International Airbnb Venture
I am getting my Italian citizenship, and using that as a tool to invest in airbnb style properties abroad. Does anyone have any experience doing this? Would love to chat.
Following, as I am working towards my Italian citizenship as well.
Just for non-Italians to know, you don't need to be an Italian citizen to invest in Italy! Also, in most countries, it's the physical residency that provides advantages rather than the nationality. But, of course it's not harmful to have it.
We have a few Airbnb's in Italy. You can do well depending on the market and if the numbers work (Follow the same real estate investment analysis rules). If you don't have a local property manager and you are doing it yourself, it takes a lot of work...like anything.
One thing that is imperative in our municipality is that when hosting any tourists or foreign guests overnight, hosts must collect their guests’ identifying information, including an image of their passport or national identification at the time of check-in and WITHIN 24 HOURS following arrival, must communicate to the territorially competent police headquarters and our local municipality. If you miss the deadline, you have to pay a fine. This gets to be a pain if you are managing the property yourself.
The benefit of investing in Italian AirBNB is that the USA and Italy have a tax agreement for foreign-earned income exclusion for US citizens. Of course, when you a running a business in Italy you are responsible for paying Italian income tax and local municipality short-term rental tax (this is a new tax that is popping up in a number of municipalities in Italy).
The biggest challenge with Italian property investment is that you will not get the benefit of leverage that you have in the USA. If you qualify for a property loan in Italy (They don't like it if your income is generated outside Italy) they will only finance 50% of the property. The other challenge with Italy is that the laws favor the individual and family over the business (property) owner. So if you get a "con artist" that stays at your Airbnb and does not leave, it could take forever to get them out with the Italian legal process.
IM me if you have any questions
While you can do well on the rental income side, bear in mind that property prices in Italy have been on a long decline since the financial crisis while they rose a lot in most if not all other countries in the developed world. They've only gotten a reprieve because of Covid and inflation over the last few years.
You therefore might end up with capital losses instead of capital gains and borrowing might therefore not be a good idea anyway.
Properties in the prime areas of the main touristy cities like Rome, Venice or Florence will probably hold their value best but they're much more expensive too.