Can an average person really invest in real estate to generate reliable cash flow overseas?
I get the question all the time.
My enthusiastically positive response isn’t based on theory but on firsthand experience and observation.
I’ve known hundreds of typical investors like you who’ve built globally diversified cash-flowing portfolios and who are enjoying both the income and the lifestyle that this investment strategy provides.
Before we go any further with this discussion, though, let’s take a step back and think about why you should be thinking about buying real estate overseas… especially right now in the face of all the uncertainty our world is facing.
Specifically and big picture, here are reasons why you are smart to be considering this idea right now:
- Like real estate anywhere, real estate overseas is a hard asset, and, in the current investment climate, hard assets are the most sensible investment class, the best choice for storing value…
- As with real estate anywhere, you’re buying with the hope of capital appreciation, but you can also be buying for cash flow, right now an important investment agenda… in effect, you can use this as a strategy to create enough income from cash flow to fund your retirement…
- Real estate overseas provides portfolio diversification—diversification of currency, diversification of market, and diversification of asset type (rental, raw land, condo-hotel, etc.)…
- Real estate overseas provides the opportunity for you to position yourself to profit from both expanding and crisis markets…
- Real estate overseas can double as a retirement plan—today’s investment can be tomorrow’s retirement residence…
- Real estate overseas can double as a holiday or second home, an investment that you and your family are able to use and enjoy from the day you make it…
- Real estate overseas can be part of a legacy of wealth that you leave to your heirs…
- Real estate overseas is safe and private, one of but two remaining asset types that an American need not report to the IRS every year…
- A real estate investment overseas can bring tax advantages, including deductions you can take on your U.S. tax return…
Fundamentally, this is all about diversification. This is the real advantage of this strategy—diversification of your portfolio and your assets, but diversification, too, of your life, your retirement, and your legacy.
We are living at a time that presents the opportunity to take the investor’s profit agenda, combine it with the live-better-for-less agenda of the retiree, and transfer it overseas. An opportunity to use overseas real estate as both an investment vehicle and a strategy for a new and better life, both immediately and longer term in retirement.
Overseas real estate amounts to the surest strategy for creating and preserving legacy wealth while simultaneously reinventing your life and rescuing your retirement.
Thanks to global market events of the past decade, many options exist right now for where to buy to make money and to generate good cash flow while also making a new life, and, thanks to our Age of the Internet, it is possible today to seize these opportunities easily and cost-effectively to build a new life while staying in real-time touch with family, friends, business concerns, and investment portfolios from the old one.
The best case is when you are able to find a piece of real estate in a place where you want to spend time, short term on vacation and long term in retirement, that also holds out the potential for an investment return, in the form of capital appreciation, rental return, or both. This perfect storm of objectives should be your ultimate goal. A holiday home on the beach of Nicaragua can become little more than a headache and a carrying cost if you ultimately decide you can’t abide life in the tropics.
How do you get started? How do you determine where and what to buy first?
Your lifestyle agendas and objectives should play a role in determining how you invest. More practically important is budget. How much can you afford?
You can find agricultural investments packaged for the individual investor available for as little as US$30,000, and you could buy a small house or apartment that you could use part-time and rent out otherwise for US$50,000 to US$100,000 in a handful of proven rental markets, including Bearn, France; Cuenca, Ecuador; Medellín, Colombia; the Northeast coast of Brazil; Granada, Nicaragua; and Cayo, Belize.
Investing less than US$100,000 in a rental property, you wouldn’t be buying big or fancy, but small and modest is the way to start anyway. Big and fancy means heavy carrying costs.
Finding an answer to the question “How much can you afford?” comes down to two things. First, how much capital you have available to invest? If you don’t know this number already, take time right now to do the math.
Second, what kind of financing or purchase terms might be available to you?
Most property markets outside the United States are cash-only. You aren’t going to be able to organize local financing as a foreign (non-resident) buyer in much of the world.
However, you do have options for leveraging whatever capital you have to invest.
Tomorrow, I’ll walk you through them.
Kathleen Peddicord
