This Is the Perfect Place for Your Second Home Abroad—And It Might Not Be Where You Think

What Are the Best Places Abroad to Buy a Second Home?

The best place for your second home should be your ideal destination for a weekend getaway, an annual vacation, or an eventual retirement community. It probably should also have rental potential, either for additional income or just because you’d rather not let a home sit empty most of the time. To narrow down your search, take a look at the places that others consider great locations for a home overseas, and how much funding you may need to afford your preferred location.

Key Takeaways

• The ideal location for your second home should be somewhere you can see yourself living for a weekend getaway, an annual vacation, or as part of an eventual retirement community.
• The hottest real estate market won’t always be good fits for a second home—sometimes looking for places in recovery from crises or market downturns is a smarter move.
• Different markets might be the best places to buy a second home, depending on your needs.

Understanding the Best Places Abroad to Buy a Second Home

The hottest real estate market may not always be best for a second home. If a location isn’t an ideal destination for a weekend getaway, an annual vacation, or an eventual retirement community for you—all important factors when deciding where to buy that second home internationally—then it doesn’t matter how popular it might be with other shoppers.

Additionally, while some countries might be welcoming to foreign real estate investment, other countries make owning property as a non-citizen harder. Thailand, Mexico, Greece, and Vietnam are especially difficult for foreign buyers.

The Top Three

According to a survey by InterNations, the best place in the world to be an expat is Panama, followed by Mexico and Indonesia. Panama is noted for its strong sense of safety, and Mexico was rated high for friendliness. Expats give Indonesia high marks for job satisfaction and personal career opportunities, and all three countries are noted for their ease of settling in, making them ideal locations for retirement.

The InterNations survey also asked expats, both year-round and part-time, about opportunities for working abroad, a question that might not appear to be immediately relevant to a second-home buyer.

But it’s worth considering because a country that makes it easy for expats to work is more likely to have a large and diverse expat community. Additionally, if you decide that you like your second home better than your first one, you may want to live and work there full-time. Job opportunities push some destinations typically beloved by Americans, such as Italy and Greece, toward the bottom of the list of 53 nations.

Best Investments

Live and Invest Overseas lists five places where an expat can find it all, meaning a beautiful place in the sun with rental income possibilities and investment potential:

• Spain due to its low cost of living, in addition to its exploration opportunities.
• Portugal offers tax incentives for foreigners and several paths to residency.
• Mexico offers quality, affordable health care with familiarity and proximity to the United States.
• Greece is a safe, little country with the highest number of physicians per capita in the EU.
• Panama, as this country taxes jurisdictionally, so retirees won’t pay local taxes if their income comes from outside of it.

Best Bargains

It’s still possible to snag a bargain overseas. Some countries have struggled with housing bubbles, debt crises, and recessions that have kept prices depressed.

Santa Marta, Colombia, offers one of the most affordable real estate to expats, according to Live and Invest Overseas. Other affordable hotspots include Chitré, Panama; Phuket, Thailand; and Dumaguete, the Philippines.

The Luxury Market 

Buying a home in an exceptionally competitive market may require looking at up-and-coming areas and avoiding traditionally high-priced markets. Coastal resort towns in Croatia and Montenegro are among Eastern Europe’s hot spots for second homes, and they’re still far less expensive than their counterparts farther west.

The same flexible approach to finding a luxury-home location works for the not-quite-super-rich in other prime second-home markets. Changes in world politics can also have had an impact on the luxury second-home market, opening up new areas to explore.

What Is the Difference Between a Second Home and a Vacation Home?

A vacation home is a type of second home used exclusively for leisure and not as a primary residence. In addition to vacations, second homes can also be used for work or as an additional source of income, such as by renting out a room. Note that a second home is considered a rental property by the Internal Revenue Service (IRS) if the owner resides in it for a number of days that’s more than the greater of 14 or 10% of the total days it’s rented.

Which Country Is the Best for a Second Home?

The best country for a second home will depend on what you intend to use the home for and what factors matter most to you when considering where you want to reside. Panama, Mexico, and Indonesia are excellent locations for vacations, working abroad, and retiring outside of the U.S. If you’re looking to use a second home as an investment opportunity, then Spain, Portugal, Mexico, Greece, and Panama are all worth considering for retirees.

Is a Second Home Considered a Good Investment?

A second home can be a good investment, but it you’ll need to carefully consider what you intend to use the new home for and where you want it to be. For example, if you wish to get a second home to supplement your income in retirement by renting out a room, then you’ll need to earn enough rent money to offset the cost of maintenance, repair, and mortgage payments and still turn a profit.

The Bottom Line

There isn’t really a “best” place to get a second home abroad, as it’s an entirely subjective notion. Different parts of the world are better suited to different home purposes and homeowner preferences. To find the best location for you, first ask yourself what you intend to use the home for, where you’d enjoy residing the most, and how much you’re able to spend.