white stone house that fit our bill, made an offer to the Croatian owner, and agreed the terms with a handshake. The seller sealed the deal by making a gift to us of lavender oil his wife had bottled.
Before you’re ready to retire, you’re likely to notice places around the world where you’d like to be able to spend time. Not just once every several years or so in a hotel, but more regularly, as often as possible, in the company of your family and friends, and in a place of your own. That’s the realization we made years ago in Istria, Croatia.
When you identify a destination that meets this description, I recommend you take stock of it bigger-picture, considering, first, whether that destination is also a place where you think you might like to spend time in retirement and, second, if the real estate market there presents potential for capital appreciation or cash flow. If the answer to either of those questions is yes (and certainly if the answer to both of those questions is yes), then you’ve found your ideal second home overseas.
In our case, with Istria, the answer to both those taking-stock questions was enthusiastically positive, and, so, we proceeded with the purchase. We recognized that this was a part of the world where we wanted an excuse to return as often as we could manage. In addition, Lief and I also agreed that this was also a place we could see ourselves coming back to longer term, a place that could become part of our eventual retirement plan.
When it comes time to flip the switch to retirement, Lief and I hope to have organized our lives so that we’re able to move around during that phase of life among a handful of destinations where we most enjoy spending time, with established infrastructure in each so that we can come and go as residents, not tourists, with friends and connections, social circles and, important to us, homes of our own.
When making your own plan for retirement overseas, the starting point—the key to the success of the adventure—is to be honest with yourself as to what kind of lifestyle you’re after. When Lief and I ask ourselves what kind of lifestyle we want in retirement, the answer is: Varied. City and coastal, Caribbean and highland, spring and summer, fall and winter, developed and emerging, sophisticated and raw, refined and gritty, we appreciate it all. So we’ve conceived a retirement plan, that we’ve been working for the past 15 years to engineer, that will allow us to enjoy it all, perpetually, in turns.
We’ve held on to the apartment in Paris that we called home when we lived in that city with our children. This will be our retirement base. From Paris, we’ll enjoy regular extended trips to Istria, to stay in the farmhouse there; to Medellin, Colombia, to enjoy life in that sophisticated mountain city; and to the Pacific coast of Panama, where we’re building a beach house. This is an ambitious plan (some might say ridiculously so), but we’ve had time to evolve it.
Whatever your plan, I encourage you to start developing it as soon as possible. An easy first step can be the purchase of a piece of property in a locale where you want to be able to spend time now and that you think eventually could become part of your retirement plan. Meantime, whenever you’re not using the property yourself, it could be generating cash flow from rental, and, over time, it could be increasing in value, too. Your future retirement residence could be a nicely appreciating asset on your balance sheet.
As we’ve been discussing, that’s the ideal situation—when the holiday home-cum-retirement plan you buy also qualifies as an investment. This was what tipped the scales for us with the farmhouse purchase in Istria. The old farmhouse we bought came with a bit of land. On that land, we’d daydream, we could cultivate olives, figs, even grapes. Maybe we could try making our own wine! We could go for long hikes in the hills, exploring the medieval villages nearby by day, then read by firelight come evening.
We’d return to these ideas again and again and, finally, rationalized them with the agreement that this was a market we believed in. Croatians, we noted, were tired of struggling and fighting. They wanted peace and prosperity and were working hard to rebuild their country. Croatia’s investment in infrastructure was and continues to be great, including an extensive modern highway system that allows you to travel through and across this mountainous country efficiently and comfortably thanks to a network of tunnels and bridges that is an engineering marvel.
Lief and I like countries at turning points, because they’re lands of opportunity. That’s how we perceived Croatia when we made our purchase there, meaning we believed an investment in real estate in that country at that time positioned us for long-term capital appreciation. The growing tourist markets in Croatia and, especially, in the region of Istria where we bought (thanks to annual film and truffles festivals), meant, as well, an opportunity for the property to generate cash flow when we weren’t using it ourselves. Plus, we were buying in a country where real estate trades in euro, furthering our diversification agenda.
In other words, with this one seemingly random (at least on the surface) purchase, we were able to meet a number of important goals, both personal and investment. This is the big opportunity that overseas real estate offers you—a chance to diversify not only your portfolio but also your life.
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