You’ve been dreaming about living abroad for years, and now you finally can afford to buy the perfect house in a beautiful gated community. You’re ready to sign on the dotted line, hand over the cash, and move in.
Not so fast—your dream home could rapidly become your worst nightmare.
By paying attention to these ten areas, you can avoid getting yourself into a home that is not what you thought it would be.
#1 The Condominium Regime
Is your dream home in a private gated community where visitors are restricted? If so, then in all probability, it must be legally formed as a condominium. Here in Mexico, only condominium communities are allowed to have gates that restrict who comes and goes.
If you like the gate restriction, then make sure you ask to see the legal paperwork that initially formed your communityas a condominium. This is a publicly registered document, and the administrator or developer should have a copy available. If not, your community might find the municipality’s director of urban development sending out officials who will require your gate to remain open to the public.
#2 Look For Permits, Permissions, And Paperwork
It’s a good idea to have the developer or administrator show you all of the legal documentation that was involved in setting up your community. You don’t have to understand what it says… it may all be in Spanish anyway, but simply knowing that your developer or administrator has the paperwork readily available is an important sign.
You want the running of your community to be transparent, organized, and efficient. Having such documents on hand is a good indicator that that is the case.
#3 Check The Balance Sheet
Ask to see the latest balance sheet or whatever it’s called by the community. What you want to know are the latest figures on delinquencies, both by owners and the community, and how the accepted budget compares to actual expenses. A financially distressed community is dangerous.
#4 See What’s In The Reserve Fund
Ask how much is in the reserve account. That is important because you want to make sure the community has enough held in reserve to be able to afford major repairs or purchases. When the well runs dry (literally) or the wireless internet or swimming pool pump gets fried, you want your community to be able to have it fixed immediately.
#5 Look For Outstanding Lawsuits
Check to see if there are currently any lawsuits involving the developer, administrator, or the community itself. Check not only in the host country of the community, but also in the home country of your developer or administrator.
If there are legal actions, you need to find out why the suit was filed and what the disposition was.
Obviously, suits from owners filing claims involving your community need to be investigated. You don’t want to be the next one at the table. And don’t ignore claims involving the developer/administrator outside of your particular community. They can give you indications of how business is conducted.
#6 Have A Look At The Common Areas
How do the common areas look? Are the roads in good repair? Is your community center up-to-date or have the furnishings been languishing since the late 90s and getting tattered?
Is the pool clean or moldy? Street signs legible or askew? Landscaping well-tended or weedy and overgrown? The entrance to your community, in particular, is the face to the outside world. Nothing destroys a community faster than bad PR. The individual homes may look great, but if the common areas don’t, something is amiss. Find out why.
#7 Check Out The Security Plan
What is the security like? Are there modern cameras? Security patrols? What is the gate protocol for visitors and workers? If anybody can get in by just asking, you might as well not have a gate. Ask to see a written security protocol. And ask about crime statistics for your community. If the local populace sees your community as easy pickin’s, theft will be hard to deter.
Security requirements will differ among countries, regions, and communities. Look for what you believe to be appropriate.
#8 Analyze The HOA Dues Regime
See a breakdown of fees (HOA dues) that you are expected to pay. Can you pay monthly or must it be yearly? How convenient is it to make payments? Can you make a bank transfer? Pay with your home currency? Pay online? How often have fees been raised? What is the expectation for future increases? Have there been any special assessments? Why?
Some of these are convenience items, but they all give you insight into how the community is run.
#9 Look Into The CC&Rs, HOA Rules, Or Bylaws
Carefully read the HOA rules and regulations (in Mexico these will be bylaws) that you are legally obligated to follow. Make sure you agree with them all. Changing bylaws can be an arduous task that often requires a unanimous approval by all owners. Don’t think that once you become an owner that you can convince people to change things you don’t like.
So if you are planning on making some extra income by renting, but your bylaws prohibit it, you need to rethink your strategy. And if you had your heart set on a purple house, you may need to look elsewhere.
