November 20, 2015

Should I Rent or Buy? Which Is Best When Living Abroad?

We all know that renting is usually the better option over buying, especially until we spend some time getting to really know an area we might be interested in for the long-term.  There are many variables that we must consider carefully before getting mixed up with owning property overseas.
Cuenca Ecuador City View from Turi
How long will you be staying? What if you don’t know how long you will be staying? Many people become so won over by the hyperbole that they buy property before they even know if they’ll like the area for permanent living. 
 

Ecuador chatter is constantly saying how there are more expats moving away from Ecuador than coming to live?  Is that true?  We do know there are a lot of over-priced properties for sale online, and in perfect English.  And that brings us to the next question.
 

Does the city you want to move to have overpriced real estate market? Cuenca Ecuador has always been overpriced, even before we got here in 2011. However, it is still possible to find and buy fixer-uppers or build your own home without it costing both arms and legs. But here again, before putting in all that time and effort, it’s still best to hang your hat for a few years before jumping in with both feet.
 

The Rule of 3 and 4 is a great way to find out if a city abroad is over-priced.  The rule has actually kept us out of trouble and out of the market. If real-estate market is already high for an area, then it doesn’t make sense from a financial standpoint to buy, especially if you don’t know if you’re going to stick around.
 

Forums chatter says that real estate in Cuenca is stabilizing and the same goes with rents. Well, we sure hope so since many of the rental listings of today have doubled in price in the last four years.
 

If your rent is below $400 to $500 a month, then it’s almost certainly best to continue renting rather than buying.  Once you have lived in the area for a year or two then you will surely know if you are ready to buy property.  If you decide the place isn’t what you expected and you move back to your homeland, you will have only spent for the entire year $6000 on rent.  Not too shabby when you read about all the folks who just couldn’t wait and bought an already over priced property and now can’t sell, without taking a loss for one reason or another.
 

Note: Although, in Latin American countries where salaries are not even $400 a month, we feel renting over that amount only feeds the greed that is so ever present in these overhyped cities, they call paradise.
 

Leaving your property unattended is a problem in Latin America. This is one of the headaches of home ownership abroad.  Many residents abroad travel more.  If you travel to visit family back in the states or simply just travel in the country you live in, it is very unwise to leave your home unoccupied, even for a day or two. This is the one and main reason we see for buying an apartment versus a house.
 

Does this mean you shouldn’t buy a detached house/property? Not exactly, there are several things you can do to ensure the safety of your home and belongings while you travel.  For one, you could rent it out for the time you are going to be away;  or two, you could hire a caretaker, both cases however will take careful due diligence to find the right person or couple that you can trust to house sit and take care of the home, plants, pets, etc while you are away.
 

Even renting a house abroad has its frustrations, since leaving a rental unattended while you travel, even for a weekend is not advisable in Latin American cultures. You might come back to a very empty house. Make sure you turn on the house alarm while away, just in case an intruder knows you’re gone and attempts to break-in; at least the alarm might scare the intruders away. 
 

FYI: We didn’t use to say this but after living here for four years you begin to observe a trend; we think it is best for the safety of foreigners that live in detached homes, to have electric fencing around the property if they live in Latin America.

Until we write again...

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We're an Expat Family of Five, Living Frugal, Healthy and Happy Abroad. We live in Cuenca, Ecuador and travel the Ecuador coast whenever we get a chance. We just adventured throughout the country of Panama for five weeks! Come along and enjoy some of our experiences with us!

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