{"id":170450,"date":"2024-04-12T10:17:13","date_gmt":"2024-04-12T16:17:13","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=170450"},"modified":"2024-06-27T09:11:49","modified_gmt":"2024-06-27T15:11:49","slug":"how-living-overseas-made-me-a-better-investor","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/how-living-overseas-made-me-a-better-investor","title":{"rendered":"How Moving Overseas Made Me a Better Real Estate Investor"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm\/?e=BIGPOC1918709254\" width=\"100%\"><\/iframe>\r\n  \n\n\n\n\n<p><span data-preserver-spaces=\"true\">Whenever I hop on a conference call, someone asks, \u201cWhere are you located?\u201d And then their eyes widen when I respond, \u201cLima, Peru.\u201d&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But back when I invested in rental properties, I did so in my hometown of Baltimore. It was only after I moved abroad that I discovered just how much I had subsidized those properties with my own labor.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">When people ask me today what I would do differently if I were to start investing in real estate all over again, I have an answer ready\u2014because I&nbsp;<\/span><em><span data-preserver-spaces=\"true\">did&nbsp;<\/span><\/em><span data-preserver-spaces=\"true\">start over again.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">My \u201cLandlord Era\u201d&nbsp;<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">I bought my first rental property in 2005, and I had no idea what I was doing. Then I bought another dozen properties over the next three years, and I still didn\u2019t know what I was doing.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">To begin with, I didn\u2019t understand&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/rental-property-cash-flow-analysis\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">how cash flow worked<\/span><\/a><span data-preserver-spaces=\"true\">. It proved a costly and embarrassing mistake.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Worse, I bought in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/low-income-neighborhoods\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">unforgiving, low-end neighborhoods<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;in&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/baltimore-sells-abandoned-homes-for-one-dollar\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">Baltimore City<\/span><\/a><span data-preserver-spaces=\"true\">. I didn\u2019t understand that low-end properties come with countless hidden costs that don\u2019t show up on paper\u2014costs like crime and vandalism, high turnover rates, heavy tenant wear and tear, and constant eviction filings to chase down delinquent tenants for rent.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Oh, and there\u2019s the fact that skilled property managers avoid them, because they pay half as well and come with twice as much work. That leaves you with the dregs of property management.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I also didn\u2019t realize just how much harder life is when you invest in anti-landlord jurisdictions like Baltimore City. It took me 11 months to get a \u201cprofessional tenant\u201d out of a property once.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I did this for a decade. And I hated it.<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Moving Abroad Kicked the Crutch Away<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">When I moved overseas in 2015, suddenly, I couldn\u2019t spend my nights and weekends driving to properties, coordinating with handymen, and staying on top of ineffectual property managers.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I reluctantly had to admit to myself that as bad as my returns had looked on paper, they were actually worse than I\u2019d thought.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I\u2019d been supplementing these investments with my own labor\u2014which isn\u2019t required by passive investments like stocks, bonds, notes, or real estate&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/ultimate-guide-to-real-estate-syndication\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">syndications<\/span><\/a><span data-preserver-spaces=\"true\">. Even under good conditions,&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/5-hardest-aspects-landlord\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">landlording comes with more labor<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;than people realize. And my challenging properties were harder to oversee than most.&nbsp;&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">When I could no longer bounce around putting out fire after proverbial fire, my properties showed their true worth\u2014or lack thereof.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">For a decade, I had served as the crutch that kept the portfolio standing upright. Take away the crutch, and the whole portfolio collapsed.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Pivoting to Passive Investments<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">As an expat halfway across the world in Abu Dhabi at the time, and a busy entrepreneur working 50-60 hours a week trying to get SparkRental off the ground, I hit The Wall. I divested all my rental properties, even the good ones I\u2019d bought later in my rental investing career.