Purchasing real estate in a foreign country is a great way to expand your investment portfolio and your better your travel life.
While investing money in international real estate can seem daunting, there are an exceptional amount of benefits that you can reap from taking the leap into international investments. You just have to know the exact steps to take in order to make your investment a success.
Whether you want to retire overseas, rent your property to tourists, or simply own a second vacation home, purchasing international property can greatly increase your standards of living.
This guide will walk you through everything you need to know for a profitable international real estate investment.
Why Invest in International Real Estate?
Real estate is a sound method to not only invest your money resourcefully, but it is also a way to see your investment increase in value. Not to mention that you are in control of your real estate investment.
You can buy, rent or sell whenever you want to whomever you want. Plus, you can use your international real estate property as your own personal getaway and vacation home.
Historically, land is often protected against inflation. Whether you rent your property out for tourists or for tenants, people will always need a place to live or a place to stay when they travel. So, you never have to worry about your real estate investment depreciating.
And, the leading real estate opportunities are located outside of the United States. This is mainly due to the fact that the economy in the United States is not growing as much as other countries. You want the property that you invest in to flourish as much as possible within an economy that is growing. Because as an economy grows, so do consumer’s demands for a shiny new house.
How to Finance International Real Estate
One of the first questions you may ask yourself when deciding to invest in international real estate is how to properly finance your property. For starters, you probably won’t be able to secure a local mortgage.
Even if you can, most countries require a large down payment that can range up to 50 percent of the property’s value, and interest rates are often much higher overseas. And, most United States banks refuse to lend money for investments overseas. So, how are you supposed to start your investment in international real estate under these circumstances?
Luckily, there are a variety of options for you to implement in order to finance an investment property in Egypt or other foreign countries
Of course, there is always the option to pay cash. Cash is one of the best options to purchase property overseas.
Paying cash can ensure that you not only get the best price, but the process of closing on a deal will be much faster than your other options. However, it’s important to only pay cash when you’re purchasing real estate that is already built. If you pay cash for a property that is in the construction stage, you can risk problems that could put a delay in your construction.
But, many people do not have the opportunity to make their property purchase in cash. Fortunately, there are more options for these individuals.
The IRS only specifies what investment you are not allowed to make with your IRA as opposed to what investments you can make. While you can’t invest in life insurance, collectibles or certain coins, you can invest in real estate property.
And while IRAs are often used to invest in stocks, mutual funds or bonds, you can also invest that money in broader assets. This means that you can use your funds from your IRA to purchase your foreign property. However, if you plan to live in your foreign property permanently, a self-directed IRA is not a viable option to purchase your real estate.
Also, tax laws tend to change occasionally. So it’s important to either work with a real estate attorney or a qualified tax specialist in order to protect you and your investment.
Many developers are offering their own financing options. Developer financing is often a great option to purchase your international real estate when there are no other financing options available in that country.
Developer financing can be beneficial because it’s often interest-free, there are no age restrictions, there’s little paperwork and no life insurance requirements. With this financing option, you can make payments on fixed dates, after completed construction stages or even monthly payments.
You will find developer financing when new developers are just starting to sell their services. However, after developers start selling regularly, you will no longer find their great financing terms.
How To Maximize Your International Real Estate Investment
While it’s easy to choose your favorite country to travel to and purchase real estate there, you should first do your research. Because buying real estate is about more than just buying a vacation home. It’s also about making an investment.
A few factors to take into consideration when choosing the country you purchase real estate in include:
- The housing market
- How their property sales have preformed in the previous years
- Government regulations
- Tax laws
- Tourism levels
One way to ensure that all of these factors are properly met is to hire a real estate agent. Not only do they know the housing market at a professional level, but there are also specified real estate agents who have industry knowledge in international real estate.
This can make the entire process of purchasing international real estate much easier. Plus, they can save you time and money by working behind the scenes with vendors.
The Bottom Line
Making an international real estate investment can take a lot of time, effort and money. But, in the end, having an investment property can be highly beneficial to not only your income but also to your travel life.
For more articles about investments and growing your income, take a look at our other small business articles.