Event Coverage
Members Share Experiences Buying Real Estate Abroad
Jasmine Lee and Penelope Huang, with SILVAR Board Director and GBC Chair Jimmy Kang
"Buying Real Estate Abroad" turned out to be a fun and interesting program for the nearly 60 members who attended SILVAR Global Business Council's program last Tuesday. In this program, SILVAR members Penelope Huang and Jasmine Lee recounted their experiences purchasing property abroad. Here are just some of the highlights:
Penelope Huang's experience purchasing property in Mexico:
Huang, who is with Golden Gate Sotheby's International Realty, owns three properties in Mexico. She said each transaction "was a journey and brought a different buying experience." Huang said you can only own land in Mexico that is within 31 miles of the coast if it is placed in a bank trust. The Huangs have placed their properties in a trust with all descendants' names. The trust costs them about $500 a year.
Twenty years ago, Huang, her husband and in-laws purchased a run-down colonial home in Mazatlán, a city in the Mexican state of Sinaloa, which they often visited. They worked with a listing agent to find a property.
Huang noted that it's harder to buy a home in Mexico, since homes are usually passed on to descendants or sold if the family needs money. In their case, the property was owned by two sisters who needed the money. Closing costs were 10% of the purchase price. Huang said you can get title insurance but "it's a waste of time." A notario handles everything. If organized, you can close in 60 days; if not, it could take six months to a year, she said.
The Huangs spent two years restoring the home, first hiring an American expatriate who spoke Spanish and supervised the workers for them. That resulted in long delays with the work while the Huangs had to dole out money every week for workers' pay, including medical and Social Security. Huang got suspicious why the work was taking so long and finally approached the foreman, and in her limited Spanish asked for receipts and found out she was paying more, and that work was delayed because the workers were told she was having a hard time paying! She fired the expatriate and worked directly with the foreman and got the place finally restored. Lesson learned: She was too trusting of the American expatriate and realized it was best to deal directly with the foreman, even with her limited Spanish.
Later, the Huangs purchased a lot in a development in San Felipe, a city in the Mexican state of Baja California. The developer went bankrupt, and they ended up taking the property out of the development and registering the land privately. To save the development, a rental condominium complex was built with a golf course. In addition to trust fees and property taxes, they pay HOA and golf course fees for the property.
In 2020, the Huangs closed on an 88-acre parcel of raw farmland. Huang is currently developing the farm as an example of bio-diverse, sustainable agriculture, with the goal of building an artisanal mezcal distillery and becoming a premiere, eco-tourism destination for events. To do so, the Huangs established a Mexican operation and applied for and received a residency permit.
Jasmine Lee's experience purchasing property in France:
For Lee, who is with Coldwell Banker Realty, it was a life-changing call with her real estate coach in 2018 that spurred her to invest in real estate. Lee's coach instructed her to buy one property a year for 10 years, and to pay them all off within 10 years of buying each property. Lee's coach also told her to use her imagination and that the investments could be anywhere in the world.
Lee excitedly set off with this new goal in mind. She made her first purchase in Arizona in 2019, and then in Pennsylvania in 2020. However, her most recent and boldest investment was a studio in the French Riviera, in a town called Villefranche-Sur-Mer. She described it as "an incredible journey and learning experience."
Foreign-born citizens are allowed to purchase property in France, but they are required to provide higher down payments than French citizens. Since her French comprehension skills were limited, she searched for a real estate agent who also spoke English. Lee dropped by several real estate offices until she found an agent at Century 21 who was bilingual. He showed her a 250-square foot studio with a view overlooking the Mediterranean Sea, equipped with basic appliances and furniture. It was a perfect match for her! The condo is a 10-minute walk to the beach or train, and only two minutes to nearby shops and restaurants. She closed on the studio in May 2022.
Lee noted when she bought the studio that mortgage interest rates in France were much lower than in the U.S. She was able to get a 20-year fixed rate loan for 1.45%. Closing costs and notary fees were about 10% of the purchase price, and the bank required her to put down 30%. Lee also learned that qualification for a loan there is only based on the borrower's income and the amount of actual debt carried by the borrower. France does not have a credit score ranking system.
Lee spent about $3,000 updating the furnishings and preparing the studio for Airbnb. This year, it is booked consistently from April to mid-October. Then she will take it off AirBnB for a couple of months to renovate.
In her first year of ownership, Lee has already learned a lot, like dealing with upset AirBnB guests and having to fix a lot of broken things from afar, such as her studio's air conditioning, plumbing, and electricity. Her expenses for the mortgage, HOA fee, utilities and insurance are under 1100€ per month. The costs for property management and cleaning fees fluctuate, and her property taxes are less than 1,000€ per year.
Also, both Huang and Lee found that prescription drugs are inexpensive in these countries. Lee said an asthma drug that costs $500 at CVS pharmacy here only costs $30 there.
For both Huang and Lee, purchasing property abroad has been an interesting journey and a learning experience. They advise those interested in purchasing property abroad to research the country and real estate process in the particular county, and try to learn some of the language before beginning their journey.
The Silicon Valley Association of REALTORS® (SILVAR) is a professional trade organization representing over 4,000 REALTORS® and Affiliate members engaged in the real estate business on the Peninsula and in the South Bay. SILVAR promotes the highest ethical standards of real estate practice, serves as an advocate for homeownership and homeowners, and represents the interests of property owners in Silicon Valley.
The term "REALTOR®" is a registered collective membership mark which identifies a real estate professional who is a member of the National Association of REALTORS® and who subscribes to its strict Code of Ethics.
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