When my husband and I moved abroad in 2016 for his video game development career, I planned to keep the same real estate investment strategy that had worked for us in California:
- Buy a home under favorable primary residence mortgage financing
- Complete a live-in renovation to add value while saving for the down payment on a new home
- Rent out the renovated home
- Start the process over again with our next new home
I underestimated how differently real estate transactions and home loans work in other countries.
Since 2016, we’ve lived in multiple German cities (Hamburg, Frankfurt, and a tiny village near Bremen), and Skövde, Sweden. And, let me tell you, this has been an education. Here are a few things I’ve learned about buying property abroad, and why I still choose to invest in SoCal real estate while living in Europe.
5 Things that Surprised Me About Buying Property in Europe
1. A 3% Down Payment Typically Doesn’t Exist (Even for Locals)
Perhaps this shouldn’t have been surprising. But it was.
While we’d been using 3.5% down FHA loans and 3% down conventional loans in the US, most Europeans put down 15-20% to buy a home. For a foreign resident with limited European credit history, you’re looking at more like 30-50%.
When we lived in Frankfurt (2017-2020), apartments averaged just over €1 million (around $1,150,000). No way we could quickly save $345,000 for a 30% down payment. With our future uncertain and affordable rentals available, it didn’t make sense to buy.
2. A 30-Year Fixed Mortgage Is Rare
I took the 30-year fixed-rate mortgage as a given. Oops.
When we bought our property in Skövde, I learned that you don’t just get one long-term mortgage. You get multiple mortgages of varied lengths and interest rates in an effort to mitigate interest rate risk.
For my stability-loving, plan-ahead brain, this is very confusing.
From what I understand, banks tend to avoid offering long, fixed-rate loans because they risk losing money if interest rates increase. Instead, they offer multiple, shorter-term loans with the assumption of ongoing monitoring, refinancing, and adaptation to market conditions. Your home loan is more of a rolling financial strategy than a set-it-and-forget-it tool.
While there’s no end to the configurations available, we took out three loans: a 3-year ARM (adjustable-rate mortgage), a 7-year ARM, and a 10-year fixed. While the rates on the ARMs are subject to change, there are limits to the periodic changes, so the rates don’t get a full reset until the end of the loan term, at which point we refinance under current interest rates.
3. You Typically Owe the Full Interest Amount, Even if You Sell Before the Loan is Repaid
In the US, it’s normal to pay off your loan early (often through selling the house and using the proceeds to pay off the loan). While some mortgages charge pre-payment penalties, most don’t. And even those that do don’t typically require you to pay anywhere near the full amount of interest that would have accrued if you had completed the loan term as originally scheduled.
In Europe, it’s common to be on the hook for the full interest charge on the original loan. That’s why so many loans are short-term. Buyers might not want to commit to a 15-year mortgage if they plan to sell in 10 years and would still owe the full interest obligation when they sell.
Short-term loans avoid unnecessary interest expense in Europe.
4. Mortgages Don’t Always Fully Amortize
Now, you might be thinking, but how can someone afford the monthly payment on three separate loans when the longest loan term is 10 years?
The answer: mortgage loans don’t necessarily fully amortize. When these short-term loans are repaid, you either sell or get new loans to keep moving forward toward repaying the original purchase.
It’s meant to be flexible, but it just feels messy to me.
5. Strict Rental Income Limits Make Rental Investing Less Appealing
We lived in Frankfurt for three years, and our landlord never increased the rent. At the end of each one-year lease term, the landlord confirmed that we’d be staying on for another year at the same rate. An incredibly reasonable €1,350 ($1,552) per month.
While I can’t speak for all European countries, Germany and Sweden are both extremely tenant-friendly. There are strict limits to how much landlords can charge and when/how rents can increase. So investing in rentals doesn’t yield the same returns here as it does in other markets.
Why I Continue to Invest in SoCal Real Estate
Given my international real estate investment experience, Southern California is my market of choice, no matter where I live. Here’s why:
- Long-term financing stability. I love my 30-year, fixed-rate mortgages. I appreciate knowing how much my principal and interest will cost every month until I refinance, sell, or pay off the loan. And I rest easy knowing that I won’t have to pay interest for the full term if I refinance, sell, or pay off the loan early.
- The ongoing demand for more housing. Southern California continues to face a decades-long housing shortage. Between under-construction, zoning laws, and geographic barriers, inventory is perpetually tight (particularly in Los Angeles). But demand remains high due to employment opportunities, sunshine, and amenities.
- Strong track record of appreciation. The same factors that contribute to ongoing demand have pushed home values up substantially over time.
- Fewer constraints on rental income. European countries often regulate rent through cost-based formulas, reference indexes, or caps on increases. But in most communities across SoCal, rent is primarily market-driven, giving investors more flexibility and potential upside.
- Accessibility. There are so many ways to access the property ladder in the US. For example, you can buy a primary residence with as little as 3% down (with good credit), and use house hacking to turn that home into an income stream. Or, you can invest in real estate crowdfunding and syndication to own a share of a professionally-managed real estate project. No time, experience, or hassle required!
How Gatsby Makes It Easy for Hands-Off Investors to Invest in SoCal (Even from Abroad)
Gatsby Investment is a Southern California-based real estate syndication company. Since 2016, Gatsby has been focused on the Los Angeles housing market, offering high-return-potential deals to investors all over the world.
Gatsby offers a range of real estate syndication projects, tailored to meet changing market conditions and maximize returns. Based on the 2026 outlook for LA real estate, Gatsby is niching down on multi-family build-to-rent (BTR), an innovative model combining the equity of developing a new building from the ground up with the income and tax benefitsof a rental.
By investing with Gatsby, you don’t have to worry about scouting potential deals, overseeing construction, or managing tenants. Gatsby handles every detail for you.
Whether you’re a local Californian or living abroad, like me, Gatsby makes it easy to leverage the strengths of the SoCal housing market!