What started as a fun side project for Tommy Sykes has become an important part of his business.
As the youngest of his three children heads off to law school, Sykes begins to think about the next chapter for him and his wife – the growing popularity of spending at least part of your retirement in Europe.
“We were faced with this humongous empty nest. We loved Italy and France and started thinking, ‘What’s our next step?'” he told CNBC Make It. “How can we make it more real?”
Sykes began researching properties across the Atlantic, focusing on affordable areas away from major cities where he and his wife could pursue their outdoor hobbies, such as hiking and kayaking.
When Sykes started sharing property online, Sykes, a certified financial planner, discovered a new group of potential clients who were excited about the prospect of owning property overseas but didn’t know how to go about it.
Today, Sikes X, weekly newsletter available through YouTube and. He understands the lifestyle appeal these homes can offer people.
“I started finding these incredible properties that were selling for $50,000, $75,000, $100,000 in small towns and villages. I was shocked,” he said. “Some of that is fixer-upper, but that’s the price of a new truck in America.”
Still, Sykes is careful to warn customers and clients not to buy such properties – even if they think they can afford them.
“There appears to be a gap in this plan — especially for Americans who need to plan financially ahead of time to make sure it’s possible.”
Sykes says there are three steps you should take before buying a property overseas.
1. Do a good financial inventory
Sykes works with many clients who, like her, are wondering what retirement will look like. For them, living abroad has significant financial appeal.
“I can create a simple financial plan for someone in the United States and create the same plan for a location in France and the cost of living is literally 50 percent less,” he said. “This means that for the same plan assets and income, you can upgrade your lifestyle … or retire years earlier.”
But before you start dreaming of a Mediterranean retirement, you need to do a thorough assessment of your financial life, says Sykes.
“You need to list your assets and income. How much is your social security? Do you have a pension? Are you investing to maximize your retirement income? Those are traditional numbers,” he said.
You may also be wise to work with a tax professional to determine what living on retirement income might look like in the country of your choice.
“Both France and Italy have tax treaties with the United States and therefore avoid double taxation,” says Sykes. “But retirement accounts like 401(k)s and Roth IRAs are very different in terms of how they’re handled.”
2. Be prepared for the home buying process
Good news for those thinking of snapping up a Sykes property: There’s nothing stopping you from doing so.
“There are zero restrictions on Americans buying property in Italy or France,” Sykes said. “You don’t have to be a citizen. You don’t even have to be a resident. You can actually buy things remotely.”
But even if that’s true for the country you’re considering, you probably still have a lot of work to do before you even think about making an offer.
For one, you may need to be willing to set aside enough money to pay cash. In France and Italy, for example, Sykes says it’s rare for U.S. citizens to get a mortgage unless they live in the country and have a relationship with a local lender.
Even if you’re willing to make a cash offer, don’t expect a seamless process.
“The biggest problem I see is people trying to do it themselves. They don’t speak the language and all the documents are going to be in Italian or French,” Sykes said. “People have to adjust their expectations. Sometimes, you need to be able to call (the seller or agent). I’ve had people tell me they’ve emailed the agent five times in three weeks and still haven’t heard anything.” No reply found. “
That’s why it pays to work with planners who specialize in the field and work with people on the ground, Sykes says.
Otherwise, he says, just start taking language classes. “It’s not like spending 10 minutes a day on an app on your phone. Start listening to music and news reports in French or Italian.”
3. Take a “test drive”.
Even if you think you’ve found your dream home on the French Riviera, your life there may be very different from what you currently envision.
“People fall in love with this property and don’t realize it’s a restaurant in a town and there’s no pub and you have to have a car because there’s no public transport and you have to drive an hour to get to a good hospital,” Sykes said. “Always, always, always, place is more important than property.”
For that reason, wherever you are considering buying a property, it is wise to rent it for a while first.
“I would say take at least two weeks to a month and plan a test drive – a mini retreat,” Sykes said. “Go to the grocery store, go to the market, go to city hall and see if you can meet some local people there and see if there’s an expat community.”
If you find a place you want to live, Sykes recommends hiring a local to be your agent so you don’t have to spend thousands of dollars to meet with a real estate agent. That person can serve as your eyes and ears.
But make sure you absolutely love where you want to go, Sykes warns. “If you don’t like it and it doesn’t have the features you need, it won’t work long term.”
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