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What are the best places abroad to buy a second home?
The best place for your second home should be your ideal weekend getaway destination, annual vacation, or eventual retirement community. It also likely has the potential to rent out, either for extra income or just because you’d rather not leave the house empty most of the time. To narrow down your search, take a look at what others consider to be great locations for a home abroad, and how much financing you would need to afford your preferred location.
Key takeaways
- The ideal location for your second home should be one where you can see yourself living for a weekend getaway, an annual vacation, or as part of the eventual retirement community.
- A hotter real estate market won’t always lend itself to a second home – sometimes looking for places to recover from crises or market downturns is a smarter move.
- Different markets may be the best places to buy a second home, depending on your needs.
Understand the best places abroad to buy a second home
A hotter real estate market may not always be better for a second home. If location isn’t the perfect weekend getaway destination, annual vacation, or ultimate retirement community for you — all important factors when deciding where to buy that second home internationally — it doesn’t matter how popular it is with other shoppers.
Additionally, while some countries may welcome foreign real estate investment, others make it more difficult for non-citizens to own property. Thailand, Mexico, Greece and Vietnam are particularly difficult for foreign buyers.
The top three
According to a study by InterNations, the best place in the world for expats is Panama, followed by Mexico and Indonesia. Panama is known for its strong sense of security, and Mexico is also highly rated for friendliness. Expats give Indonesia high marks for job satisfaction and personal business opportunities, and all three countries are known for being easy to settle in, making them ideal locations for retirement.
The InterNations survey also asked expatriates, both year-round and part-time, about work opportunities abroad, a question that may not seem directly relevant to second home buyers.
But it’s worth considering because a country that makes it easier for expatriates to work is likely to have a large and diverse expatriate community. Additionally, if you decide that you like your second home more than your first, you may want to live and work there full-time. Job opportunities push some destinations that Americans typically like, such as Italy and Greece, to the bottom of the 53-country list.
Best investments
Live and Invest Overseas lists five places where an expat can find it all, which means a beautiful place in the sun with rental income potential and investment potential:
- Spain because of its low cost of living, in addition to its exploration opportunities.
- Portugal offers tax incentives for foreigners and several paths to residency.
- Mexico offers high-quality, affordable health care with familiarity and proximity to the United States.
- Greece is a safe, small country with the largest number of doctors per capita in the European Union.
- Panama, as this country taxes the jurisdiction, so retirees will not pay local taxes if their income comes from outside.
Best deals
It is still possible to get a deal abroad. Some countries have suffered from housing bubbles, debt crises, and recessions, which have kept prices low.
Santa Marta, Colombia, offers one of the most affordable properties for expats, according to Live and Invest Overseas. Other affordable hotspots include Chitre, Panama; Phuket, Thailand; And Dumaguete in the Philippines.
Luxury market
Buying a home in an exceptionally competitive market may require looking at up-and-coming areas and avoiding traditional high-priced markets. The coastal resort towns of Croatia and Montenegro are among Eastern Europe’s hotspots for second homes, and remain much less expensive than their counterparts farther west.
The same flexible approach to finding a luxury home location works for people who are not super-rich in other major second home markets. Changes in global politics could also have an impact on the luxury second home market, opening up new areas for exploration.
What is the difference between a second home and a vacation home?
A vacation home is a type of second home used exclusively for entertaining and not as a primary residence. In addition to vacations, second homes can also be used for work or as an additional source of income, such as renting a room. Note that a second home is considered rental property by the Internal Revenue Service (IRS) if the owner resides in it for a number of days greater than 14 or 10% of the total days he or she rents it.
Which country is best for a second home?
Choosing the best country for a second home depends on what you intend to use the home for and what factors are most important to you when considering where you want to live. Panama, Mexico, and Indonesia are excellent locations to vacation, work abroad, and retire outside the United States If you’re looking to use a second home as an investment opportunity, Spain, Portugal, Mexico, Greece and Panama are all worth considering for retirees.
Is a second home a good investment?
A second home can be a good investment, but you will need to think carefully about what you intend to use the new home for and where you want it to be. For example, if you want a second home to supplement your post-retirement income by renting out a room, you’ll need to earn enough rental money to offset the cost of maintenance, repairs, and mortgage payments while still making a profit.
Bottom line
There’s really no “best” place to have a second home abroad, because it’s a completely subjective idea. Different parts of the world are more suitable for different household purposes and homeowner preferences. To find the best location for you, first ask yourself what you intend to use the home for, where you will most enjoy staying, and how much you can afford to spend.
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