Like many baby boomers, I’ve always dreamed of buying a winter home for my retirement, a place where the sun shines and the palm trees wave while the cold winds are blowing back home. I’ve spent a lot of time looking for just the right spot: Mexico, Panama, Ecuador. But along the way, a question occurred to me: should I really buy my winter hideaway, or just rent?
Buying a winter home has worked for thousands of retirees, from Canada, the U.S. and Europe. In my series on retiring abroad last year, I spoke to two people who went a step further and bought a year-round home: Loren Chudy, who retired happily with his wife Jan to a small town in southern France; and Sue Martin, who chose a retirement in a sunny corner of Spain.
Both are still happy with their choices: Loren says he has no regrets, and still loves his French home. You can read about his life (and especially French food) in his blog, Radio Free Daglan. Sue, meanwhile, is using her Spanish home as a base for travelling around Europe with her husband Ian (seen here), as you can read in her blog, Memoirs of a Motor Home.
However, I also talked to Allan Prout, who has spent many winters renting a place in Puerto Vallarta, Mexico, one of my favourite winter spots. He loves the city and its people, and wouldn’t trade it for anywhere else. He’s going back again this year — but he’s not sorry he didn’t buy a home there.
So, is it really worth buying a winter home in a foreign country? Here’s a look at the upside and downside of buying a winter home.
It’s your home
There’s no denying that buying a place gives you a feeling of belonging. You’ve planted some roots, made a commitment; you own a piece of the country where you’ve chosen to spend your winters. As well, you have the comforts of home. You can plant a garden, choose the furniture and décor you want, equip the kitchen with everything you need to make your favourite dishes. It just feels different from a place you’ve rented for a couple of months.
You’re part of the community
Part of the adventure of retiring abroad is learning a new community and a new culture, and by buying a home, you become part of that community. You have a stake in its present and its future, and while you come from outside, you’re not really an outsider any more. Sue Martin, for example, was doing volunteer work at a local animal shelter when we first talked to her, and spending the rest of her time in the garden.
You’re in for the long term
If you buy your winter home wisely, you have a place you can escape to for years, or even decades to come. No landlord is going to tell you it’s not available this year because his cousin needs a place to stay. And if you decide you really love being there, you can think about leaving your old home behind and moving in permanently. That’s how many an expat started – in fact, most experts (including Loren) recommend spending six months or so in your new home before deciding to make it permanent.
It’s an investment
Making a profit is probably not the best reason to consider buying a retirement haven – lifestyle should come first. But as International Living magazine can attest, expatriates who buy in the right place at the right time can make a tidy profit in the long run. That’s especially true if you get there early, while the area is still developing. For example, real estate prices have gone up significantly since an influx of northerners began to settle in places like Costa Rica and Panama, and the early movers have seen their investments grow.
All that sounds great, but nothing’s perfect. As with any kind of investment, there are some costs involved, and some dangers, including:
If you own a home, you know that the maintenance is never-ending — and so are the expenses. The same goes for a home in another country. There’s taxes, utilities, upkeep, insurance, and the inevitable repairs. Since you’re a foreigner, all these can be a puzzle, and occasionally a rip-off. If you’re only there part of the year, the cost can seem exorbitant. As one Canadian snowbird pointed out: “You pay a full year’s expenses for three or four months of living.”
You may need security
Depending on where you purchase, some of the expenses you encounter may involve security. Especially in Latin American countries – but even in places like Florida and other parts of the U.S. – your residence can be a target for thieves. They watch your house, then break in when you’re away and take your TV. That means you’ll need to have someone keep an eye on the place during the months you’re not there, or install a security system. This is why many northern snowbirds buy in gated communities.
Now you’re part of the community, but there’s no guarantee you’re going to like every member of the community. That includes the people next door. Latin America is notoriously noisy, and if you can’t put up with loud music and kids playing soccer in the street, you might want to be in a retirement community. There can be other kinds of problems, too, like the story of the retiree in Puerto Vallarta who shared natural gas deliveries with two neighbours: they pulled out, leaving him with the entire bill each month.
The same place, every year
Having a second home is great, as long as you want to go there every winter. But if you still want to travel, that’s going to be an extra expense, unless you can find someone else in the same situation who wants to swap winter homes. This is one reason people join time share clubs — even then, many time shares sit empty because the owner doesn’t want to go back this year. If you just rent a winter home, you can decide to try a new location now and then, or move on if you get tired of the place you’ve chosen.
Watch out for red tape
Buying property in another country always involves some rules and requirements you’re not used to. In some places, outsiders are barred from owning certain types of property; in others, there are fees and special taxes you might not expect. For example, Canadians who sell their winter home in the U.S. will find that 10 percent of the proceeds are withheld by the government. And if they rent the property while they’re not using it, they have to file a U.S. income tax return. Lastly, some countries, including parts of Europe, are notorious for land fraud: make sure you have a good (and impartial) lawyer.
So there’s a look at some of the things to think about when deciding whether you should buy or rent your winter home. While the potential problems may seem daunting, they aren’t necessarily a deal-breaker: if you love a place enough to live there, then buying can still be a good idea, as the subjects in our expat series can attest. And in many less-developed countries, the land prices are so affordable that they’re hard to resist: you can have the retirement home of your dreams for the price of a condo in your own country.
Still, if you do decide to buy, it goes without saying that it’s best to look before you leap. Spend a good amount of time in the town or city before you buy, and talk to other expats to see what problems they’ve encountered. Then, make sure you understand the technicalities involved in the purchase, and get a lawyer with good recommendations from other foreign buyers who’ve used him or her.
As for my own quest for a winter haven, I’m still looking — there are too many places I still want to travel during the winter months, like Africa and the Galapagos. But when I do decide on one place, I think I’ll be renting. I’d rather leave myself some choice as to where I spend my winters. However, if somewhere on my wanderings I come across a place that’s just too perfect, well — who knows?