Smart Buying
At Home Abroad
Vacation home prices are soaring, but you can still enjoy the comforts of a getaway retreat -- if you're up for some adventure. Discover three enticing locales where the price is right.
By Pat Mertz Esswein, Associate Editor
From Kiplinger's Personal Finance magazine, August 2005
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Italy: Far off the beaten track
For less than the price of some condos in the U.S., you can buy a vacation villa in Italy. The key is to bypass Tuscany, Umbria and the other well-traveled regions. That's what Albert Annunziata, 52, a second-generation Italian-American, and his wife, Margaret, 53, did to find an Italian vacation-home bargain. Last April the Annunziatas, who live in Westchester County, N.Y., purchased a two-bedroom townhouse for less than $120,000 near the city of Viterbo, in the region of Lazio, known for its Etruscan history. The location is about an hour and a half from Rome, Florence and Assisi. Plus, the Annunziatas are 40 minutes from the Mediterranean and right next door to Lake Bolsena, the largest freshwater volcanic lake in Europe.
On his trips to Italy, Albert has become friendly with his father's brothers and his many cousins. Italy offers scenery, history, art and architecture at every turn, but it's the way of life that has captured the Annunziatas' hearts. "My family over there sits for hours at the dining table with their wine, pasta, fresh fruit, cheese and grappa, and they talk about politics, music, the fact that the butcher's wife is flirting with the milkman," says Albert.
He initially browsed "tons" of Italian-realty Web sites but eventually reined in the search to more-affordable areas. He and Margaret hope to get some rental income from their home, but it will be a bonus, not a necessity. The Annunziatas' real estate agent, Carol Milligan, who is based in Florence, says that Americans expect prices to be cheaper than they are. The farther south from Tuscany and Umbria you look, the less expensive property will be -- but you'll also collect less rental income.
Another misperception among Americans, says Milligan, is that they can save money by restoring a home themselves. "You won't save money by doing it yourself because you can't do it yourself," she says. "Some of these houses are several centuries old, maybe even a thousand years old, and they're made of solid stone. We're talking about major construction, not just a bit of carpentry and paint."
Buying basics. Albert describes negotiating price and terms as a "bit of a fandango." Milligan says that an "incredible bureaucracy" slows down the purchase process; closing can be anywhere from a month to several months, depending on whether you stay in the country (or hire your agent to expedite things) and if you need financing (see "How Sales Work in Italy," at www.milligansales.com).
The seller will expect about 10% down, which is nonrefundable. Period. Before you put any money down, you should have a home inspected by a geometra (surveyor) or an architetto (architect) to determine its condition and the cost of renovation. You can finance up to about 70% of the purchase price through an Italian lender. With the assistance of Milligan, the Annunziatas found a 15-year adjustable-rate mortgage with an initial interest rate of about 3%. Anytime you seek foreign financing, ask your real estate agent what personal documentation lenders will require and whether you can be preapproved before you arrive, says Milligan.
In Italy, there are two prices for a home: the actual cost and the declared price, which is officially registered and is usually equivalent to about 50% to 60% of the actual cost. Closing costs will amount to about 10% to 15% of the declared price, and you'll pay property taxes on the declared price as well; the Annunziatas will pay about $1,200 annually. They will also pay about $300 a year for homeowners insurance, purchased through their lender. Note, however, that homeowners insurance is almost nonexistent in Italy, and you can't get title insurance, says Milligan.
Italy will charge you a Value Added Tax -- about 20% of the declared value -- on anything you bring in, so it's probably cheaper to buy your home furnishings there.
Getting there. The Annunziatas try to fly directly from New York City to Rome, about an eight-hour trip. Once there, you can rent a car, as the Annunziatas do, for a weekly rate of about $440 to $490.
