Buying Real Estate Overseas For Cash Flow (And A Better Life)

5Consider Local Financing Options (If They Exist) and How You Can Qualify

Lief used other people's money (OPM) to launch his real estate investing career in the United States, and we were able to borrow for our first purchases overseas, as well.

For his first investment, in Chicago, Lief negotiated a 98% loan-to-value (LTV) loan from a local bank running a special offer, and we bought our house in Ireland with a 95% LTV financing from Bank of Ireland. While our second overseas property investment—a preconstruction condo on the coast of Spain—wasn't financed by a bank, it was made using developer terms that allowed us to pay just 5% down and then another 25% over two years, with the final 70% not due until completion of the unit.

Bank financing in the United States comes with an additional cost if your LTV is greater than 80% in the form of private mortgage insurance (PMI). Ask Lief how he got out of paying PMI for his Chicago purchase if you meet him at a conference sometime.

Private mortgage insurance isn't a requirement when borrowing to buy property in most markets overseas, but a local life insurance policy naming the lending bank as the primary beneficiary if you die before the mortgage is paid off is. You can buy the policy through the bank or from a third party, but a current life insurance policy in your home country won't qualify. More important, most life insurance companies around the world will insure you only up to age 70 or 75. That limitation restricts the mortgage ...