#10 Talk To The Owners
Finally, and not least, question as many owners as possible about how the community is run. It is typical all across Mexico, for example, for condominiums (including gated communities) to be managed by an outside administrator who is supervised by a Vigilance Committee (VC) made up of owners. By and large, your satisfaction with daily life in your community is going to be heavily influenced by these two.
Find out if there is any owner dissatisfaction or unrest with the Vigilance Committee, the administrator, the developer, or amongst owners. It’s hard for people to agree on most things, but especially hard when it comes to where you live. Things can get ugly, so make sure your dream community is full of and run by people who share your core beliefs.
You surely don’t want everyone to be the same, but it’s no fun if you disagree on fundamentals. Remember, the policies that affect your daily life will be determined by the majority of owners and carried out by the administrator and VC.
Taking the time to address these issues could potentially save you from making a terrible mistake. Remember that the salesperson and developer want you to buy, so you aren’t likely to get the straight skinny from them. Do your research. Ask questions. Observe. It can be the difference between living your dream or dreaming of somewhere else.
For Overseas Property Alert
Editor’s note: Please don’t take Dianne’s advice lightly.
I have 15 years of examples of what happens when you don’t follow these basic rules. I’ve seen people lose money, lose their property, or end up regretting that they ever purchased in their community. Some up-front work can prevent that.
Dianne Harper Dubin is a teacher, manager, marketing director, and public speaker, who with her dentist husband, sold everything—home, cars, furniture, business—to move to Tulum, Mexico, two-and-a-half years ago. Spending five years prior to that doing extensive research on everything from where to live to passive cooling, she learned to use an architectural software program and designed the home they built and live in today. Her home is completely off-grid in the jungle with a pool and separate guest house, which they rent on Airbnb. Since moving to Mexico, Dianne has navigated the immigration, banking, taxing, and medical systems, purchased cars, hired workers, and made countless friends along the way. She currently writes freelance articles on travel, expat life, Mexico, and tropical building.
I enjoyed your article about Colonia, Uruguay. I plan on visiting there soon regarding a real estate purchase, but I also want to set up a bank account to invest U.S. dollars.
Is there a limit on the cash amount to purchase a two-year CD in Uruguay? Can I purchase with cash in hand or is it better to transfer funds from a U.S. bank?
Then, should I set up a separate account in Uruguay to handle the purchase of real estate there or is it best to wire funds from a U.S. bank?
Finally, are the properties you mentioned local individual’s properties or Live and Invest Overseas affiliates?
Banco de la República has CDs that go as high as 10%. I don’t know of any maximum, but the minimum deposit is small, at 5,000 Uruguayan pesos (US$178 today). To get the top rate, you need to buy a two-year CD. Don’t forget that you’ll have some exchange rate exposure when investing in a foreign currency.
For CDs in U.S. dollars, the rates are as lousy as they are in the states… under 1%.
When I’ve transferred amounts to Uruguay in excess of US$10,000 they’ve asked me for the source of funds. This has never been a problem in my personal experience, especially when buying a property.
When buying real estate, I’ve done it both ways—wired money from the United States to my account in Uruguay and also wired money to my real estate attorney (escribano) who acted as an escrow agent. Properties in Uruguay will always trade in U.S. dollars.
Finally, the properties I listed are available on the open market. They’re not in any way affiliated with Live and Invest Overseas. The two realtors I mentioned are guys I met on my first trip to Colonia in 2004 and have worked with over the years.
How does one find a reputable realtor for buying or renting pre-owned homes? Is it difficult between countries?
Is it difficult to go from resident to worker if you decide to work?
As a matter of fact, I have a previous article on the topic of overseas agents: Five things to know about your overseas real estate agent.
With respect to joining the workforce in a foreign country, it depends on the visa you’re holding. For example, some retiree visas do not allow you to work, while other visas do.
In Colombia, for example, you can work on a resident’s visa provided your profession is not regulated by a state body, a requirement that applies to doctors, professional engineers, etc. In Ecuador, residents can work on their retirement visas.
In more restrictive countries, you may need to re-apply for the proper visa.
Have a question? You can write to Lee (or Dianne) here.