You know that fantasy a lot of us have?
You hop on a plane, land somewhere warm, walk past a café with $2 cappuccinos, and think: “I could buy an apartment here for less than my car back home.”
Fast-forward a few months and suddenly you’re not just daydreaming about it—you’re wire-transferring money to a country where you barely understand the legal system… in a language you’re still learning on Duolingo.
Overseas real estate can be a fantastic move:
Strong rental yields
Diversification outside your home market
A backup residency or even a path to citizenship
And a place you actually enjoy spending time
But here’s the truth nobody on Instagram wants to tell you:
Most of the pain in overseas property investing doesn’t come from “bad markets.”
It comes from avoidable mistakes.
Not just “I overpaid a little” mistakes.
I’m talking:
Contracts you can’t enforce
Tax problems with two different governments
A property that looks great on Airbnb photos but bleeds money in real life
We’re going to walk through the 10 biggest mistakes I see people make when buying property abroad—and how to avoid every single one of them.
If you’re thinking about buying a condo in Medellín, a villa in Bali, a farmhouse in Tuscany, or a beach place in Mexico, this is your pre-flight safety briefing.
Mistake #1: Ignoring Local Ownership Laws
In your home country, you’re probably used to a simple equation:
Money + contract = I own this thing.
Overseas, that’s… not always how it works.
Many countries restrict foreign ownership, especially when it comes to land or strategic coastal areas. A few examples you’ll commonly hear about:
Thailand – Foreigners usually can’t own land directly. You can own condos, but only up to 49% of the units in a building can be foreign-owned.
Mexico (coastal and border “restricted zones”) – As a foreigner, you don’t hold the title directly; you usually use a bank trust (fideicomiso) or a corporate structure.
Philippines, Indonesia, parts of Eastern Europe – Different shapes of the same problem: foreign ownership restrictions, long-term lease workarounds, or “nominee” structures that can get messy.
If you don’t understand these rules before you sign anything, you risk:
Paying for a “title” that is not legally yours
Holding an interest through a structure that’s not enforceable
Losing deposits or being unable to resell later
How to do it right:
Hire a local, independent real estate attorney (not the seller’s lawyer, not the developer’s lawyer).
Ask them in writing:
Can I legally own this in my own name?
If not, what structures are common and safe in this country?
What are the risks and protections?
Don’t accept “this is how everyone does it” as a legal explanation.
Mistake #2: Underestimating Transaction Costs
The listing price is just the starting number.
In many countries, total closing costs can easily add 10–15% on top of the purchase price once you include:
Transfer taxes
Stamp duties
Notary and registry fees
Legal fees
Agency commissions (sometimes paid by buyer, sometimes by seller, sometimes split)
And in a few places… let’s say “expediting fees”
In places like Spain or Italy, that extra 10–15% is normal. If you don’t plan for it, your first-year rental yield can evaporate before you’ve even handed over the keys.
How to do it right:
Before you commit, ask your lawyer and agent to give you a written breakdown of all expected transaction costs.
Build your model assuming the full all-in number, not just the listing price.
If the deal only looks good when you pretend those costs don’t exist… it’s not a good deal.
Mistake #3: Only Looking at Peak-Season Returns
This one is very common in tourist markets.
Someone goes to:
Bali
The Greek islands
The Algarve in Portugal
Tulum
A Caribbean island
They see rental rates in December, January, and July and think, “Wow, I’ll be rich by Easter.”
The problem?
Most properties don’t rent at peak prices, 12 months a year.
In many destinations, you have:
High season – Fully booked, high nightly rates
Shoulder seasons – Some bookings, lower rates
Low season – Crickets
Investors who only model high-season numbers often end up disappointed when:
Occupancy drops
Rates must be discounted
Maintenance and fixed costs keep going
How to do it right:
Build a conservative annual model:
High-season occupancy and rates
Mid-season
Low-season
Look at mid-term rentals as a backup:
Renting to digital nomads, remote workers, or local professionals for 1–6 months at a time in off-season
Don’t buy a property if it only works financially under “perfect conditions.”
Mistake #4: Ignoring Currency Risk
Let’s say:
Your income is in USD, but
Your expenses, taxes, and mortgage are in local currency, or vice versa
A big move in the exchange rate can mean:
Your returns in home currency shrink
Your expenses effectively go up
Your “great deal” doesn’t look so great anymore
This can work in your favor too, of course—but hoping the currency moves your way is not a strategy.
How to do it right:
Think in both currencies:
“What does this look like in local currency?”
“What does this look like in my home currency?”
Where possible, set rental contracts in a strong, stable currency like USD or EUR (if local law and market demand allow it).
Use multi-currency bank accounts so you’re not forced to convert at bad rates.
If your exposure is big enough, talk to a professional about hedging options.
Mistake #5: Picking the Cheapest Property Manager
Owning an overseas property you don’t personally manage can go one of two ways:
It becomes a turnkey income generator, or
It becomes a long-distance headache with a broken WhatsApp trail and unexplained charges
Bad management shows up as:
Poor communication
Long vacancies
Guests complaining online
“Surprise” repair bills
Misreported bookings or missing income
And here’s the twist:
A lot of people choose managers based on who charges the lowest percentage—then lose far more than they “saved.”
How to do it right:
Interview multiple property managers.
Ask for references from existing owners, not just generic reviews.
