Why don't real estate investors do more foreign transactions? I'm only a novice but it would seem beneficial to me to invest in a developing market such as Brazil, Chile, certain parts of Mexico, etc.
How does an average every day person go about doing this?
My main concern is the lack of political stability. Evey now and then we get into debates about the possible collapse of the dollar or the complete meltdown of the US political system. Those concerns are multiplied when dealing with a foreign government. Governments change the rules. Governments have been known to nationalize certain industries. Governments do flat out collapse. Leadership changes.
So, not only are you subject to currency fluctuations, but you're also at the whim of a government that may change the rules to suit their convenience (like Cristina Fernández de Kirchner in Argentina attempted to drastically raise taxes on farms to make up for a budget shortfall) or even completely change (Egypt, Tunsia, and I'm pretty sure we've not seen the last of that.)
The countries you mention are more stable, but all have various issues.
Wouldn't it be a cheap way to do business, as long as our currency is worth more than other currencies? (Until our currency falls through the floor completely.)
My main concern is the lack of political stability. Evey now and then we get into debates about the possible collapse of the dollar or the complete meltdown of the US political system. Those concerns are multiplied when dealing with a foreign government. Governments change the rules. Governments have been known to nationalize certain industries. Governments do flat out collapse. Leadership changes.
So, not only are you subject to currency fluctuations, but you're also at the whim of a government that may change the rules to suit their convenience (like Cristina Fernández de Kirchner in Argentina attempted to drastically raise taxes on farms to make up for a budget shortfall) or even completely change (Egypt, Tunsia, and I'm pretty sure we've not seen the last of that.)
The countries you mention are more stable, but all have various issues.
Is it the case that foreign govts are unpredictable or is it that properties are hard to buy? Does the average investor know where to find property agents and managers, etc, in say Mexico? I briefly looked online and I can't even search for single-family homes in Brazil or Mexico.
Investors have a hard enough time managing properties an hour away, let alone those out of state or out of the country.
I could not see doing this without having a solid relationship with an in-country agent and property manager -- and you'd have to go there to meet these people.
Another option, albeit not quite as hands-on as what people here are used to, would be international REITs.
As Paul suggested, unless you have a lot of experience investing in areas you don't know well, and have the means to travel often, the best best is likely a REIT that focuses on International or Emerging Markets.
I would say because there are more deals here than one can deal with in a 40 hour day! LOL! I do have friends that have holdings over seas, but at the end of the day, with travel and watching a deal so far away, it will just pull you away from deals in your own back yard that you could be makin some real coin on! :mrgreen: