Buying Real Estate Abroad, Part 2

This is a post I did Jun 27/08, after one of my many trips to New York and New Jersey. I though I'd repost it because I think it's relevant … plus, I'm still kind of in vacation mode.

(Jun 27/08)

I was in New Jersey a few weeks ago (Asbury Park) and was amazed at how cheap some of the properties were. Friends of mine bought a renovated old house for $180,000 – you can’t buy anything in Vancouver for that price anymore.

Granted, the house is in a ‘transitional’ area so there is a reason that the value is much less. Any decent house in Vancouver is well over $500,000.

It begs the question: if you can’t afford to buy in Vancouver should you buy somewhere else?

It’s kind of appealing if you look at some of the property values in other parts of Canada or the US. A friend of mine was travelling a few hours outside of Vegas and apparently, you could get houses for $50,000.

In New Jersey, in some of the really ‘transitional’ areas, you can buy a house for $140,000.

Sounds like a good deal?

Some would say New Jersey isn’t Vancouver, so values here are higher given our weather and lifestyle. This is something to consider: if you’re looking to buy in another city or even country and find a deal, prices are probably cheaper for a reason.

Each real estate market has local differences so it’s important to do the research. One thing that I found interesting is that the cost of home insurance is significantly higher in New Jersey than in Vancouver.

As it turns out, if you’re close to the ocean, your insurance rates could be much higher. My friends pay $1,200 per year for their house and they consider that a good deal. In Vancouver, similar rates seem to be about half and we have the potential for earthquakes!

Another issue is the need for title insurance. They have a completely different system of land titles in New Jersey, where the government is not as involved as here in Canada. Consequently, the system isn’t as rigorous and the chance for error or fraud could be much higher.

When I owned in Vancouver, I did not have title insurance – that I know of – and I wouldn’t have thought to ask about it.

So, if you’re thinking of buying abroad do your homework – investigate why prices are cheaper and make sure you hire someone locally who knows what they are doing.

That amazing deal may not be such a deal after all.

UPDATE

I've been back several times (including just last week) and the house in Asbury Park is looking great after some much-needed decoration. But, there have been a few surprises:

1.) There is no insulation in the house – they discovered this after a squirrel ran around in their walls. Most homes in Asbury Park were built for summer use and did not have insulation at the time. Oops!

2.) There are no heating ducts upstairs – the heat is currently running through the walls, which happen to be empty. Nothing like getting a $400 heating bill!

3.) Some of the fixtures weren't installed with the best quality. As a matter of fact, the general quality seems to be lacking.

The house was actually a flip originally purchased by investors for $53,000. It was in pretty sad condition – burnt walls … you name it – but was supposedly completely renovated, which is why my friends purchased it.

They did hire a home inspector, but he seems to have missed some pretty major items, which I think will have to be another post.

Hopefully, the house will stand the test of time.

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