In the age of globalization and mass tourism, traveling abroad is nothing special anymore, and even the coronavirus won’t change this in the long-term. Before the virus struck, most of us vacationed at least once a year in a foreign country. Some spent a lot of time overseas on business trips or doing project work. And the number of people, who took off several months or even a year to travel the globe, was growing rapidly. But this was traveling, not international living. To spend many years of your life outside of your home country requires very specific preparations. You need to obtain the right, to legally enter a country for an extended period and perhaps work there. You should think about medical insurance. You have to make preparations, to ensure easy access to local currency with limited exposure to capital controls, exchange rate fluctuations and excessive credit card fees. And you need to find a place to live.

Immigration requirements

Most Westerners have a passport for foreign travel. But a passport alone does not necessarily give you the right to enter a foreign country. In many cases you have to apply for a visa first, which is not always easy, especially if many documents need to be submitted. Possession of a visa is also not a guarantee, that you will be allowed to enter. When the coronavirus emerged into a global crisis, many countries revoked all visas and allowed only their own citizens and permanent residents to return. Some countries shut their borders completely. As the health crisis is now developing into a severe economic crisis, we can’t expect all current restrictions to be lifted soon. Easy travel, that most Westerners have grown accustomed to, might not come back in the foreseeable future.

There are many websites that promote the acquisition of a second passport. Some smaller countries in the Caribbean or other exotic parts of the world allow you to purchase a passport for a little “donation” of USD 200,000 or a lot more. Others require you to invest a few million dollars in domestic businesses or real estate. Obtaining a second passport is therefore not a very realistic option for the average middle-class family, except if it can claim ancestry in a country, that offers “citizenship by descent”.

A second passport only gives you the right to live in the country issuing the passport, or in associated countries as is the case within the EU. However, if you are European with a (purchased) Caribbean passport and want to live in Asia, the acquired passport hardly provides additional benefits. However, in case your home country has very few visa-free travel agreements with other nations, a second passport can be useful. And it is essential to those, who come from a boycotted country or – at least for the moment – from one that is a corona hotspot.

For many people obtaining residency is the best option to stay in another country for extended periods. However, most countries require a larger investment and/or a longer stay in the country in exchange for a residence permit. Only those who are married to a local or fulfill some other special requirements, can hope to obtain residency without too much cost and effort.

Some people manage to get a long-stay visa. If you are young and have the right education and professional background, you can find quite a few countries, that are willing to issue a visa and work permit with such a duration. If you are 50 years of age and above, some countries might grant you a retirement visa, provided that you have sufficient funds to finance your stay and possibly can provide proof of an adequate health insurance.

For everyone else a tourist visa valid for several months is the best they can hope for. It allows for a longer stay in the country of your choice, but when it expires, you have to leave. This is fine, if you want to spend most of the year in your home country. But for many would-be expats this is not a satisfactory solution.

Quite a few people, who can’t obtain a long-term visa, try to circumvent the rules by entering the country with a tourist visa. After their tourist visa expires, they travel to another country to get a new tourist visa, and then return immediately. This is called a visa run. However, recently some countries have denied reentry and those affected could therefore not recover their belongings and forfeited their rental deposit. Others decide to just stay after their original visa expires. Almost all of them are eventually sent back to their home country and some even end up in jail for overstaying. Both approaches are therefore not recommended.

Many digital nomads have found another way. They move every 3-6 months to another country. This is great when you are young. But it is more expensive and the initial excitement wears off after a few years. Most finally settle down somewhere, especially if they want to get married and have kids.

In summary obtaining the legal right to stay and work in another country can be a big challenge. Proper preparation is required to avoid a lot of trouble in the future including potentially heavy fines and being sent home.

Health insurance

Another challenge for long-term expats is to obtain suitable and affordable medical coverage. Most public and private health insurances either don’t cover foreign stays at all, or only for a short period. If you travel for several months, you can obtain relatively cheap travel insurance, as long as you are not too old. But if you plan on living in a foreign country for a year or longer, you need a different solution.

