Domestic Real estate vs International Real Estate

International Real Estate
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Domestic Real estate vs International Real Estate

Kamika Camilien
Hempstead, NY · Member since 2015 · 5 posts · 1 vote

Does anyone know the protocols of  investing outside of the US. ( I understand that each country has different laws and regulations) I wanted to know if it is more lucrative to start investing in countries such as Cuba or Thailand vs investing in the US?

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Russell BrazilBusiness Member
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Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
10y

I think it always safer to invest within an hours drive of where you live. This will greatly reduce your risk.  

Investing overseas is really for those that know what they are doing.  Laws, customs, standards of practice vary enough within our own country....going abroad with your money is just a large risk to take if you do not know what you are doing.

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  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    10y

    I think it always safer to invest within an hours drive of where you live. This will greatly reduce your risk.  

    Investing overseas is really for those that know what they are doing.  Laws, customs, standards of practice vary enough within our own country....going abroad with your money is just a large risk to take if you do not know what you are doing.

    [email protected]301-893-4635Podcast Guest on Show #192
    District Invest Group546 Reviews
    WebsiteView Page
    2Reply
  • Kamika Camilien
    OP
    Hempstead, NY · Member since 2015 · 5 posts · 1 vote
    10y

    Thank you so much for that advice. I live in NY and the market price out here is pretty steep. So I have been looking into the PA, NJ, CT markets, there are not as cheap as Iowa. But they are cheaper than NY. What do you think?

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  • George Gammon
    Flipper/Rehabber · Las Vegas, NV · Member since 2016 · 174 posts · 251 votes
    10y

    I'm going to have to slightly disagree with Russell. I agree it is better to invest within driving distance if the ROI is similar to what you can achieve outside of that distance. For me, I prefer to look at a total risk adjusted return.

    Let's look at extremes to understand the concept. Assuming there's more risk in a property outside driving distance you have to ask yourself how much more risk? Try to quantify it, then measure that against the increased ROI (assuming there's an increase). If you can achieve a 5% return within driving distance with a 2 risk factor (risk based on a scale of 1-10) but outside the driving distance you can achieve a 20% return with a 3 risk factor it's wise to at least consider the property further away.

    If our imaginary scenario was reality I'd suggest a portfolio with both local and distant properties.  

    This comes with the assumption you have access to good property managers.

    As far as international investing more specifically, I know of several countries where the risk is far less than the US.  Remember, most other countries don't have real estate markets fuelled by low interest rates and excessive debt.  What's riskier in terms of appreciation, investing in a market that give's loans with 1% down and 3% interest (US) or a market that requires 40% down and 10% interest?  Also remember, in the US, the government always has the first lien on your real estate.  If you fall behind on your property taxes the local government will foreclose and take your house.  We demonize banks for foreclosing on people and forget that our governments do the same and potentially to a greater degree.  I've invested in several countries where the governments don't have the power to take your property and have more stringent personal property rights than the US.  I'm not saying the US isn't a good place to invest (I own several properties in the US), I'm only saying there other options out there that may have a better risk adjusted return.  

    I'd start local, as Russell suggests, but keep an open mind to other opportunities. ;) 

    Good luck,

    George

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  • Siku Nkhoma
    Real Estate Investor · Lilongwe, Malawi · Member since 2016 · 4 posts · 0 votes
    9y
    Originally posted by @George Gammon:

    I'm going to have to slightly disagree with Russell. I agree it is better to invest within driving distance if the ROI is similar to what you can achieve outside of that distance. For me, I prefer to look at a total risk adjusted return.

    Let's look at extremes to understand the concept. Assuming there's more risk in a property outside driving distance you have to ask yourself how much more risk? Try to quantify it, then measure that against the increased ROI (assuming there's an increase). If you can achieve a 5% return within driving distance with a 2 risk factor (risk based on a scale of 1-10) but outside the driving distance you can achieve a 20% return with a 3 risk factor it's wise to at least consider the property further away.

    If our imaginary scenario was reality I'd suggest a portfolio with both local and distant properties.  

    This comes with the assumption you have access to good property managers.

    As far as international investing more specifically, I know of several countries where the risk is far less than the US.  Remember, most other countries don't have real estate markets fuelled by low interest rates and excessive debt.  What's riskier in terms of appreciation, investing in a market that give's loans with 1% down and 3% interest (US) or a market that requires 40% down and 10% interest?  Also remember, in the US, the government always has the first lien on your real estate.  If you fall behind on your property taxes the local government will foreclose and take your house.  We demonize banks for foreclosing on people and forget that our governments do the same and potentially to a greater degree.  I've invested in several countries where the governments don't have the power to take your property and have more stringent personal property rights than the US.  I'm not saying the US isn't a good place to invest (I own several properties in the US), I'm only saying there other options out there that may have a better risk adjusted return.  

    I'd start local, as Russell suggests, but keep an open mind to other opportunities. ;) 

    Good luck,

    George

     Hallo George, 

    This is exactly my experience here in Malawi where the opportunities are soo vast and yet there are no opprtunities for investments. I think matching the two (access to low interest finances in the US, and real estate developments in international markets is a winner). lets touch base when you have time we think through this. 

    0Reply
  • Curtrice Dorsey
    Andrews, SC · Member since 2016 · 2 posts · 0 votes
    9y

    Thanks for sparking this conversation Siku and George.  I am currently in the process of purchasing property in Bogota, Colombia.  I am freaking out because I have not been able to find any educational materials or sites that focuses on international real estate investments. Any advice that you all can provide would be greatly appreciated.  I am trying to approach my real estate portfolio like any other investment portfolio (diversify).  I am hoping that for every US property, I can also secure an international property as well.

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  • Sam Van Horebeek
    Hong Kong, Hong Kong · Member since 2015 · 140 posts · 89 votes
    9y

    I think it is best to connect with people located in the countries that you are interested in. If you are keen on China or Hong Kong, please feel free to PM me.  I am not an expert but can give some anecdotal information. Good luck

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  • Dusty Ackerman
    Specialist · MN · Member since 2014 · 42 posts · 13 votes
    9y

    @Curtrice Dorsey

    I know a little about the Colombian RE market and have a contact who currently invests in Columbia. PM with questions. Thanks, 

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  • Curtrice Dorsey
    Andrews, SC · Member since 2016 · 2 posts · 0 votes
    9y

    Thanks, Sam.  I wish that I had invested in the Chinese real estate market when I lived there in 1995.  I will definitely reach out to you when I am able to free up collateral to invest.

    0Reply
  • Franco Li
    Vendor · New York, NY · Member since 2017 · 217 posts · 88 votes
    9y

    Investing in other areas outside of the US is sort of risky unless you are in a developed market - i.e. Europe, Japan, China? You have to understand that buying domestic properties for investments in America is most likely very different than buying elsewhere. For example, does Thailand or Vietnam have the same lending criteria? Do they have property management services, and what about the eviction process? How will you be taxed because it's foreign income? What about insurance, and will you be required to have one? 

    All these questions just makes investing outside of the US much harder in my opinion, and unless you know the answers to all of these (perhaps your home country) then I would suggest otherwise. MOREOVER, unless you are making ridiculous returns, the USD is very strong right now and will probably be over the course of 2017 - depending on which bull/bear you ask. You would want to make more USD instead of getting rental cash in EUR or AUD or Yen for example. And on top of all these problems, you'd have to swap back and possibly get hit with FX risk. 

    So in conclusion, why bother?

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