Global Yield-Generating Property Investing

Not So Sexy, But You’ll Sleep Like A Baby

Sept. 8, 2009
Panama City, Panama

PLUS:

For The Smart Money, It's Back To Basics...
When Must The American Abroad File A U.S. Tax Return?...

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The Six Best-Value Destinations for Living and Investing in the World Today

You can retire in style overseas and live better than you do now...for as little as $694 a month --

Live well -- including a maid, a gardener, a driver -- all on a Social Security budget...

Arrange health insurance for $150 a month or less...some places, you can even enjoy free medical care...

Own your own home in the sun for as little as $120,000...and wake up each morning to the sound of the waves on the sand...or the freshness of clean, mountain air...

Where to Go Overseas in 2009 -- Best-Values Special Report Free, Here.

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Dear Overseas Opportunity Letter Reader,

"You still read about promises of triple-digit investment returns in a matter of weeks or months," writes resident global real estate investing expert Lief Simon. "It'd sure be nice if these were realistic. We've all taken hits this past year, in the stock market and elsewhere, and we'd all like to find quick, easy ways to regain some of our losses.

"But the smart investors are going back to basics. (The smartest, of course, never abandoned them.) Slow and steady. It's not sexy, but it's the formula for long-term investment success.

"And slow and steady are the kinds of returns you can get from global yield-generating property investing.

"I've got my work cut out for me, I understand. Options traders and others who've known big returns in recent years turn their noses up at a rental investment generating a net yield of, say, 7% a year.

"I take a different point of view. A 7% annual yield compounded with perhaps 3% to 5% capital appreciation a year (in a normal market) gets you into double-digit total annual returns. Throw in some leverage, in the right market, and your return on investment can jump to 20% or even 100% a year. Yes, leverage increases your risk, but a little leverage can go a long way and, coupled with the right buy, can enhance your overall returns significantly.

"Even if we stick with the 7% net yield per year and assume even 3% annual appreciation, your total annualized return is 10% with no leverage. Add in low volatility and a downside that doesn't approach zero, and rental real estate looks better to me than any stock option. Not as exciting, maybe. You don't have the wild ups and downs of stocks and options to look forward to. But, frankly, the older I get, the more I value a good night's sleep.

"Rentals aren't the only real estate that can produce yields. Productive land--to farm trees, produce, or cattle--is another, and here the potential for annual return can be much greater. However, most real estate investors prefer more passive opportunities, so running cattle might not be in the cards (though leasing your land to a cattle farmer for a fixed rate plus a percentage of the herd could be a great long-term play).

"My preferred productive-land play, however, is the most passive of all--forestry. Not only is this a buy-it-and-forget-it kind of investment, but it also boasts the highest risk-adjusted returns of any investment vehicle. Generally speaking, a direct forestry investment can generate an annualized return of 12% to 15% and more over 20 years and longer.

"There are two downsides. First, the lack of liquidity; second, the length of the investment term. A forestry investment isn't going to kick out cash flow year by year. You aren't going to be able to pocket your 15% every 12 months. You can earn cash from thinnings along the way, but you'll have to wait 15 to 25 years (depending on the type of tree), for the full harvest, to reap the real return.

"On the other hand, compounding 15% over 20 years means you can turn US$1 into more than US$16. That is to say, this is a vehicle that can earn you 16 times your initial investment. You just need to be patient (and otherwise liquid) enough to wait for it.

"If you can't afford to have your capital tied up for 20 years, you could plan to sell your land and maturing trees on to another investor at some point along the way. Or you could buy a property already planted with mature trees.

"I did this a couple of years ago. I bought a piece of land planted with 10-year-old teak. The sales price for the property was the current value of the trees if they had been cut and sold the day of closing. In other words, the land was effectively free. Two years later, I'm now in the process of harvesting, meaning the return will be even greater.

"These kinds of yield-producing opportunities are many right now. Colleagues are developing rental properties, forestry products, and other yield-generating real estate plays that amount, I believe, to the smartest investment opportunities available anywhere.

"I've invited these gentlemen to join me in Panama next month to present their best current opportunities as part of my Third Annual Global Real Estate Profits Summit. Those in the room will have first-in and, in some cases, preferred-pricing chances to participate in the smartest global investing plays anywhere, including forestry investment opportunities in three countries, resort rental opportunities in at least four top markets, and private boutique offerings that will not be circulated further than those four walls. In total, my colleagues and I will present a minimum of 12 current plays.

"I invite you to come on down and join us. Discover how to diversify your investment portfolio into international real estate and reduce your risk profile while improving your overall and long-term returns.

"All the while, sleeping like a baby.

"I look forward to meeting you there."

Kathleen Peddicord

P.S. Complete details of what Lief and friends have planned are here.

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The Smart and Experienced Money Is Moving Into International Real Estate...

But how do you begin? Where do you start?

Over three days in October, Lief Simon and 12 other international real estate investing professionals will discuss how and where to position yourself in world property markets for profit.

For instance, find out where to find Distress Sales in one of Europe's most popular beach resort areas...where families from all over Europe continue to vie for vacation rentals every year. You can buy here right now at discounts of up to 22% or more...with financial incentives including cash back and no money down.

Turnkey, furnished, and ready-to-rent in one of the world's most proven markets...

And that's only a start.

Learn more about this market, plus over a dozen unique globe-spanning opportunities, here

MAILBAG:

"Kathleen, as a new subscriber to your service, I read with interest the following statement in your latest newsletter discussing the advantages of foreign residency:

"'The trouble is, this means you also avoid the benefits of full-fledged foreign residency. An American residing abroad can pay no tax in the United States. As an American residing abroad, you pay no tax in the States, because you owe no tax in the States. Depending where you're residing overseas, you may owe no tax in that country either.'

"Could elaborate on this statement? I have always understood that U.S. citizens are liable for U.S. tax irrespective of where in the world they reside."

-- Neil F., United States

U.S. citizens are required to file a tax return annually no matter where in the world they reside. This does not, though, mean that, as an American abroad, you necessarily owe any tax to Uncle Sam. The tax you owe, if any, to the IRS depends on many factors.

If you live and work outside the United States, you are eligible for the Foreign Earned Income Exclusion. For 2009, the amount of the exclusion is US$91,400. This means that, as an American abroad, you can exclude your first US$91,400 of earned income from your total U.S. taxable income.

If you're earning that income while living and working in a country that charges no income tax itself, then you pay no tax at all on up to US$91,400 of earned income this year. Passive income, of course, such as interest or dividend income, is another story.

Pay taxes on any income in another country, and you generally receive a tax credit for that income against any U.S. tax owed. Receive rental income from an apartment in Buenos Aires, for example, pay the appropriate tax in Argentina, and you can credit that tax toward any U.S. tax owed on that same rental income.

Note that, if you are eligible for the Foreign Earned Income Exclusion and earn less than the annual exclusion amount (meaning you owe no tax in the States), you are still required to file a return with the IRS. Technically speaking, it's the filing requirement you never lose...not the obligation to pay tax. Again, the answer to the question of whether or not you owe tax is far less straightforward.

Resident international tax expert Chris Rusch explains more fully here.