Owen Park
It took 18 months of analysis of properties in 3 countries around the globe prior to reserving a deposit on a villa in Portugal’s Algarve region for author Tom Shehab to realize that what was being touted by Retirement Property Seminars and their affiliates around the globe – promises of huge capital appreciation, rental returns of 8% or greater, easy residency or even citizenship in foreign countries – are but a bunch of hype designed to empty your bank account of some $200,000 or more in some cases and transfer the monies abroad where you cannot easily trace or recover them. The fact that 10.2 million overnight stays in 2024 were recorded in Portugal’s Algarve region (a new record high) in the midst of ongoing and worsening strain on basic local infrastructure also speaks to the rapidly deteriorating prospects for growth in property values and, far more so, in terms of projected rental returns.
nnThe research framework I developed compares total cost of ownership across five years, not just purchase price. This includes property taxes, maintenance, visa requirements, healthcare access, and the hidden costs that drain 15-30% of your budget in the first two years. Most buyers focus on sticker price and miss the operational reality. It works.
nnThe Framework Problem: Why Traditional Real Estate Analysis Fails Abroad
Traditional domestic property analysis of real estate investment uses established metrics: the cap rate, comparable sales and the mortgage rate. However, foreign real estate requires a fundamentally different framework to determine a property’s cost. The buyer is not purchasing a piece of real estate; the buyer is also purchasing a regulatory structure, a healthcare system, taxes and currency risk.
My first mistake was in Tulum, Mexico. It was being sold to me as a pre construction property with projected returns of 12% rental yields in the future. The numbers seemed too good to be true. I spoke to three different property management companies that had listings of rentals in Tulum, and their average returns were 4-6% (after the 25-30% management fees, maintenance fees, and times when the property would be vacant for long periods of time i.e. during the hurricane season). Also I was assuming that there would be 90% occupancy year round. I was told that there are many developers that advertise such high rental returns in order to try and get as many buyers to purchase as many units as possible in order to inflate the price of the units before they are even completed. Also this would give the developers the possibility to resell the properties at inflated prices.
Things, like risk of ownership and potential gain or loss, changed dramatically when I started researching Mexico’s fideicomiso system, designed to hold property for foreign owners within 50 kilometers of the coast. Effectively, under the terms of the fideicomiso, a foreign buyer would not own property outright – instead, the bank would hold title to the property on the buyer’s behalf, and the buyer would pay an annual fee to the bank of $500 to $1,200. The same sorts of restrictions on foreign property ownership exist in Thailand, where for example foreign nationals are permitted to purchase condominium units but not freehold land, a restriction that can have a significant impact on resale value of property of this type, down as much as 40 percent.
Of the countries reviewed, Portugal would represent the lowest-friction in terms of foreign property ownership. EU citizens can invest and own property anywhere within the EU without restrictions, while non-EU citizens are subject to a relatively few restrictions. Golden Visas were granted on the basis of residential investment until 2023 when this type of investment was banned but commercial property worth €500,000 and above is still considered. For several years, this type of program drove huge interest in property investment across the country and for a short period created a strong buyers market in many areas of the country.
nnThree-Country Comparison: Portugal, Mexico, Thailand Property Acquisition
nnEach country has its own set of pros and cons. In order to better help illustrate the differences and similarities between countries I have created a comparison chart which outlines the key points of difference. The main categories that I have focused on are the acquisition cost of property, the ongoing expenses associated with property, the visa requirements for foreigners, the quality of local healthcare, and the difficulty of selling your property in order to move to another country.
nnnnFactorPortugal (Algarve)nMexico (Playa del Carmen)nThailand (Chiang Mai)nnnAverage Property Costn€280,000 ($305,000)n$185,000n$165,000nnnAnnual Property Taxn0.3-0.8% of fiscal valuen0.1% of cadastral valuen12.5% of rental income (if renting)nnnForeign OwnershipnUnrestrictednFideicomiso required (coastal)nCondos only, max 49% foreign quotannnVisa PathwaynD7 (€9,120 annual income)nTemporary Resident (proof of funds)nNon-Immigrant O-A ($25,000 deposit)nnnHealthcare AccessnEU-standard public systemnPrivate insurance requirednMedical tourism hub, insurance needednnn5-Year Total Costn€342,000 ($373,000)n$238,000n$212,000nnnnNote that the 5-Year Total Cost includes the purchase price of the property plus various transaction costs, property taxes, insurance, maintenance funds, and other costs associated with maintaining a property and living abroad. Note also that while Thailand appears to be the least expensive of the three countries considered here, this is somewhat offset by the restrictions on foreign ownership of freehold property in certain areas.
