Embarking on the journey of overseas real estate investment can feel like navigating uncharted waters.
You might be lured by tales of high returns of buying a property abroad, a place to escape during vacations, or simply the charm of owning a piece of paradise in a foreign land.
But as a trusted advisor, I’m here to tell you that it’s not all sunshine and roses. Let’s explore the terrain of overseas real estate together and find out what are the best countries to buy property in.
Why Consider Investing in Overseas Real Estate
The first question that pops up in your mind might be, “Why should I even consider investing in overseas real estate?” Well, there are several reasons you might want to do so. These can range from financial benefits to lifestyle upgrades, or even as a step to becoming a global citizen.
The Process of Investing in Overseas Real Estate
Understanding the Market
Investing in overseas real estate is akin to learning a new language. You need to understand the nuances, trends, demand, and supply dynamics of the local market.
The better you understand the international real estate market, the better your chances of making a successful overseas property investment.
You need to put a lot of research into buying property abroad, go on local forums where you may wish to purchase and ask people for their advice and about their experiences. Ask them about the costs, tax implications, management services and ownership laws.
Getting Legal Advice
When it comes to overseas real estate investments, overseas property laws and regulations play a significant role.
So, what’s the solution? Simple, get yourself a good lawyer and real estate broker who is well-versed in the property laws of the country you’re planning to invest in. Speak to people “who know how to invest in overseas real estate”!
Their are risk of investing in foreign real estate.
Understanding the financial implications, including tax laws, potential ROI, property management costs, etc., is critical. You must understand the tax implications of buying property overseas. Familiarize yourself with currency exchange rates as they can significantly impact your investment and returns.
The Mechanics of how it works – The ups and downs
Real estate is an excellent way to build your overall wealth whilst receiving an income in the process.
However, it is not the complete solution to your retirement in our opinion.
When living overseas you will be approached by many property brokers, in person, online or over social media. Their main focus will be selling properties in the country where you are living, but also in various other locations around the world.
The UK is always a popular choice for salespeople as are various locations across Asia such as Thailand and Malaysia and numerous countries in Europe, highlighted below in the golden visa scheme.
Unless you are planning to live in your property, my advice would not to be sucked into investing where you are living unless you feel very confident about the local market, your country of residence has a long good history of looking after foreign investors and is one of the top overseas real estate destinations.
For example, as a foreigner, you cannot own the land that your house is built on in Thailand, it has to be 51% Thai-owned. There are now ways around this with experienced lawyers and shared ownership schemes where you can buy into a complex as part of a shareholder, but I implore you to read this article to understand what you may be getting yourself into.
Thailand has very strict laws on property ownership and defamation, hence I will not go into this in more detail and the BBC has taken down the video. Here is another alarming story written in The Bangkok Post.
These cases are extreme, but they are not unique to Thailand and are unfortunately not uncommon.
After reading these articles you may feel that Thailand is not the right place to invest, however, I think Thailand is a great investment centre and done correctly with the right people, then you should have a trouble-free experience.
A lot of people have been investing in Australian and New Zealand real estate as they are deemed to be good, safe markets, with growth potential and also wonderful places to retire to.
Unfortunately, though, this has led to overinflated prices appearing in the market and I’ve been told first-hand by real estate investors that every time they now go to a property auction they are bidding against fifty Chinese investors who are happy to pay over market prices.
Furthermore, developed economies are not free from scandal. After the financial crisis, we saw the collapse of Australian-based real estate investment company LM, which can be read about here. Many investors. around the world lost money in the scheme.
Again, I do not think that Australia or New Zealand are bad places to invest, it’s just a case of being aware of potential pitfalls and positioning yourself correctly, but maybe they are currently well overpriced.
Hampton Bridge feels that out of all the destinations around the world for an overseas real estate investment, your best option is Berlin.
Prices are still very low compared to its European counterparts such as Paris, London, Munich or Milan and Germany offers some of the strictest laws in the world to protect the tenants and owners of the property.
Hampton Bridge/Inspiration Asia also encourage our clients to buy individual apartments in Berlin as the potential for growth still continues to deliver double-digit returns every year across the city and the market has been growing at this rate for over a decade.
Pro tip: Berlin and Lisbon are often cited as the cities that offer the best value and tick all of the above criteria. If you would like to access the growth that Berlin offers then click here.
Caution: DO NOT buy off-plan property that guarantees a rental income. So many buildings fail to get completed by running out of money halfway through resulting in the early investors losing all of their money
Tips for Successful Overseas Real Estate Investment
It is important that you check all of your options and speak to various real estate agencies for international properties to get a good feel for what you think is right for you.
We cannot emphasize enough the importance of diversifying your investment portfolio. Real Estate Investments can provide a steady stream of income through rental yields and appreciation in property value.
However, real estate can be capital-intensive. Therefore, we recommend conducting thorough market research.
Key things to look for in a location when buying a property: Strong, growing economy, regular flow of immigration into the city, undervalued market with potential for growth and high employment. All of these are your key indicators when investing in overseas real estate.
Be patient and diligent in your research. Understand the local culture and regulations, work with reliable professionals, and above all, visit the location before investing.
It might seem like a lot of work, but remember, the journey of a thousand miles begins with a single step!
Golden Visa Scheme
Many European countries have been offering “Golden Visa” schemes to Asian investors over the last ten years, which gives the investor a lifelong visa to their country if they fit the investor requirements.
These schemes are aimed largely towards the Asian market as people from Asia often have difficulty travelling and living in Europe due to visa requirements. They can also get access to first-rate healthcare and education, something that can be more difficult to access or very expensive in Asia.
Investing in overseas real estate is not as daunting as it appears, you are simply just buying a property. It does though come with its own set of challenges and risks. But with due diligence, it can offer attractive benefits. So, as an expat investor, are you ready to explore this journey and make the world your oyster?
Frequently Asked Questions (FAQs)
Is investing in overseas real estate a good idea?
It depends on your financial goals, risk tolerance, and understanding of the foreign market. It can offer high returns and diversification, but it also comes with risks.
What are some popular countries for overseas real estate investments?
Countries like Spain, Portugal, Thailand, and the Dominican Republic are popular among investors due to favorable real estate laws and potential for high returns.
How can I manage my property if it’s overseas?
You can hire a local property management company to handle maintenance, rent collection, and tenant-related issues.
What are the legal considerations for investing in overseas real estate?
Legal considerations can vary by country and may include property ownership laws, tax implications, and contractual obligations.
Can I live in my overseas investment property?
Yes, you can use your property as a vacation home or even apply for residency, depending on the country’s laws.