Quite a few expats have been living abroad for many years without any expat health insurance. Some fly back to their home country, to use the inexpensive or free public health service there for regular checks and larger operations. This might be fine as long as you are young and don’t have a severe accident. But once you get older, the likelihood of falling sick increases, and you might not always have the choice to fly back to your home country.

Longer hospital treatments even in developing countries can be quite expensive, except if you are willing to stay in a room with another 20 patients and be treated by a doctor who doesn’t speak a word of English. There are regular news reports about Westerners, who got stuck in a tropical paradise unable to pay their bills. Some even ended up in jail. Others died or suffered long-term disabilities, because they didn’t have enough cash and their credit card limit was below the expected cost of the medical treatment.

Getting health coverage from a local company or a global insurance is affordable as long as you are young. But exemptions might apply, that can prove very costly. Once you get older, insurance premiums skyrocket. Most people above 60 face problems to pay for expat health insurance and above 85, it is virtually unaffordable except for multi-millionaires. This will become a bigger issue in the future, as more and more countries start to require health insurance in exchange for a long-term visa.

Deciding on your medical care strategy depends on your age, your health history, your family situation, your home country, the country or countries you plan to live in, your assets, your language skills, your risk aversion and many other factors. From our own experience we can assure you, that the average insurance consultant does hardly consider any of them. They just want a quick deal to get their commission. Truly independent advice is important, as it can save you tens or even hundreds of thousands of dollars over your lifetime.

Access to local currency

Ensuring easy access to your money can also prove to be a major challenge. To use the debit or credit card from your home country is a very expensive option, even for short-term travelling. In case you stay for a year or longer, foreign exchange commissions on normal transactions can end up in the thousands of dollars, and cash withdrawals are prohibitively expensive.

You also have to be aware of exchange rate fluctuations. Many retirees, who have moved to an allegedly low-cost country in the developing world, but kept their savings in their home country and also relied on a pension from there, have experienced this first-hand. Their hopes for a retirement in style got shuttered, when their home currency depreciated by 15%, 30% or more over the course of several years. Having access to a larger funds in local currency can save you a lot of money.

In case you already have one or two countries in mind, where you would like to live in the future, it is wise to open a local bank account. This used to be quite easy in many countries, but conditions have been tightened in recent years. Many banks now require a work permit or at least a long-stay visa to accept you as a customer. If you can’t provide them, you have to personally visit many bank branches and might still end up without a local bank account.

Finding a place to live

In most countries renting real estate is not a big deal, as there are many specialized agents that cater for the specific needs of the expat community. You will end up paying more than the locals and might learn about a lot of issues related to your condo or house later on. But contracts are in English and most expats don’t face major issues as long as they pay their monthly rent. If the rented property turns out not to be as nice as expected, just accept the loss of your deposit payment and move to a new place.

Purchasing real estate is a totally different matter. Property rights abroad can be very different. In quite a few countries foreigners don’t have the right to purchase land. Agents will offer you long-term leases, which are renewable upon expiry. However, this is often not in line with local law or the contracts drawn up don’t withstand closer scrutiny. And even if you can legally buy land and buildings, the seller might lack the proper legal deeds, and consequently you run the risk of not acquiring undisputable legal ownership. Other issues that often pop up are poor building quality, construction of new roads or other buildings in the vicinity, and inflated property prices.

Many people have lost a lot of money purchasing real estate abroad, especially if they bought it on impulse while vacationing. Carrying out proper due diligence and obtaining advice from an independent source other than the agent, who is usually paid by the seller, is essential. It is best to rent first and get acquainted with the property market in general, and the targeted location in particular, before investing a fortune to make other people rich.

Good preparation is key

Depending on your personal situation, there are many other issues that might come up when moving to another country, such as finding work and choosing a good school for your children. Both topics deserve a blog of their own.

Moving to another country almost never goes smoothly. But with the right preparation, risks can be reduced and major pitfalls avoided. If you plan to move to South East Asia, we can help you to enjoy an easy start. Please contact us at info@adexoconsulting.com.

Disclaimer: The above is for informational purposes only. It is not an offer or advice to buy or sell any products or services. Adexo Ltd does not provide specific investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this blog.