When we were in the process of trying to decide how to become Expatriates, we read about anything we could get our hands on to look over the shoulders of people who had already done it to see what we could learn. Since we started this Blog, we have been honored to have been contacted by some people who are looking at this lifestyle and are trying to determine what might fit for them. What follows is in response to some of the questions we have been asked on very basic logistical issues. Some have been interested to know not only what we did but what were the driving factors behind the decisions. These were our reasons that seemed to work for us. They are not our prescription for everyone. Our hope is this will stimulate thinking for others to determine what might be best for them. Happy Planning!
An acknowledgement to Italy Magazine for their article, Tips on How To Be A Happy Expat in the 1 August 2014 edition of their on-line resource. For anyone not already familiar with that site, we recommend a visit. What follows are some of our thoughts on a few basic logistical issues, the choice of setting in which to live, whether to rent or purchase a home and whether to buy a car? These reflections come from the current stage of our Expatriate experience. They reflect our priorities that are bound to be different for other people. As much as anything, we hope these ideas provide a framework for those considering the Expatriate life to decide what is best for them and the unique lifestyle they are seeking.
As a preamble, there have been some general goals behind our decision making process. High on the list has been a desire to keep things as simple, free of stress and as cost effective as possible. Another guiding principle for us was to keep at a minimum the necessity of interacting with the Italian bureaucracy. If that isn’t already something you think about from past experience, once here, it probably will be.
Town or Country? – Location, Location, Location -Where do you want to call home? Our preference remains to live in a community of sufficient size to provide a stimulating cultural life, a variety of services such as dining choices, plus ready access to adequate health care and retains a sense of positive, common identity and life year-round. Having a wider range of social possibilities and sufficient access to transportation options also doesn’t hurt.
We passed pretty quickly through the pre-immigration, romantic allure phase of restoring an old farmhouse in the country. Thank you Francis Mayes for heightening our interest in Italy, but no thanks on old property restoration. In the end, we had to confess to being ‘city folk’ at heart as long as the city was not too big where anonymity prevailed. The determination we made to locate in a town of adequate but not overwhelming size conditioned much of the following:
Rent or Buy? We suspect many who are now retired or approaching retirement from North America come from a mindset that ‘owning’ your own home has been a cornerstone for security. First, in recent time few of us really ‘owned’ our own homes. That is probably because we succumbed to the ills of the ‘Edifice Complex’ and felt it necessary to ‘upgrade’ periodically to larger and more costly properties. A lot of us did it with the result that we carried mortgages into retirement age.
Post the 2007-2008 ‘Great Recession,’ real estate prices in North American as well as Europe fell. Italy has yet to show signs of a real economic recovery. When first arriving here, a North American conditioned real estate reflex can set in and eyes widen when perceiving what might, at first, appear to be ‘housing bargains’ to be had. However, the ‘gains on paper’ some of us saw in the ‘real estate bubble’ of the past are not likely to be repeated here anytime soon. So that requires an immediate sanity check to control your reflexes. The hard reality is there are perceived bargains in real estate here because the real estate market in much of Italy is still in the tank and may not yet have hit bottom. So if you are tempted to ‘invest,’ consider very carefully how long it might take to get your money back out.
Then property ownership here immediately immerses you into a bureaucratic labyrinth. May the Saint for whom you are named watch over you if you fall in love with a property to renovate deemed to have any ‘historic significance.’ You know, just the kind of property you are looking for or was built anytime before currently living memory. There will be a traffic jam of bureaucrats, representing often competing and overlapping jurisdictions, lining up to tell you ‘what you may not do to the property!’ Additionally, there are reams of paperwork required to seek approval to do much of anything. A deserted country property literally falling down and virtually inaccessible except by donkey plus rightly called a ‘ruin,’ may be on the market for what seems at first to be a real bargain. But the very conservative rule of thumb is to more than double the acquisition costs just to make it marginally ‘habitable’ let alone the home of your dreams. Then the time required to get multiple layers of approvals plus construction delays, is beyond patience. And of course, you will probably have the additional expenses to live somewhere else while this ‘project’ is underway.
