Overseas Retirement Letter Editor-in-Chief Lynn Mulvihill is off with her family next month for a stay in Montenegro. They want to try this little nation on for size to see if it might be a fit longer-term.
Consulting clients we’re working with are preparing for extended visits to Nicaragua, Panama, Argentina, France, and beyond, again with the objective of getting a feel for what it might be like to live in these countries full- or part-time.
When you’re considering your options in this way, trying different places on for size to find which one(s) might suit you best, you need temporary accommodation. You could stay in a hotel, of course, but this gets costly and doesn’t give you a real experience of living somewhere. Hotel life isn’t real life.
Much preferable to rent short-term. Which leads to the question we’re asked often, “What’s the best way to source a rental in a new locale?”
Word-of-mouth. You can search on the Internet, but, as with property for sale, the rentals you find this way are typically the most expensive, certainly if you search English-language sites in non-English-speaking markets. Your chances of getting a better deal are increased if you reference sites in the local language. Still, going this route, you’re going to find only those properties for rent by locals with the wherewithal to advertise them on the Net.
You can also source rentals through local print classifieds. This can be an effective method, a way to penetrate the local market and to gain access to local pricing, but only if you read and speak the local language fluently. For, understanding Spanish well enough to read a rental property listing in a local newspaper in Buenos Aires, for example, isn’t enough. You’ve got to be able to speak Spanish well enough to have a conversation by telephone with the owner to arrange a viewing appointment. Then you’ve got to feel comfortable enough in your Spanish to meet with him (or her) in person, at the property, to ask your questions, to negotiate the price and other particulars, and, ultimately, to review the rental agreement (which, of course, will be in Spanish if that’s the language of the country where you’re shopping). I’ve known many people who’ve successfully sourced rentals this way and been happy with the results, but I, for example, couldn’t do it without help, not in a market where the language is Spanish. Mine isn’t good enough.
The most efficient and effective strategy, therefore, certainly if you’re not fluent in the local lingo, is to ask around. You can begin this process before you arrive in your new home, but finding a suitable rental in the right location for you at a good price can be a difficult thing to accomplish from afar.
Two months in advance of the date we planned to move from Paris to Panama City, I tried to launch our search for a rental in the Panamanian capital. I sent off e-mails to friends, business contacts, and property agents in the city. Everyone replied to say, in effect: “Searching long-distance for an apartment or a house to rent in this market is going to prove neigh on impossible. Much better to wait until you’re here in person. Probably any time you invest before you’re on the ground will prove wasted.”
The Panama City rental market at the time was an extreme example. It qualified as one of the most active short-term rental markets in the world. The would-be renter had to be ready to act. If you hesitated (showed up to a viewing without your local bank checkbook, for example, and therefore unable to write a local check for the deposit on the spot), you risked losing out. Few markets are this competitive. But there’s another, more universal reason it’s not easy to try to shop for a rental apartment in one country while you’re sitting at home in another.
Say you ask around from the comfort of your armchair. One of your sources replies to tell you about a rental in such-and-such neighborhood available for such-and-such price. It sounds great in the e-mail, the best value you’ve come across. But is it a place you’d want to live? Making that determination without having seen the place yourself can be dangerous. Maybe you’d trust your best friend or your significant other to scout and secure a rental on your behalf, but I’ve known even that to backfire.
It may sound like a non-strategy, but, for all these reasons, the best approach to finding a rental in a new place is simply to make a reservation at a hotel in the area where you think you’d like to live. Show up, check in, and hit the streets. Look for “For Rent” signs. Check notice boards in grocery stores and restaurants. Ask everyone you meet everywhere you go if he (or she) knows of an available rental.
Perpetual traveler friends Paul and Vicki face this challenge of finding a rental in a new place as often as two or three times a year, and this is the strategy they employ.
“Paul and I prefer to begin our search after we have landed in our city of choice,” Vicki explains. “However, before we arrive, we gather as much information as we can about rentals through friends, travel guides, and the Internet. We check into a moderately priced hotel then head out to the neighborhoods that sounded appealing to us in our research. We check bulletin boards in grocery stores, cafes, English-language churches, and laundromats. We read the local papers and chat with anyone who might have a lead. In small towns, we visit the local tourist office.
“We keep an open mind, while, at the same time, remembering what’s important to us. In a tropical climate like Chiang Mai, Thailand, we want a place with an outdoor sitting area. In big cities like Paris, we want to be close to public transportation and grocery shopping. In small towns like Chapala, Mexico, or Boquete, Panama, we want to be in the center of town, living like the middle-class locals. We always choose places where we can walk to shopping, restaurants, libraries, bus stops, etc.
“We deal only with owners. When a deposit is required, we amortize it over the number of months we intend to rent to give us what could be the real cost of the place if our deposit isn’t returned. (Normally, this isn’t a problem, but, remember, in a developing country, you have no easy resource for help getting your security deposit returned if the landlord decides he’d rather keep it in the end.)
“When eating out is cheap (as in Southeast Asia), we live without a kitchen. Sometimes we decide that our best bet is to stay in a hostel with kitchen privileges, a guesthouse, or a simple apart-hotel, rather than a furnished apartment. We often find what we need in a few days. We move in. I set up my nightstand and make a cup of coffee, even if it’s instant with an immersion heater, as long as it’s in my own cup. I sit down, savor the coffee, look out the window at my new view, and relish the moment. I’m home.”
“Kathleen, soon I plan to travel (by auto through Mexico) to Antigua, Guatemala, where, God willing and the creeks don’t rise, I will begin my new life as a pensionado.
“Why do you never mention Guatemala in your letters?”
— Theodore W., United States
We do! For, we agree. Antigua can be a great choice. In fact, we have a correspondent based there, Michael Paladin, who has written a full report on living the expat life in this charming colonial town.
“Lief, I just read your article regarding yields for property investment. I was just thinking along the same lines and, in fact, have been thinking there could be a good opportunity for this in Ireland. On the other hand, it may be a few more years before we see bottom in that country. Any thoughts on this?
“Also, I think you offered a newsletter for real estate investors a while back. Are you still offering this or planning any seminars on this subject?
“I’m sure your development project in Panama is keeping you quite busy. I wish you well and look forward to your reply.”
— Mark S., United States
Mark, I wouldn’t touch Irish real estate for rental yields. Gross yields were never higher than 3% or 4% when I was living in the country, and net yields were 2% at best. That is to say, this is historically a very low-yielding market.
It’s true that real estate prices in Ireland have since collapsed (that is, fallen by 50% and more). However, I’d expect rents have fallen, as well, and, Celtic Tiger appreciation notwithstanding, they were low to begin with.
One thing that led to the real estate boom in Ireland was 20-somethings moving out of their parents’ houses before they got married. The norm in pre-Celtic Tiger Ireland was to live with Mom and Dad as long as possible. Now that jobs are again scarce, the expanding first-home-buying market will shrink. This will translate to fewer renters.
Remember, too, the high cost of buying in this country (thanks to the stamp duty). On the other hand, the Irish government imposes no property tax.
This could be a great time to shop for a retirement or second home in the Emerald Isle, but, all things considered, you have better options if your agenda is yields.
Finally, in fact, yes, I’m preparing as you read this for the re-launch of the global real estate investment service I produced for years earlier in my career. Kathleen will have details for Live and Invest Overseas readers soon. And, yes, I’ll also be holding another real estate investment conference this year. Again, Kathleen will share the details when they’re finalized.