Ask to see a sample monthly report:
Bookings
Expenses
Net payouts
Clarify:
How do they handle maintenance?
Do they add a markup to repairs?
Who approves expenses above a certain threshold?
Make sure they use modern systems (channel managers, accounting, transparent dashboards) not just a notebook and vibes.
Mistake #6: Ignoring Legal and Tax Integration
Overseas property is not just a financial decision; it’s a tax and legal decision in at least two countries.
You might trigger:
Local income taxes on rental income
Local capital gains taxes when you sell
Inheritance or wealth taxes in some countries
Home-country reporting obligations (especially for U.S. citizens)
If you’re American, remember:
The IRS taxes you on worldwide income.
That means:
Rental income from your property abroad is still taxable in the U.S.
You may need to report foreign bank accounts and foreign entities.
At the same time, countries like Portugal, Italy, Spain, Greece, and others may offer special tax regimes for new residents—but these usually require formal registration and planning.
How to do it right:
Before you send a deposit, talk to a cross-border tax advisor who understands both:
Your home country
The country where you’re buying
Ask specifically:
How will my rental income be taxed locally and at home?
Should I hold this in my personal name, a local company, a foreign company, or a trust?
What happens when I sell?
What happens if I pass the property to my kids?
A small amount spent on good advice up front can save you years of costly mistakes later.
Mistake #7: No Exit Strategy
A lot of people fall in love with buying.
Almost nobody falls in love with selling—until life changes and they suddenly need liquidity.
But not every market is easy to exit.
Some places have:
Very limited buyer pools
Very slow transaction times
Very high capital gains taxes
Or simply low demand for “resale” properties compared to new builds
That charming farmhouse in a remote part of France, that off-grid island house, or that jungle villa down a dirt road? Amazing lifestyle. Not always amazing resale.
How to do it right:
Investigate resale demand before buying:
Are resales common?
How long do properties sit on the market?
Are prices stable, rising, or discount-driven?
Ask your agent to show you recent comparable sales, not just listings.
Factor in capital gains taxes and fees when you model your eventual exit.
Aim for properties in locations that other expats or locals actually want to buy later.
Mistake #8: Buying for Your Personal Fantasy, Not Market Demand
Overseas property has a way of turning into a personal love story:
“This crumbling stone house has soul.”
“This cabin is so remote—no neighbors for miles!”
“This quirky apartment has so much character.”
All of that is great if the property is primarily for you.
If your goal is income, though, your renters don’t care about your fantasy. They care about:
Location
Amenities
Comfort
Safety
Convenience
In Bali, for example, tourists overwhelmingly book:
Well-located villas
With a private pool
In established areas
Not inland houses you need a scooter and a dirt track to reach.
How to do it right:
Be honest:
Is this primarily a lifestyle purchase or an investment?
If it’s an investment, ask property managers:
“What types of properties rent best?”
“What do your guests consistently request?”
Buy the product the market wants, not just what makes a great story at dinner parties.
Mistake #9: Skipping Due Diligence on Infrastructure
This one sounds incredibly unsexy… until it ruins your stay and your reviews.
Properties can look perfect in photos and still have:
Unreliable electricity (frequent blackouts)
Weak or unstable internet
Low water pressure or water cuts
Access roads that turn into mud pits during rainy season
Great for “adventure” on Instagram. Not so great when:
Guests demand partial refunds
Remote work becomes impossible
Maintenance costs skyrocket
How to do it right:
Test the internet speed on-site (multiple days, not just once).
Visit the property at different times of day.
Ask neighbors about:
Power cuts
Water issues
Road conditions in rainy season
If you’re buying in a brand-new area, be especially cautious—“planned infrastructure” doesn’t always arrive on schedule.
Mistake #10: Rushing the Purchase
This is where most horror stories start.
The pattern is almost always:
“It felt like everyone was telling me I had to move fast or I’d ‘miss the opportunity.’”
Developers, agents, and even other buyers may all be saying:
“These are selling out.”
“You have to reserve now.”
“Someone else is ready to wire the deposit.”
When your fear of missing out overrides your due diligence, you risk:
Buying without a proper inspection
Skipping a full title search
Overlooking unpaid taxes or debts attached to the property
Signing contracts you don’t fully understand
And once you’ve wired the money, your leverage disappears.
How to do it right:
Accept up front: “If moving slowly means losing the deal, I’m okay with that.”
Make your own non-negotiable checklist:
Independent legal review
Title search and encumbrance check
Technical inspection (structure, plumbing, electrical)
Clear closing cost estimate
If any of those steps are rushed, minimized, or dismissed as “not necessary,” that’s a red flag—not a time saver.
Building a Smarter Overseas Property Strategy
Overseas real estate can absolutely be:
A powerful wealth building tool
A lifestyle upgrade
A backup residency plan
A way to put part of your net worth somewhere that doesn’t rise and fall with your home country’s politics
But it only works long-term if you:
Respect local law
Run conservative numbers
Understand your tax position
Build an exit strategy
And get help from the right professionals
The best overseas investors I know are not the ones who “got lucky.”
They’re the ones who:
Took their time
Asked uncomfortable questions
Walked away from bad deals
And treated the process like a serious financial decision, not vacation shopping
If you combine local expertise, patient due diligence, and realistic expectations, you can build a portfolio that gives you both income and options—without the nightmares.