What started as a fun side project for Tommy Sikes has become an important part of his business.
With the youngest of his three children about to enter law school, Sykes began thinking about the next chapter for him and his wife, the increasingly popular possibility of spending at least part of his retirement in Europe.
“We were faced with this looming empty nest. We loved Italy and France and started thinking, ‘What’s our next step?'” he told CNBC Make It. “How can we make this more of a reality?”
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 properties he found online, Sykes, a certified financial planner, discovered a new group of potential clients who were excited about the prospect of owning property abroad but didn’t know how to get there. Do.
Today, Sikes is available via X, YouTube and via weekly newsletter. He understands the appeal of the lifestyle these homes can offer people.
“I started finding these incredible properties that were selling for $50,000, $75,000, $100,000 in smaller towns and villages. I was shocked,” he said. “Some of these are fixer-uppers, but that’s the price of a new truck in America.”
Still, Sykes is careful to warn subscribers and clients not to buy such a property on a whim — even if they think they can afford it.
“There appears to be a gap in this planning — particularly for Americans who need to plan financially ahead of time to make sure this is doable.”
Sykes says there are three steps you need to take before buying a property overseas.
1. Do a good financial inventory
Sykes works with many clients who, like him, are thinking about what retirement will look like. For them, life abroad has significant financial appeal.
“I can create a simple financial plan for someone in the United States and the same plan for one of the locations 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 potentially retire a few years earlier.”
But before you start dreaming of a Mediterranean retirement, you need to do a thorough evaluation of your financial life, says Sykes.
“You need to list your assets and your income. How much is your Social Security? Do you have a pension? Are you investing to maximize your retirement income? Those are the traditional numbers,” he said.
You would also be wise to work with a tax professional to determine what living on retirement income might be like in the country of your choice.
“Both France and Italy have signed tax treaties with the United States, so they can avoid double taxation,” Sykes said. “But in terms of how retirement accounts like 401(k)s and Roth IRAs are handled, they’re very different.”
2. Be prepared for the home buying process
Good news for those thinking of snapping up one of Sykes’ properties: 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 this is true for the country you’re considering, you’ll probably still need to do a lot of work before you even think about making an offer.
For one, you may have to be willing to set aside enough money to pay cash. In France and Italy, for example, Sykes said 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 need to adjust their expectations. A lot of times, you have to be able to call (the seller or agent). I’ve had people tell me they’ve had to email the agent five times in three weeks and haven’t heard anything yet. .
That’s why it pays to work with planners who specialize in these areas and work with people on the ground, Sykes says.
Otherwise, he said, 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 house on the French Riviera, life there may be very different than what you currently imagine.
“People fall in love with this property and don’t realize it’s in a town with one restaurant and no bars, and you have to have a car because there’s no public transportation, and you have to drive an hour to get to a decent restaurant. “The hospital,” Sykes said. “Always, always, always, the place is more important than the property itself.”
That’s why, no matter where you’re considering buying a property, it’s wise to rent it for a while first.
“I would say spend at least two weeks to a month planning a test drive — a mini-retirement,” Sykes said. “Go to the grocery store, go to the market, go to the city hall and see if you can meet some locals there and see if there’s an expat community.”
If you do 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 flying back and forth 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 move, Sykes warns. “If you don’t like it and it doesn’t have the amenities you need, it’s not going to work long-term.”
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