This blog is the second in a 15-Part Series from Mike Cobb, CEO of ECI Development. As an offshore real estate and resort developer, Mike has used his experiences in Central America to create the “15 Critical Questions to Ask When Buying Property Overseas.” Buy What You See: Infrastructure One thing that you need to accept right off the bat is that buying real estate abroad is going to be nothing like buying real estate in North America. There are many things one must account for, and more importantly ask, that wouldn’t be of concern if you were buying a house in the US. For that reason, I put together a list of the 15 top questions that an interested buyer should ask before committing to a property or project overseas. They follow three central themes: Buy What You See, Own Community, and Know the Developer. The Second Question: What road and public infrastructure exists? Does the current infrastructure include underground utilities, paved streets and sidewalks? While these all seem like things that can be taken for granted in North America, buying property overseas requires additional due diligence. When looking at a potential property, make sure there are paved roads and underground utilities in place. While a developer may say, “It’s coming,” it will almost never be coming from the government or utility companies. Providing utilities like fiber optic Internet, water and sewerage systems, and reliable electricity will almost always fall on the developer. So if they tell you they plan to build out first-class infrastructure, ask them to show you the funds they’ve set aside. If they are a trustworthy developer, they will do so. What to Look For:
Many people have gone abroad and bought into projects that ended up just a collection of homes or lots without services. When buying abroad, “Buy What You See,” is of paramount importance. There is often little recourse for a developer not meeting expectations. It is really on the buyer to do the due diligence by getting their boots on the ground and seeing what is really there. If the infrastructure necessary for a community isn’t in place, it might never be. Relying on just the promises of the developer could lead you to paying for utility installation yourself, which can become extremely costly. If you are quoted a price, make sure that includes access to all necessary infrastructure and utilities. There are many exciting opportunities in offshore real estate, and different buyers may be looking for different kinds of development. However, most folks are looking for real living communities, appreciating values, or a combination of the two. The only way to create those two conditions is to put the necessary infrastructure in the ground. A home on a paved road with sidewalks lined with shade trees is much more likely to retain and grow in value, as well as provide the lifestyle most North Americans are looking for. It’s a picture many developers like to paint, but you need to make sure it’s the reality on the ground before you buy into any development. If you are interested in additional information, I regularly hold special training sessions for agents interested in international real estate in which I briefly walk through the rest of the 15 Critical Questions. These sessions highlight how you can profit from working with international developers by implementing a simple and easy strategy. If you would like to learn more or register for an upcoming session, you may do so
With proven experience in international real estate development, Mike Cobb is a time-tested Industry Sage, expert and entrepreneur with a passion for helping consumers achieve a high quality of life. Mike speaks at dozens of international conferences annually about offshore real estate finance, development, and ownership. He was consultant to The Oxford Club, has a weekly radio program, contributes regularly to overseas publications, sits on the board of several international companies, gives counsel to various real estate projects throughout Central America, and serves on the Presidential Advisory Group for the National Association of Realtors. You may contact Mike directly here.