OFFSHORE REAL ESTATE INVESTMENT AND MANAGEMENT, 101
By: Lief Simon, editor of Global Real Estate Investor.
Dear Reader:
Why buy real estate internationally? The best reason is profit
potential.
Repeatedly I've proven this in my own investments; for
instance, the value of a house in Ireland I owned for five years
increased 2 1/2 times during that period. A property I bought and
resold on Spain's Costa del Sol returned about 35% annually for the
2 1/2 years I owned it.
But there are other reasons to invest in offshore real estate as well.
It's an excellent hedge against the dollar, the US economy, and US stock
markets. It's a hard asset. You can stand on it...and enjoy it, while it
appreciates. Plus, international real estate is an easy way to globalize
your investments. It also offers asset protection advantages; once you
own property abroad, it's extremely difficult for a lawsuit-happy lawyer
to find it, much less seize it.
I've been investing in global real estate for almost a decade now. Since
1996, I've bought, sold, and invested in more than a dozen countries.
And I manage a US$40 million global real estate portfolio. That's a
substantial portfolio. But you don't need anywhere close to that amount
of money to become a successful international real estate investor.
But how do you begin? More importantly, once you decide to invest a
specific amount of capital in offshore real estate, what's the best way
to allocate that investment?
The fundamental rule here is the same as with other investments:
diversification. You don't want to put all your eggs in one basket. In a
global real estate context, this means don't put all your capital into
one foreign market...or one type of property investment.
Furthermore, you should invest not only in different countries, but
also in different currencies and, critically, in different types of
real estate. I currently own or am buying real estate in eight
countries. If one of these markets doesn't go the way I expect, the
impact on my overall portfolio will be manageable. Further, my
portfolio includes raw land, short-term rentals, resort rentals, off-plan buys (i.e., purchases in a development that is not yet complete and
are thus available at a discount), and an investment in a small
development.
The flip side of the diversification rule is that you don't want to
spread yourself among too many countries. While theoretically this
would provide tremendous safety, it has a downside. You have to
remember the ongoing management and administration of each holding.
For every country where you hold property, you need to understand the
local laws related to real estate investment and ownership. You need
to address the tax obligations. And sometimes you need to visit.
Generally, I recommend that you invest in countries where you travel
anyway...or where you want an excuse to spend time.
Lief Simon
Editor, ''Global Real Estate Investor''
www.globalrealestateinvestor.com
Copyright: Global Real Estate Investor (Reprinted with permission.)
