Exposure to the asset class, “Real Estate,” is a broad one. In reality, Real estate investing comes in many shapes and sizes. One of them is investing in Real estate overseas.

Depending on your goals and preferred investment amount, you have a number of available options. New technologies are allowing you to get exposure to real estate with lower amounts every day through innovative companies like Fundrise & PeerStreet.

Investments in direct real estate shouldn’t be limited only to the US, however. By expanding your search for investable properties to a more international search, there can be some very enticing opportunities abroad. However, as with everything, investing in real estate overseas carries some special risks and benefits.

“Passive Income” source from Rental investments

Before jumping too deep into what to look out for, it should be mentioned that the goals of investing in real estate overseas should be clear beforehand.

Buying up / investing in a diversified portfolio of rental properties all over the world, and having them all send you rent checks every month. Super easy and super passive.

In reality. Often NOT passive.

It’s an easy trap to get in to. Touted by many, Real Estate is a “passive income” source, where you buy up a portfolio of rental properties and essentially wait for your lovely tenants to pay off your mortgage for you. Sounds great, right?

The truth is that renting these single-family houses is NOT passive. If you invest in a larger city, perhaps you can find a really good property manager. Otherwise you’re stuck doing a lot of the grunt work yourself. Finding tenants, dealing with maintenance and management – this is not “Passive.” Even if you are able to find a good property manager, these come at a price, so prior to investing paying for a good property manager and properly incorporating all the additional expenses needs to be taken into consideration (think vacancy rates and repair & maintenance…).

So get your goals in line first. If it’s a “Passive” Income source you’re looking for, there are other methods to get Real Estate Exposure in your portfolio that are much more passive. However, investing in real estate overseas does offer quite a few enticing characteristics for your asset allocation.

Benefits of investing in real estate overseas

A common theme of this site is diversification and asset allocation – often with rather esoteric asset types. International Property Investments are no different. They come with their own sorts of benefits, the most important alluring one is that of diversification. Not only exposure to a different asset class (Real Estate), but when investing in real estate overseas an investor is diversifying the investment out of your home country’s government, currency, and economy.

Here are some additional benefits:

Diversification/Security. This is a big one. You’re investing in another country, in their economy. If all of your property investments are in another country that has a lot of issues, this is a big one. It also diversifies your cash flows if this property is a rental, allowing you to generate a cash flow in another currency. This is a great way to diversify your portfolio towards (potentially) appreciating currencies.

This is a big one. You’re investing in another country, in their economy. If all of your property investments are in another country that has a lot of issues, this is a big one. It also diversifies your cash flows if this property is a rental, allowing you to generate a cash flow in another currency. This is a great way to diversify your portfolio towards (potentially) appreciating currencies. Longer-term Government Benefits. Perhaps you’d like to go the route of citizenship in another country to hedge your bets for healthcare or some other governmental service. Or perhaps you’d just like another passport.

Perhaps you’d like to go the route of citizenship in another country to hedge your bets for healthcare or some other governmental service. Or perhaps you’d just like another passport. Potential for High Returns. Especially if you have a longer-term mindset and are able to safely invest in emerging economies. Yes, the risk is higher, but the potential returns should be higher as well.

Especially if you have a longer-term mindset and are able to safely invest in emerging economies. Yes, the risk is higher, but the potential returns should be higher as well. Fun. This is often overlooked, but an important one. Yes, it’s scary, but can be nice to check up on your international property from time to time with a vacation.

Things to watch out for prior to investing in real estate overseas

As with any investment, there are also risks.

One way to mitigate a lot of these risks is to have a partner in your target country that you know and trust.

This is often very difficult. Another possible approach would be to start by hiring someone in that country to help do a little research for you. By paying them a set fee to do some research and find the ‘best few properties’ they can find for investments (which shouldn’t be advertised on english-speaking websites), you can start to get a good feel for the market in that particular country/city.

A way to mitigate some of these risks is to actually go to your target location and get a feel for the place. It’s extremely hard to buy properties sight-unseen, as there are many factors that go into a buildings valuation.

In addition to the standard risks of real estate investing, there are some added things to watch out for associated with investing in real estate overseas

Country. A big one. Additionally a more of a macro view of that country’s economy and growth prospects, you’re investing in that economy (and government, and monetary system).

A big one. Additionally a more of a macro view of that country’s economy and growth prospects, you’re investing in that economy (and government, and monetary system). Terms of ownership . Are foreign nationals are legally allowed to own 100% deeded freehold property in that country? Some countries do not allow this. You want to make absolutely sure that you understand the terms of ownership before you purchase. Also important to make sure there are no liens or claims of ownership on the property that would affect your right to hold the title. Another one is squatter rights. Are there any located on your property and what rights do they have? Working with a trusted attorney to navigate these items is recommended.

. Are foreign nationals are legally allowed to own 100% deeded freehold property in that country? Some countries do not allow this. You want to make absolutely sure that you understand the terms of ownership before you purchase. Also important to make sure there are no liens or claims of ownership on the property that would affect your right to hold the title. Another one is squatter rights. Are there any located on your property and what rights do they have? Working with a trusted attorney to navigate these items is recommended. Recourse. If something goes wrong, what recourse do you have as an investor? Some governments are more corrupt which could make it very hard to find recourse if something goes wrong. Worth noting that many times recourse in the US can be equally as difficult as recourse overseas. As with any investment, it’s important to always consider the worst-case scenario, which is you lose everything you invested.

If something goes wrong, what recourse do you have as an investor? Some governments are more corrupt which could make it very hard to find recourse if something goes wrong. Worth noting that many times recourse in the US can be equally as difficult as recourse overseas. As with any investment, it’s important to always consider the worst-case scenario, which is you lose everything you invested. Location. An obvious one for all real estate investments. Most other things can be fixed with money and time, but not the location. If it’s not in a good location, are you sure it will become a good location? Is it close to airport, medical facilities? Is it walkable and near public transport? There are many factors here.

An obvious one for all real estate investments. Most other things can be fixed with money and time, but not the location. If it’s not in a good location, are you sure it will become a good location? Is it close to airport, medical facilities? Is it walkable and near public transport? There are many factors here. Short-term rentals allowed? Depending on your goal – if you want to rent your property – you need to make sure that this is permitted. There are many municipalities that place restrictions on short-term rentals.

Depending on your goal – if you want to rent your property – you need to make sure that this is permitted. There are many municipalities that place restrictions on short-term rentals. Good in-country partner? Especially if you plan to rent out your property when you’re not around. Be extremely aware of who has their eyes on your property, and in the case of overseas this can be more difficult because of language barriers and time zone differences. Having a trusted party is EXTREMELY important as you are an overseas investor and won’t be there to watch things yourself.

Key Takeaways

International real estate investing can be extremely appealing. As with any investment, it does come with its own unique risks. However, as with any investment risk, there are always mitigations to each risk. There are always ways to lower your risk, but the significant first step is choosing the country in which you’d like to invest and GOING there.

It’s (unfortunately) not as simple as choosing a country/city and buying something. To increase your odds of a more profitable investment, you will need to go there, and have good partners in the area to help you out.

Getting a feel for the local market prices, fulling understanding the potential risks and working with local partners are essential before making the investment.

In the end, these international properties will likely always have some sort of value. The biggest risk is in you not fully doing your due diligence and not having the right people to help you do things the right way.

And in case you missed it…

Make sure you’ve also caught the blog about investing in real estate.Investing in Real Estate: What are the options?

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