House Hunters International paints a very saccharin picture of old property renovation in Italy. Accept the reality that is promotional propaganda nowhere close to the difficulties and expenses involved. Can it be done, of course, but you have to decide on your frustration and financial resource threshold to see it through. Having gone through home renovation and remodeling in the U.S. in the past, we understood the most basic realities of that process; it is going to cost way more and take longer than you can imagine. If you really want to do it, be very sure you fully understand what you are getting into.
Renting. We chose from the outset to rent. A major factor is we wanted the equity we received from the sale of our California home to immediately go to work and to generate a positive cash flow for living expenses. We did not want to tie up working capital against some possibility of a future gain. At my age, we need positive cash flow resources to live now and not be holding out hope for some future benefit that may or may not materialize and where the liquidity timeline could become a very complex issue.
We are attracted to live in an area with historic charm. Charm seems to translate into structures literally centuries old having gone through various forms of ‘restoration.’ We were not ready to take on the complex maintenance responsibility for structures like this. We want to use our resources of time, energy and cash for priorities other than taking on ‘structural charm’ as a serious dependent.
Next we wanted the flexibility to be mobile if that were to seem desirable. Renting clearly provides more flexibility than being locked into complex property ownership. As it happens, the laws regulating property rental and leasing in Italy are considered ‘tenant friendly.’ As we understand it, in the immediate post war period, the war’s devastation resulted in a severe housing shortage. To protect tenants from ‘gouging’ by less than scrupulous landlords, statutes were put in place. The general tone of those statutes is still in effect.
Why Buy A Car? We rely almost exclusively on public transportation. If we need a vehicle for trips to the countryside or to haul something, we rent it. Owning a car is a very expensive and complicated matter. Places we have chosen to live and visit are the older, historic sites all presenting a decidedly medieval character. Read that as narrow, congested streets. In short, forget about parking and forget about keeping that shinny car scratch and blemish free. Fuel is expensive, insurance and taxes are expensive, and parking can be prohibitively expensive if you can find it. Additionally, for our own personal use, any car we would want would be as small as possible. But then we have occasional visitors that would require a larger car. So, we can’t define the ‘ideal’ car to own for our mixed needs. Then there is the stress issue.
Before thinking about buying a car, do a lot of renting and driving in Italy under various circumstances. Italians are, by and large, good drivers but they operate under a very different risk calculus than many of us from North America. Being behind the wheel in Italy still makes me very tense (and I have done it over thirty years). So again back to stress reduction, I go back to the old slogan from Greyhound Bus, – Leave The Driving To Us! For those of us from the ‘car cultures’ of North America, the accessibility and convenience of the public transport infrastructure in Italy, as well as most all of Europe, is a welcome new experience. This is the first time since I was eighteen that I have not owned a car and much to my surprise and delight, I’m doing just fine without the headaches and expenses.
No Fast Rules. These thoughts reflect what we felt fit for our inclinations and goals. We expect and actually hope some readers will disagree with some of these observations. If that happens, it means some who are actually in the process of considering the Expatriate life are actively deciding for themselves what will work best for them. Can’t ask for more than that.
Thank you for your wonderful blog. I’m an American and will be retiring with an American pension next year. I’ve always dreamed of living in Italy. In an earlier blog, your suggested downloading the brochure put out by the Minister of Interior, “Staying in Italy”. However, I can’t find it on their website. Do you know where else I might be able to locate it?
Secondly, I understand that I can either apply for an Elective Residency Visa or a Residency Visa. I’m not planning on working in my retirement. I also know that taxes are very high in Italy.
Do you happen to know if American pensions get taxed by the Italian government? If so, does the type of Visa one has determine whether or not you’re taxed and/or the percentage of taxation?
If you could help me with any of these questions or point me in the right direction, I’d be so very grateful.
Thank you Marie- Responded to in detail by direct Email. Happy planning!
Terrific advice there’s always the dream first and practicalities after, I agree that renting perhaps in a couple of different areas prior to ever consider buying makes more sense then listen to your gut response,your visceral reaction and where your heart is you will find your home.