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Friday, 13 December 2019
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Your Ultimate Guide to International Real Estate Investment

Written by Posted On Saturday, 12 October 2019 03:15

Want to dip your toe into the world of international real estate investment? Here is everything you need to know to get started.

Did you know that 9 million Americans live outside the US?

How are so many people able to turn that dream into a reality? One of the most common ways is through overseas property investment.

Whether you hope to retire abroad, earn rental income, or you simply want to boost your portfolio, international real estate investment can help you meet those goals.

But before you jump into this exciting world, there are a few things you need to know. Where and how should you make an overseas investment? Are overseas investment laws more complicated than buying real estate at home?

In this post, we'll discuss all that and more. Here are 7 important factors to consider with international real estate investment.

1. Get Familiar with the Culture

Sure, you may get a great deal on that townhouse in Bangladesh—but would you actually want to live there?

Before you think of making any overseas investment, you need to spend time in the country. Culture shock is real, and it can be an eye-opening experience in a country very different than your own.

How well do you understand the local customs, laws, language, and geography? What drives the local economy? Is there potential for growth and development that will improve the future value of your investment?

Even if you don't plan to live there yourself, find out more about the local housing market and culture. If you don't, it could lead to a rude awakening later on.

2. Learn the Local Laws

Speaking of local customs, what are the country's laws for investment from abroad?

In many Asian countries, foreign investors can only legally buy a condo (not a house or land). So before you fall in love with Thailand, you need to accept the fact that you will never be able to own land there.

Then there are countries like Colombia, where an investor receives permanent residency by investing $150,000 in any property.

In some places, you can own the land but not the building on it. In other countries, the law is reversed. Buying a property may give you residency or citizenship in some lands, but not in others.

Before you set your sights on any locale, make sure to research the laws about foreign investment. It might be a lot easier—or a lot more complicated—than you thought.

3. Start Small (And Grow from There)

It might be tempting to jump right into a big investment—especially if the return potential seems high.

Don't do it. International real estate investment always carries an element of risk. The last thing you want to do is allocate all your assets and then realize you made a mistake.

Instead, start small. If things don't go as planned, your losses won't be so dramatic.

And if things go well, the next step is making a larger (and more profitable) investment. But remember to keep things in perspective, too—the average rental yield of foreign property is between 3%-6%.

4. Broaden Your Horizons

As you get comfortable in the world of foreign property investing, why not expand your portfolio to different parts of the world?

Like local real estate markets, global real estate goes through ups and downs. If you have all your overseas properties in the same country, what will happen if there's a natural disaster or political unrest?

Or what if the entire country's economy tanks, like the crisis in Venezuela?

Buying properties in different regions will enable you to ride out the ebb and flow of the global real estate market.

5. Understand Financing Options

How do you plan to pay for your investment property? It may be straightforward if you're sitting on a mountain of cash, but what if you aren't?

Many countries won't offer mortgages to foreign buyers. And your home country may not give you a loan to buy property abroad.

Developer financing could be an option for buying a lot or a pre-construction site. These are generally interest-free, require little paperwork, and have no age restrictions.

Another option could be using funds from your self-directed IRA account. You won't be able to live in the property before retirement, but you could use it for rental income in the meantime.

6. Know the Tax Implications

Ah, taxes—everyone's favorite topic. While adding a foreign investment property to your portfolio has its perks, it can create new headaches at tax time.

When and how will you report investment gains? What about the transfer and income taxes? What tax deductions will your property qualify for?

Keep in mind, too, that foreign tax laws vary drastically from country to country. Will you end up owing more in local taxes than you'll make from rental income?

These are all things you need to carefully research and weigh before making an investment.

7. Consult with Local Professionals

If this all starting to sound complicated, that's because it is. Buying a property overseas can be a lucrative and exciting investment, but it's not the easiest process.

Experts agree that your best bet is to consult with local contractors, investors, and real estate professionals. They'll understand the ins and outs of their country's laws, as well as the best (and worst) areas to invest.

When you're ready to buy, consider hiring a local accountant to help you through the process. It may cost you a little more, but it will make the buying process faster and easier.

International Real Estate Investment: Class Dismissed

As you can see, there's a lot to consider when it comes to international real estate investment.

Choosing the right location is just as important as securing the finances you need for the purchase. You may also need to jump through a lot of legal hoops to make your investment dream a reality.

But once everything is done, your efforts will be worth it. You'll have joined an elite group of foreign investors—and you'll have an amazing property to prove it.

Did you find this article helpful? Browse our other recent "Buyer's Advice" posts for more expert advice.

Listing Additional Info

  • State: Maryland
  • Address: 3232 Hickory Heights Drive
  • City: Baltimore
  • Zipcode: 21202
  • SOLD: no
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Stacy Stein

stacy is a real estate writer, and she would like to real estate, business-related topics, she would like to go out with her friends. she studied business management from California University and she presently lives in California.  

 

 

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