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">But that left me feeling out of touch with what I was teaching. I had learned every lesson the hard way and had eventually become an expert on every mistake to avoid and every easier path to success with rental investing. At SparkRental, we taught rental investing\u2014but I no longer bought new properties myself.<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Meanwhile, our students kept asking, \u201cCan I just invest in a deal with you guys?\u201d We kept saying no until one day, I looked at my partner Deni and asked, \u201cWhat if we said \u2018Yes\u2019?\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This, by the way, is a crucial lesson for entrepreneurs: Sometimes the business you think you\u2019re in isn\u2019t actually the one the market wants or needs. But I digress.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Around the same time, I started experimenting with passive real estate investing. I began with small amounts in most of the major real estate crowdfunding platforms and wrote about my experiences. Then, I started testing out private equity real estate syndications (fancy words for \u201cgroup investments\u201d).&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I didn\u2019t love the high minimum investment real estate syndications required. I wanted to&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/warren-buffett-is-wrong-diversification-is-not-just-for-ignorant-investors\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">diversify<\/span><\/a><span data-preserver-spaces=\"true\">&nbsp;and spread smaller amounts across more properties and markets.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Then it hit me: I had people clamoring to go in on real estate investments with me. What if we all went in on a syndication deal together?<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">So we did. And we liked it so much, we started going in on deals together every month as a form of&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/dollar-cost-average-real-estate\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">dollar-cost averaging<\/span><\/a><span data-preserver-spaces=\"true\">. Later, we opened it up to the public as an investment club.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">Deferring Taxes Without a 1031 Exchange<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">Many people get into real estate investing for the tax advantages, at least in part.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">As I gained more experience investing in real estate syndications, I was pleasantly surprised to discover the \u201c<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/lazy-1031-exchange\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">lazy 1031 exchange<\/span><\/a><span data-preserver-spaces=\"true\">.\u201d<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Active investors can defer capital gains taxes on income properties with a&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/1031-exchange\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">1031 exchange<\/span><\/a><span data-preserver-spaces=\"true\">. But they come with a lot of hoops to jump through\u2014hiring a qualified intermediary to hold your money and file your paperwork, declaring a replacement property within 45 days of selling your old property, closing on the new property within 180 days, and so forth.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">Even when I lived in the States, that struck me as too much work, so I never did it.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">With passive investments in syndications, all you have to do is reinvest your proceeds from an old deal into a new one. Hard stop.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">The depreciation from the new deal shows up as a loss on your tax return, which you then use to offset your capital gains from the property that sold. It\u2019s that easy.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">This fits my new hands-off investing strategy perfectly as an expat.&nbsp;<\/span><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span data-preserver-spaces=\"true\">We\u2019re All Busy\u2014Who Wants Another Job?<\/span><\/h2>\n\n\n\n<p><span data-preserver-spaces=\"true\">In my 20s and 30s, I put up with all the nights and weekends wasted, futzing with rental properties. But becoming a dad, an expat, and a busy entrepreneur put my priorities in perspective. Why would I want to spend my precious little free time hassling with contractors, tenants, property managers, or city inspectors?&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">I\u2019d rather be hiking the Andes with my daughter. Or visiting Chilean wine country with my wife. Or, for that matter, investing the time in growing my business.&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">There\u2019s no wrong way to invest in real estate. I have nothing but respect for rental investing. I just don\u2019t want to do it anymore myself when I can get all the upsides (cash flow, appreciation, tax benefits) without the hassles (financing, contractors, repairs, permits, inspections, tenant management, ad nauseam).