Posted by John Corey on May 15, 2006 at 03:53:52:
I invest in the UK and have looked into the markets in Prague and southern Spain.
The legal differences are large compared to the US. In some countries a foreigner can not buy property. In other countries you need to do so through a company that is registered in the country.
Many countries do not have credit scoring or similar methods to evaluate the borrower’s credit. With little commonly held credit details it makes it a bit harder to shop around for a loan.
To get a loan in Europe normally means having established income and established residency. How long will vary by the standards a lender wants to use and what sort of LTV you are looking for.
Moving to Europe and being able to work legally is rather important if you want to establish a local presence before speaking with lenders.
Expats are normally sponsored, on a work permit and will have their employer offering an introduction to a local bank. This will vary by company and country. Some expat assignments have specific clauses about not buying a property as they want to move you back quickly with no strings attached to local property.
Some of the problems you might have in Europe are similar in nature to what someone from Europe has when they try to move to the US and buy property.
A final caution. Some eastern European counties will have issues with chain of title (think about the WWII history with the Jews, the Nazis and then the Communists). In Crete there is the Greek and Turkish dispute to cloud the chain of title. You need to look at the legal system and understand what sort of historical claims might exist on the property. There can be some bargains and there can be some nightmares. Do not assume there is title insurance (title insurance is unheard of in the UK). A different title issue is how developers in Spain can obtain title to property you own if they push through a new development. This action many times is associated with bribes to local officials. Check the Sunday Times from yesterday to see an article.
There are lots of opportunities but the process for investing is rather different between countries.
One last thing that jumps to mind. Check out the eviction laws to see if a landlord has the right to evict (when it is cold in the winter that can be grounds to stop an eviction in France).