Investing outside USA

17 Replies

I think a prudent investor would be comfortable with investments within arms reach. Unless you are thinking about Canada, investing out of North America you have to understand the different rules regulations and by laws of that country. For example some countries have 100 year mortgages. How does that effect the local real estate market? Just so much to learn.

A lot Canadians invest in the US because the prices in Canada are not affordable for the average Joe. But Canada and US are so similar in terms of fee simple, leasehold, how mortgages operate  etc.. it very easy to adjust.. 

If there is not enough opportunity in the US to make good yields to invest abroad I mean by all means.. But I can understand if someone has developed a large portfolio and are interested to explore go ahead.. Again I am speaking for the majority in BP

Originally posted by @Divya Pratap :
What do we think of investing outside USA? What strategies should one adopt? Which specific cities people focus on for high ROI and ease of bussiness?

I would only do it now if I have a "trusted" family member locally outside as they can manage the project. But even that goes sideways. 

ROI would be my only factor for even trying..

@Divya Pratap Each jurisdiction comes with its own set of challenges. I know a lot of South Asians (Indians/Pakistanis/Bengalis) invest in their own country but that is because they either go back frequently and/or want to maintain ties to their home country. 

As lucrative as Asian markets are, you don't see a lot of retail-level investors who do not have local knowledge investing (unlike the US), because the markets are not mature and there are minimal, if any, checks and balances in place. Another big reason is that a lot of Asian markets are not as open as the US and still have currency control and ownership issues. 

E.g. I doubt there are many American born-and-raised, retail-level investors buying real estate properties in India/Pakistan (assuming they have no ancestral link to either country). But I personally know a ton of successful Indians/Pakistanins with property holdings in the US, Canada, UK, EU and Australia.

@Divya Pratap

I'd recommend a good understanding of the tax system in both the foreign country and the US. You'll have to declare the foreign property income on your US tax forms and most likely in the foreign country so you may be "double taxed" if there is no tax treaty between the 2 countries. It would impact your net ROI.

As far as which cities, the countries I looked at have the same dilemma as the US: desirable areas are so expensive that the ROI is relatively low and less desirable areas have a higher ROI but higher risks.

I will add that countries with a socialist tendency such as France can have complex rules (from subsidizing renters, rent control, subsidizing rehabs, tax cuts for renting to people in need...) with each new government tweaking those rules, they can have a serious impact on real estate investment market. My point is to reinforce the importance of knowing your targeted market.

Finally, take in consideration the impact of currency stability... and mortgage rates if that's an option (2% interest for 15 years was an important factor in my decision to invest in France).

Originally posted by @Divya Pratap :

Omar Khan

Thanks for your input. I am looking to explore properties and ways to invest in Australia in particular.Also vacation rentals outside in Europe or South America. 

I would focus on developing the right team especially property management and finding the right CPAs. Australia and Western Europe (most of it) have a solid legal system so you should face less hassles but once you run the #s you might realize (purely from an investment point-of-view) that investing in those jurisdictions might not be worth the time and hassle. 

Hi Divya,

I messaged you my contact details as well as my wife's as she works with property developers across Australia and has extensive experience working with foreign buyers who as a general rule can only buy new properties here. A good place to start your research is http://firb.gov.au/real-estate/ as there are numerous restrictions and duties that have been implemented at a state/federal level in recent years. 

@Divya Pratap

Over the last few years, I couldn't get the numbers to work for another RE investment with my previous criteria. I expanded my search initially from Seattle area to a wider area in state, then out of state in search for better ROI. The most important rule was to be able to rely on someone local I could trust. I expanded my search to international markets based on countries I've visited and connections. But most places I looked at were either already discovered and expensive (such as the island of Bali, Singapore) or too risky (Asian countries with unstable politics).

I grew up in France (many years ago) and didn't really want to invest there because of the "socialist" rules penalizing investors. But after looking at the numbers carefully, having family there to help out and knowing the language (although it is not a must), I decided it was worth a shot.
My main motivations are:

- Generating income in Euros (hedging against dollar value fluctuations)

- 2% fixed / 15 years mortgage (1.4% for owner occupied) - healthy leverage considering current inflation around 2%

- I chose an area with a low price point (not Paris, but cities with $30k to 50k/unit) with higher risks but working with much smaller numbers ($100k for 3 units in France vs $1M for 3 units around Seattle). So I decided to buy more units and factor in a larger amount for vacancies/issues in my ROI maths.

Note that I did visit the places before making offers but everything after the first visit was done remotely (through power of attorney).

My daughter has lived in Spain for the past 4 years. Has a great job and will likely stay for the forseeable future. From my look at the market in Seville, where she lives, I am left with the impression that my return expectation would be about half to two thirds of what REI brings me here.

If real estate is too expensive where you live there are tons of other states and areas with various price points without going overseas. Those who love to invest overseas more power to them but it is not in my plans currently.

You have to deal with a lot of other things and worry about economic and civil unrest. If there were no deals at all in U.S. then might be different. There are a lot of investors putting money into U.S. because they have almost flat to negative returns where they live in other countries.

Look up the website of the real estate guys. You will see ways to invest in central America. (Belize, Panama, ...)

However different people have different levels of comfort/risk depending on where they invest. Everyone's investment goals are different. Always make sure you are comfortable before pouring money into a particular location/geography.

Investing internationally can be very rewarding if you know what you’re doing and have contacts on the ground.

I buy properties in Southern Europe and Latin America together with passive investors using my connections to buy at the right place and significantly below market value, even for brand new or pre-construction properties (provided that I’m personally connected with the developer). This way, out returns are much higher than they would be in the US or Canada. I wouldn’t invest. If it wasn’t the case, as it wouldn’t make any sense.

My advice would be to do your research, due diligence and hire a great lawyer or invest with someone who knows what he/she’s doing.

I forgot to mention that I also buy foreclosures in Europe. In certain cases, you can buy at down to 30% of the current market value. Imagine wat your return would be if you buy and resell and finance 80% through a long term non-recourse mortgage at an interest rate of max 2%. Good luck to find anything like that in the US!

Im  a Real Estate agent in Panama. Prices now in the low side bottoming I guess in the next 10 months. Lots of real bargains, owners desperate to sell, lots of foreclosures, Can assist on the whole process including finding buying and renting