Stick with US or go International?

Question

Hello all, I'm new to Bigger Pockets. I am looking for some guidance on whether to stick to US investment or to go international. I was told that Portugal, Panama might be good investments by a friend who is also an investor. I have limited funds (around 500k) so I'd like some advice from those who have done it. I'm looking for rentals (no flipping). Thanks!

Mark C. · Answer

I am a BRRRR investor in Colorado, and I am currently looking to move to Portugal. This is partly for the lifestyle, but also for investment. I will place my current US rentals under management and live overseas. We hope to get a feel for the market there and possible look into syndicating deals there.

Mike Krieg · Answer

I've owned in Russia and Mexico. I have found that there can be very good opportunities overseas, however, they require a careful study of the laws and regs to determine your level of risk. One of the issues you need to consider is the possibility of your capital getting stuck in a market. This happened to many in Mexico when I owned down there. I knew a retired Canadian truck driver who invested 300k on the beach in MEX. The beach began to erode and he lost all of the beach in front of his house. The erosion began to also threaten the structural integrity of his home. He couldn't sell that (at that point) for anything. But he stuck it out and after the local government enacted policy to protect the beach, things turned around in that area. Stuff like this can get you.

John Fortes · Answer

Hello Sandra! Welcome to BP!

I can't tell you much about investing out of the country. From what I hear, other countries invest in RE in the US because of the returns. With that said, why not using 100k to test the out of the country investing and see if its to your liking. Doesn't have to be 100k just something to provide some proof of concept.

For instance, if you took 50k-100k and invested it out of the country, took another 50k-100k and invested it here in the US and compare the returns. There are plenty of was to invest passively or actively. Researching syndicators buying into the business opportunity through multifamily, be the bank and fund fix and flips (I know you said you don't want fix and flips but the returns could be in your favor), purchase multifamily apartments on your own. It all depends on how busy your lifestyle is to be active or passive in your investment strategy. Hope this helps, good luck, and God bless!

Mike Lambert · Answer

@Sandra Nelson You might think I'm a bit biased because what I do is invest in rentals internationally with investors. Of course it's much better you know local people or if you know people you do and if you have the right connections to access leverage to enhance your returns. Investors invest with me because they put down less money, make much higher returns and take less risks than if they were investing by themselves. This is to show that is possible for everyone to invest internationally

Nobody knows for sure what will perform better between US or international. Regardless, it doesn't make sense to have all your eggs in one basket. Presumably your primary residence is in the US, your 401k, maybe your stocks. Those who suffered from the Global Financial Crisis know what I'm talking about. Besides, if you're a passive investor, you know that, if you buy in the US today, you cash-on-cash return won't be very high. Also, given that prices are elevated, it might take you very long before you see significant capital gains. It depends what to buy of course.

Also, real estate is much cheaper in the most promising international markets than in the US. You would be surprised about how far your 500 k would go. You could already do great even if you only allocate a part of that to international.

Regarding the countries, I confirm that Panama and Portugal are great countries. I have been focusing on Mexico lately because it is the best time there. However, I have the connections in Panama and Portugal as well and I'm planning to start investing in those countries this year.

Feel free to contact me if you have any questions. BiggerPockets is all about helping each other. Welcome to the network!

Dougan Milne · Answer

Hi Sandra -- Do you hold dual/poly citizenship and/or Non-US tax residency? If the answer is No... then the answer is No. There are far more complicated answers with caveats.... but unless you and your friend are quite sophisticated and experienced international investors... the answer is very simple.