Ten Essential Steps Towards Buying a Home
Someone's sent me an article by Nia Williams with what she presumably
thinks are good tips for people buying real estate abroad.
I dont know who she is, but the article is utterly worthless and comes
up with the usual rubbish, and leaves out all the important stuff. Here
it is slightly abridged.
(Please Note: I give the real ten essential steps further down this
article. If you're going to buy abroad you MUST read this.) Here's the
rubbish first with my criticisms.
Tip 1: Get the purchase contract in English. Hey, isn't that normal?
And why start with the last item? How do you get to that stage in the
Tip 2: Get mortgage approval beforehand. Hold on. If you dont have a
mortgage and you need one how the heck are you going to pay for the
place, so that's a bit obvious isn't it? Where did this silly girl come
from? Has she ever bought a property abroad? Probably not.
Tip 3: Get a valuation and a survey. Not sure what that has to do with
anything. The valuation will be given by the mortgage provider, and it
will be useless. No valuation = no mortgage. This girl is really green.
She should read my booklet How to Value
. (Click the link. It will save you tens of thousands of
£.) You dont get in a valuer. A valuer will only tell you what a
similar house sold for last week. That is not a valuation, lasts week's
sale may well have been to an idiot who was conned.
Tip 4: Employ a lawyer to check title. Isn't this all a bit basic? You
wouldn't buy without a lawyer anyway would you? After all, in a foreign
country you aren't likely to know the ins and outs of the property
Tip 5: Check track record of builder if buying a new build, and check
rental returns in the open market. Hey, now we're getting somewhere.
Pity it's number 5 on the list. On the other hand, why buy from a
builder who is probably going bankrupt right now anyway?
Tip 6: Do some research on restaurants, cheap flights, etc. Okay, but
there are many more important things to note.
Tip 7: Explore which currency to use when obtaining a mortgage. Okay.
Tip 8: Set up a local bank account. The silly cow goes on "Failure to
pay your taxes in some countries such as France, Portugal and Spain,
could lead to action by the authorities." I've got news for you baby;
not paying taxes in any country can cause you a spot of bother. And
what's that got to do with buying a house?
Tip 9: Check out inheritance taxes and make a will. Once again, not
much to do with buying a house abroad.
Tip 10: Dont forget to add in extras for lawyers fees and insurance.
short, a hopelessly useless article. Shall we start again, and do it
I'll try and do this in ten steps, though what is special about the
number ten I dont know.
Firstly, a quick call on why my advice is good. Maybe I can do that in
ten silly steps as well.
- I have bought and sold
property in nine different countries over a period of forty years. I
have long term experience.
- I have called the tops
and bottoms of the UK and Spanish property markets with 100% accuracy
over the past forty years.
- I issue an annual
property analysis. I have been doing it for thirty-five years. I have
never been wrong.
- I've written books and
articles on real estate for over twenty years, appeared on radio and
t.v. in several countries, and have clients in 70 countries.
- Good grief, I even
invented buy-to-let back in 1991, and wrote a book about it in 1993.
- ........... I've got
my ten tips
Work out what the heck you're doing to
start with. That is prime. Why are you buying? Anyone who doesn't start
with this question and kick it around for a year or so is a complete
Do you want a holiday home or a retirement home? If the former, why?
Why would you always want to take a holiday in the same place? Work out
what it will cost, including taxes, repairs, and everything else. Then
add in the opportunity cost (the cost of not having the money you just
used up). Even if you put that in at 5%, you need to put it in, and if
you only get 5% on your money you need to talk to me because you are
screwing up really badly. (Check out this page on the Unique Property
site (The Big Pension
costs, and do a little subtraction
sum. Now start thinking!
Holiday rentals dont bring in money. If you dont believe me check the
holiday rental sites and start counting the unbooked weeks. I live bang
in a tourist zone. You can book a one bed apartment for €75 a week.
Three apartments out of every five are empty. Buying is idiotic. A
three bed villa with a pool in the Algarve will cost you €500 a month
on a long-term contract. Heck, I know. Last year I was renting out one
for precisely that figure. I repeat, buying is idiotic. If you want
some of those deals all you have to do is contact me.
The re-sale market is almost non-existent in a tourist zone, which is
why you should always buy in or close to a normal city.
If you are buying for retirement, or because you want to live somewhere
else, check that it suits you. Flights easy to see the kids. Cheap
living perhaps? Warm sea. Plenty to do. Good climate. And talk to the
locals, and read the letters expats write to the newspaper to get a
feel for the place.
Always spend time living in the target
area before buying. Three months minimum. And check out whether it's
Work out (from tip 1) where would suit
you best. Town, country etc. Close to shops and all amenities if you
are old or frail.
Now check property prices using the
local press. Do not under any circumstances go into an estate agent's
office to check prices. They have nothing to do with reality. And check
prices against the local economy. See tip 5.
Now do some proper research. What's the
average wage? Property turnover? Rental returns, and so on? If the
average wage is €1000 a month, what should the cost of an average home
be? Maximum 4.5 times income + deposit. Answer, about €60,000. That's
what you should pay. Add no more than 50% for a top quality area. If
the cost is more than that then you are being screwed. I dont care what
anyone else says, I say you are being screwed, and I can get you a
If prices are too high, wait, and think
whether you should be renting instead of buying.
The rest is the same as for buying in
the UK. The only difference is the currency choice for any mortgage.
The euro has strengthened against sterling rather badly over the past
few years. That has affected not just the amount someone would pay in
sterling on a euro mortgage, but the conversion of pension funds.
Generally speaking get any mortgage in the same currency as your
income. And remember your pension is at risk if you live in a different
currency zone. If sterling crashes you will get seriously poorer.
If you are buying for a holiday home
take a course in elementary maths first. The holiday home market has
just crashed all over Europe. I dont see it recovering any time soon.
If you buy you will be buying into a falling market. You will also find
resales in tourist areas are difficult. You should preferably buy into
a normal market not a tourist market. They hold up in bad times a lot
easier. But, and this is the crunch, it makes no economic sense to buy.
It's cheaper to invest in something that brings you in an income, and
then use that income to pay rent. Now you've got the home and still got
Call John Clare and get his personal
advice. I'll save you tens of thousands of pounds. I'll charge you
Open a bottle of vodka, and crack out
the ice and relax.
And a bonus: if you want anything
clarified, or need any help, talk to me. I will give simple help to
anyone, but more detailed help would require you to at least become a
Unique Member; here's the link: Unique Property Site Home-Page.