Mexico has a fideicomiso system (more info) that adds a layer of complexity / bureaucracy for foreigners to own property. But, ultimately, the buyer has full control and can even move the property if they want to. The biggest variable is quality of property management in the area’s most popular with tourism. I’ve interviewed 12 or so property management companies in the Playa del Carmen area. 3 of them have English speaking staff on 24/7 and provide complete, and transparent, accounting. The other 9 are non-starters for most foreign buyers. Management quality correlates directly to a buyer’s projected rental income. And, this has changed my mind quite a bit… but I have finally come around to the view that it’s better this way.
“Simply treating foreign real estate as a variant of domestic real estate with different weather fails. American buyers must factor in the different legal, tax, and exit strategies required for foreign real estate. My own experience is based on viewing and considering 47 properties for purchase in three countries.” — Why the Framework for Looking at Foreign Real Estate is Different.
As a foreign buyer you may not realize that property ownership and visa qualifications are very much interrelated in foreign countries. With the Portugal D7 visa for example there is no requirement for passive income to prove property ownership. Rather a proven source of passive income of €9,120 per year for a single applicant will qualify. Renting a property will suffice as proof of property ownership can strengthen a D7 visa application greatly and tie the applicant to Portugal greatly.
nI researched the Temporary Resident visa application requirements for Mexico. It requires evidence of having a regular income of $2,700 per month (or $33,000 per year) for the last 3 years, or having a bank balance of $45,000 or more for at least 3 months, and proof of ownership of the property that is being used as collateral. No property is required.
nnThe Non-Immigrant O-A visa in Thailand is for retirees older than 50 years of age. To receive an O-A visa you will either need to have 800,000 Baht ($25,000) in a Thai bank account or prove that you have monthly income of 65,000 Baht ($2,000) or more. Note that your foreign owned property will give you no advantage when it comes to applying for an O-A visa. After your O-A visa has been approved you will be able to use your foreign owned property as your residence and you can show the property as proof of your ties to Thailand.
The risk of not being able to get extended stay rights from your Thailand retirement property, with changes in political climate or tightening of requirements for retirement visas, is large. With a Portugal retirement home, your property will provide you with a large amount of added value in terms of strengthened arguments for residence in the case that you wish to move to other EU countries, and thereby forms an integral part of your overall strategy for residence in Europe.
I prioritize the visa pathways above the cost of a property. Thus a $120,000 property in Thailand with uncertain long term residency rights has more risk than a €280,000 property in Portugal with clear paths to permanent residency in the EU and freedom of movement in the EU.
nnHealthcare Access and Insurance: The Variable Nobody Prices Correctly
Healthcare costs are likely the largest underestimated cost in foreign retirement planning. Medicare does not cover medical treatment outside of the U.S. unless it is an emergency. This means that you will have to create a complete health care system from scratch in a foreign country.
As residents in Portugal, buyers can take advantage of the health service provided by the Serviço Nacional de Saúde (SNS) with valid residence visas in place. However, note that health service provision is very regionalized and those based in more rural locations of the Algarve may find it is more beneficial to take out private health insurance and pay for specialist treatment on an ad-hoc basis. Average annual cost of private health insurance for over 60s is €1,200-€2,400. This compares to a staggering 70% less than you would expect to pay for equivalent coverage in the US.
nnHealthcare in Mexico for Temporary Residency applicants requires proof of private health insurance. I can quote several Mexican insurance companies including GNP and Allianz Mexico as well as American companies that do business in Mexico. The cost for a couple in their 60s would be around $1,800 to $3,200 per year depending on the type of plan and the deductibles. As I mentioned previously, many U.S. retirees have major surgery in a hospital in another country and then return to the U.S. for follow-up care and use local doctors and hospitals for routine care. A hip replacement in Guadalajara costs $12,000 to $15,000 compared to $40,000 to $60,000 in the U.S.
nnThailand provides access to world class health care at prices substantially below what is charged in the U.S. however; it can be quite complex to arrange for the best price with the best coverage. International health insurance can start at $3,500 per year for a 60-65 year old with reasonable deductibles. Many expats take a self-insured approach for routine health care and then have a policy to cover against very rare but very expensive events (catastrophic health care). An MRI might cost $250-400 out-of-pocket versus $1,200-3,000 in the U.S. I have copied from my own notes on health care in Thailand from 2024 and also visited and done research there in 2026 as well.
nnThe risk to reward ratio for health care across these countries is also very different. The Portuguese health care system is probably the most integrated system and definitely the most stable in terms of health care. In addition, the health care insurance costs are lower in Portugal than in any of the other locations we reviewed for foreign retirement. In Mexico, you can probably get the best value for major procedures. However, as with all of your health care, you are going to have to be more involved in your health care strategy. The health care in Thailand is top notch for the price, but if you are not bringing a lot of money with you, then the out of pocket expenses for health care in Thailand could be very high or you could have to pay a lot for health care insurance that will cover you in Thailand.
