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

6Consider Shopping for Financing Back Home or with the Developer

If financing your real estate purchase overseas through a local bank isn't a realistic option (because the market where you want to buy doesn't lend to nonresident foreigners or because your financial situation doesn't qualify you), you have alternatives.

The first and easiest—sometimes even if local financing is available and you do qualify—can be to take out a loan back home. No, your local U.S. bank isn't going to fund your overseas real estate purchase directly. With the exception of some banks in Texas and California that have at times over the years offered loans in Mexico, U.S. banks don't have the infrastructure to protect themselves against default in a foreign country. How would they foreclose and recuperate their funds?

U.S. banks do, however, offer home equity loans and lines of credit. This was an important source of funding during the rapidly appreciating U.S. market leading up to 2008. Taking out a $100,000 equity loan, say, on your principal residence in the United States to invest in a condo at the beach in Brazil or the Dominican Republic can be a straightforward strategy. Your U.S. lending bank doesn't typically care what you use the money for as long as they're happy with the metrics to do with the value of the collateral and your debt-to-income ratio.

You should care, though. If you're lucky enough to own a piece of property in the United States that has enough equity to allow you to draw ...