&nbsp;<\/span><\/p>\n\n\n\n<p><span data-preserver-spaces=\"true\">When investors complain that they\u2019re busy and, within the same conversation, say they\u2019re planning on buying another active property, nowadays, I keep my mouth shut about the contradiction. They\u2019re on their own journey to find&nbsp;<\/span><a class=\"editor-rtfLink\" href=\"https:\/\/www.biggerpockets.com\/blog\/financial-freedom-at-the-lowest-barrier-of-entry\" target=\"_blank\" rel=\"noopener\"><span data-preserver-spaces=\"true\">financial freedom<\/span><\/a><span data-preserver-spaces=\"true\">. I\u2019ll keep enjoying mine.&nbsp;<\/span><\/p>\n\n\n\n    \n  <div id=\"visibility-group-block_e06bf2dc9e07274ecc131fe986e59e15\" class=\"visibility-group  hidden\">\n        \n\n<div id=\"hero-block_785f064924831f4be3a49ba978996eb5\" class=\"first:mt-0 hero-block py-4  alignwide   has-background has-theme-gold-light-background-color has-text-color has-theme-gold-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<p class=\"has-theme-gold-color has-text-color has-large-font-size\" style=\"font-style:normal;font-weight:800\">Get the Best Loan Today<\/p>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-slate-900-color has-text-color\" style=\"font-size:16px\">Find trusted, <em><strong>investor-friendly<\/strong><\/em> lenders who specialize in your strategy. <\/p>\n\n\n\n<p><\/p>\n\n\n\n<div id=button-custom-event-block_54c40005a9b4e0499382d1081419202e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/business\/finder\/lenders\"\n        x-on:click=\"window.analytics.track('Blog Block | B2C Marketplace Lender Finder', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/how-living-overseas-made-me-a-better-investor',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-gold-background-color has-text-color has-white-color\" target=\"_blank\">Find a Lender<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n                <div class=\" first:mt-0 relative h-full lg:flex lg:items-center\">\n            <img decoding=\"async\" class=\"object-cover w-full relative z-20 my-0  rounded-md hidden lg:block\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2022\/08\/Marketplace-Blog-Blocks-Lender-v3.png\" alt=\"investor friendly lender, investor friendly real estate loans\" title=\"\">\n        <\/div>\n            <\/div>\n<\/div>\n\n  <\/div>\n  \n\n\n<div class=\"wp-block-group\"><div class=\"wp-block-group__inner-container is-layout-constrained wp-block-group-is-layout-constrained\">\n    \n  <div id=\"visibility-group-block_64dd31c79f00f\" class=\"visibility-group  \">\n        \n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n\n<div id=\"hero-block_64dd2875dba9d\" class=\"first:mt-0 hero-block py-4    has-background has-slate-100-background-color has-text-color has-theme-slate-color\">\n    <div\n        class=\" flex flex-wrap lg:flex-nowrap max-w-screen-xl mx-auto px-4 relative lg:items-center \">\n\n        <div class=\"relative z-30 w-full \">\n            <main class=\"py-4\">\n                \n\n<h3 class=\"wp-block-heading my-0 tracking-tight font-extrabold has-theme-slate-dark-color has-text-color has-large-font-size\">Join the community<\/h3>\n\n\n\n<p class=\"my-3 md:my-5 lg:my-8 has-theme-slate-color has-text-color\" style=\"font-size:16px;font-style:normal;font-weight:400\">Ready to succeed in real estate investing? Create a free BiggerPockets account to learn about investment strategies; ask questions and get answers from our community of +2 million members; connect with investor-friendly agents; and so much more. <\/p>\n\n\n\n<div id=button-custom-event-block_64dd2888dba9e class='button-custom-event'>\n      <a\n    href=\"https:\/\/www.biggerpockets.com\/signup\"\n        x-on:click=\"window.analytics.track('Blog Block | Acquisition | Free Membership Signup', {\n      referrer: 'https:\/\/www.biggerpockets.com\/blog\/how-living-overseas-made-me-a-better-investor',\n    });\"\n    class=\" btn-shape inline-block no-underline has-background has-theme-blue-background-color has-text-color has-white-color\" target=\"_blank\">Sign Up<\/a>\n  <\/div>\n\n            <\/main>\n        <\/div>\n\n            <\/div>\n<\/div>\n\n\n<div style=\"height:10px\" aria-hidden=\"true\" class=\"wp-block-spacer\"><\/div>\n\n\n  <\/div>\n  <\/div><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Whenever I hop on a conference call, someone asks, \u201cWhere are you located?\u201d And then their eyes widen when I respond, \u201cLima, Peru.\u201d&nbsp; But back when I invested in rental [&hellip;]<\/p>\n","protected":false},"author":158586,"featured_media":170452,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5183,7119],"tags":[],"class_list":["post-170450","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-landlording","category-biggerpockets-daily"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/170450","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/158586"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=170450"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/170450\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/170452"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=170450"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=170450"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=170450"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}