Five Things To Know Before You Rent Overseas
When making a move to another country, we recommend that you rent before you buy. This gives you the opportunity to try the place on for size and to confirm or reconsider where you want to live.
Kathleen and I have done this for each of our international moves, and, in each case, we’ve been very glad we did. In Ireland, for example, renting first saved us from making the big mistake of settling in Waterford City. It took only a few months living there to realize that where we really wanted to be was out in the country.
We’ve been renting here in Panama, as well, since our move from Paris two years ago. In fact, we’ve just moved into our third rental in that time. This experience is reminding us that, just as buyer should beware in a new market, so should renter.
Not all properties are created equal, and neither are all property owners or property management companies.
Here are five caveats, therefore, to keep in mind when renting long-term in a foreign country:
Overseas Rental Caveat #1:
Think twice before renting new construction or just-completed renovation.
You don’t want to be the first person living in a place. It makes you a guinea pig, forced to work out the kinks.
This was our very frustrating experience in the house we just moved from in Casco Viejo. The owner hadn’t done a punch list after the extensive renovation he’d undertaken. We were left, therefore, to discover a long list of things that didn’t work and that hadn’t been properly addressed (including a very leaky roof, no hot water in the guest bathroom, and bedroom doors that couldn’t be closed because they bumped into the ceiling fans).
We discovered too late that the owner didn’t seem to care whether anything worked or not, leaving us to deal with his incompetent and unresponsive property manager. Thus our most recent relocation.
Overseas Rental Caveat #2:
Investigate the reputation of the management company responsible for the property.
Ask around. If the feedback is all negative, consider finding another place to rent.
This also applies to building management in the case of a high-rise apartment building. In Panama, most new buildings come with loads of amenities (swimming pools, grill areas, children’s playrooms, basketball courts, tennis courts, even putt-putt golf). However, if the building administration isn’t maintaining the amenities, and you therefore can’t use them, what’s the point of paying for them (as you will, in your monthly building fees)?
Overseas Rental Caveat #3:
Understand what documents will you need to rent.
Depending on where you’re moving, the answer could be none. On the other hand, in some markets (France, for example), you’re going to have to prepare a complete dossier of paperwork (including, for example, recent bank statements, pay stubs, reference letters, even, sometimes, letters of guaranty) to submit for approval before you’ll be able to sign a lease.
In Panama, you generally don’t need anything to rent a place to live. Renting in this country is a straightforward process. You find a place, sign a lease, pay your deposit, and move in.
In Paris, on the other hand, again, you’ll need a complete dossier–unless you rent on the black market. Renting long term on the black market can be more expensive, but it overcomes the dossier hurdle, which, depending on your situation, you may not be able to meet.
Overseas Rental Caveat #4:
Understand what deposit will you be required to make.
The general rule is that you’ll have to pay the first month’s rent plus a deposit equal to one month’s rent. Sometimes, the deposit can be 1 ½ or two month’s rent.
Whatever the deposit, don’t expect to see it again. Friends in Paris joke that the best way to think about any security deposit you make in that market is to amortize it over the lifetime of your rental. In other words, consider it part of the rent. (I’m speaking about long-term rentals, not short-term tourist stays.)
In Panama, if your landlord is following the law, your deposit will be posted with MIVI (Panama’s department of housing). MIVI holds the funds and then releases it at the end of the rental term. If something is to be deducted for damages, the landlord informs MIVI, and the renter (you) are given a chance to sign off on the amount to be deducted for repairs.
Unfortunately, not all landlords do this (many foreign landlords aren’t even aware that they’re supposed to do this). This means your deposit is at risk.
In the case of our first rental in this country, an apartment in a high-rise, the landlord returned our deposit within a couple of weeks of our moving out. He made no deductions, and we got our deposit back in full.
In the case of the house we moved out of July 1, the property manager refuses to return our deposit citing “damages.” However, they refuse to tell us what these so-called damages are. In effect, they’ve stolen our deposit. As they didn’t post our deposit with MIVI but kept it themselves, we’re out of luck.
Overseas Rental Caveat #5:
Use an attorney.
You know to use an attorney when you buy property overseas, but you should also use one when signing a rental agreement in another country. Unless you are very familiar with tenants’ rights and the particulars of rental contracts in the country where you’re renting, it pays to have someone who is reviewing the documents before you sign. A good attorney will also inform you of any negotiable clauses–that is, any opportunities for you to adjust the terms of the agreement to your benefit.