Is Overseas Real Estate Investment Safe?

With all the media coverage of the current presidential campaign in the U.S., you’d think a large segment of the population will be ready to bolt depending on the outcome of the general election in November.  How many celebrities and political pundits to date have made half-assed threats to leave the country should Donald Trump be elected president?  There is no denying the more-than-implied threat to both national, and therefore, world economic stability should Trump succeed in his endeavor to gain the presidency, and then as he attempts to make good on many ludicrous economic “suggestions” he seems to come up with on a daily basis…

It’s times like these that taking a serious look at real estate overseas as an investment model may make some sense.  And not simply for the experienced investor.  Consider how it may be a smart move to diversify your real estate holdings.  While the knee-jerk response to buying real estate overseas might be “it’s too risky,” understand that property investments outside the U.S. should be thought of as part of a total portfolio of real estate holdings long term.  In this way you can best diversify to offset the vagaries any one property (or set of properties) in one particular country (like the U.S.) may perform, based on events way outside your control (read:  Donald Trump’s being anointed King, or some facsimile thereof.)

Also take into account the possibility for some very high returns, depending on the country you plan on investing in.  Some emerging countries can show yields in the double digits year to year.  Your selection process will be critical, based on the degree of risk you’re willing to assume.  I always recommend getting advice from other property investors who are experienced, and know how to buy real estate overseas.  There are online property investing clubs for real estate investors who just invest in overseas property.  Seek them out as part of your initial research into different countries.  In addition, know that overseas real estate investment is going to be for the adventurous at heart…the risk-takers who have the guts and stamina for dealing with investment property that is not close to home.  From time to time you’ll be able to travel to them, but for the most part, you’ll probably have a property manager handling the day-to-day duties of running the properties overseas.

Keep in mind that with foreign real estate holdings, you can buy, sell or rent based on your own sets of standards.  Just like with investment property in the U.S., you can set the rental prices, lease terms, etc., as well as the amount you’ll accept when it comes time to sell your property.  In addition, your diversification will also include having holdings in different currencies.  In this way you can take advantage when certain countries currencies appreciate in value.  Remember too, your property investment overseas has the ability to make use of multiple land uses, depending on what is “hot” at the time in that particular country.  You shouldn’t think that purchasing real estate overseas can be simply for renting to people.  Some countries rely on a burgeoning forestry or agricultural usage of the land.

As with any investment, you should always consider the worst case scenario, that is, if you were to lose all the money you invested in the property.  If you’re concerned too much that the government of the country you’d like to invest in may be corrupt, or too third-world for your tastes, then very simply, don’t make the jump into buying real estate overseas.  At least not until you’ve fully vetted the country and it’s political environment enough where you can sleep at night.  Once you feel it is safe enough to make the jump, then by all means, dive in.

I have written in some recent articles here about some good places to begin your overseas investment property searches.  I have noted how “areas with emerging and burgeoning economies are good places to start looking. Pacific rim countries like China, Japan and the Phillipines are all doing well right now. In Europe, countries like Turkey, Latvia and Romania are in fine shape, with low debt and rapidly increasing economies. Meanwhile, the usually reliable spots for investors, like Italy, France and Spain, are all currently struggling. However, if you stay in major cities like London or Paris, there is much more stability in real estate valuations. Of course, if you’re unfamiliar with specific areas, you’ll need to do a good amount of research first before investing. You’ll need to make sure the market has been relatively stable over the past five to ten years.”

I have also been extremely supportive of European property investment for another key factor – and one that, given the explosion of refugees from Syria over the last year – remains such a huge factor.  I refer, of course, to immigration.  This factor is one of the key stabilizing factors in buying real estate overseas!  One might think the opposite, given the negative press Syrian refugees have received.  However, Europe’s largesse should be a beacon to overseas property investors. The high immigration patterns throughout Europe tend to create a very robust rental market for each developed country in the European Union.

With this pattern, Europe remains an excellent alternative for property investors to consider when deciding to invest in long distance rentals, as confidence in the marketplace stays high. Basically, you’re taking lemons and making lemonade out of them. I have also noted before that, as long as you are utilizing the services of a local property management company, the risks of such long-distance investing can be reduced substantially. This is especially true in countries where market rental rates are increasing and demand remains stable.