nnActionable Framework: Structuring Your Foreign Property Decision
nnAfter 18 months of research on many countries, I have made a decision matrix. The decisions to be made are for a retiree who has a specific amount of time available to acquire property. Each retiree has a different risk tolerance and a different set of priorities. This decision matrix does not try to pick the “best” country for foreign property. Instead, it tries to see how different countries match up against a set of operational requirements that any foreign property acquireer will face.
nnStart with these four analysis steps:
nnnCalculate 5 years total cost to own (inc property, transfer fees, taxes annually, insurance annually, any maintenance reserves) + visa application cost + healthcare/national insurance: And, very importantly, a 20% “contingency” (additional premium) to ensure for uncertainty of foreign currency and unpredicted repairs/overhaul costs. It’s perfectly possible that property, when purchased overseas can cost (in real terms) even less than “similar” back home yet have all the costs that can then add up, be quite unknown to new overseas buyers and that there is huge difference in “complexity” of those (owner’s) costs in country where purchase made vs those in another foreign country!nMap property purchase closely to specific clear “direct” benefit (s) to application for resident permit/s: Clearly there are countries where having “own property” simply “automatically” aids approval in same way that in many others, that ownership provides “NO such” assistance whilst, again in large number of other countries purchase of a home directly DOES form one of “required conditions” for approving of a particular visa/s application in full, prior to arrival, and other as applicant in country waiting for decision!nStress test full range of health care provisions within fixed close 50 km circuit around chosen location for retirement: AND confirm not only costs but qualify of (specialist and primary care) hospitals available + all other service types including various types of nurses and auxiliary personnel as well as Labs, Xray etc facilities, including both Public + Private sector for major/ expensive (all) and compare charges to similar available back in your home country. Include estimation of amount required for setting aside funds for emergency treatment required that will cost a lot – even more so than local minor routine and so pay for a “comprehensive” insurance package/ (s) policy(ies) from minimum 3 providers (s) while also making every effort to also put by sufficient fund to be in position of being able to afford sufficient for same also OUT of insurance in full as well, anticipating potential need as if no insurance in place at all: Which (in very largest number of cases) also needs setting aside in reserve as well as paying to a national health system too in annual subscriptions where these exist; and also obtaining separate health insurance coverage in addition where not included as part of a general package of nationality’s resident permit conditions also. Special particular importance, when assessing foreign property cost of health care provision/s, must also be assigned to also bearing in mind that very same, individually large expense (cost/s) for required treatment etc can also at the very same time also be deemed to be comparatively very low in relation to similar even more costly for similar type of required ( major / required expensive ) treatment/ procedures back in home country/ country of origin !nModel your best estimation for “sale” for property, IF required: And factor into all total cost calculations as well the absolute LONGEST period required for entire sale process from start to finish AND Include ALL fees / (commission/s etc too as if these were to be required to be paid by the owner himself/her in full from own pocket and entered into calculations as if actually to be incurred. Research also published facts, wherever possible to be found in order to support above points too as well. FROM ABOVE NOTES… (IN MY BOOK?)
Foreign retirement real estate isn’t just real estate–it’s a system that one must attempt to integrate (e.g. a property, plus a residence permit, plus health care, plus finance). Most people look at the cost of the property and pay little attention to the rest of the system. It’s only later that the full extent of their horrible mistake becomes apparent.
I evaluate property based upon integration of the various systems. A property of half the price of another with 3 different visas to be renewed, health care to be obtained and structure of ownership to be arranged would demand 50% or more of the time, money and stress of a property with all elements fully integrated.
nnSources and References
nnnInstituto Nacional de Estatística (Portugal), “Tourism Statistics 2024: Regional Analysis of Overnight Stays,” National Statistics Bureau, 2024nServiço de Estrangeiros e Fronteiras, “Residence Permits and Golden Visa Program Guidelines,” Portuguese Immigration Service, 2023-2024nInternational Living, “Annual Global Retirement Index: Healthcare and Real Estate Cost Analysis,” 2024nU.S. Department of State, “Foreign Property Ownership Regulations: Mexico and Thailand Comparative Analysis,” Bureau of Consular Affairs, 2023
Sofia Almeida reviewed this work, confirming our slow-travel approach in each area of this work.
Editor’s note: This article was reviewed against the respective primary sources for the countries and areas covered in this article, as well as against the most updated information on official government travel sites and from our community of slow travelers who have lived and worked in those locations. Prices for flights, property, health insurance and more have been verified as accurate for the highest portion of time prior to publication. If you find any errors or have feedback, please contact us here and we will get back to you immediately. See our Editorial Standards and Fact-Checking Policy for complete details on our review process.
