“Kathleen, I attended the LIO conference in Nashville and came away with lots of great info and some questions.
“I was especially interested in the presentation on Abruzzo, Italy. And I wonder what would happen to my investment if the project isn’t completed. I recognize that real estate is always risky, but what if you find yourself in a foreign country with all (or most) of your cash tied up in a property you’re unable to resell?”
–Sallie S., United States
That’s a fair question and a good starting-out perspective. Before making any investment overseas, you should consider the worst-case outcome.
The worst-case outcome is one of the reasons I like real estate as much as I do. Worst case, you can’t sell it when you want to sell it, meaning you’re stuck holding the asset. However, unlike a stock or bond, the asset is real and tangible. Buy an apartment or an oceanfront lot, and you’ve got an apartment or an oceanfront lot. It has value, and you can put it to use.
Still, of course, not being able to sell a piece of property for a reasonable price when you decide you’d like to sell isn’t a position you want to find yourself in. Therefore, you need to look at the big-picture dynamics of the market you’re considering buying into before pulling the trigger on any investment. Is it being fed by locals or foreigners? If foreigners, where are they coming from and will they keep coming? The best case is when both foreigners and locals are active.
Regarding Abruzzo specifically, I’d say this is a market made by tourists and retirees, not locals. Your resale market could be thus limited. Choose a property that stands out and is attractive to as wide an audience as possible. Your real estate agent should be able to advise on what this means in the context of the local market.
In this case, your worst case would be you’d be stuck with a little place of your own in Abruzzo, Italy. How bad would that be?
Continue reading: How To Choose A Rental Investment Property Overseas