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Using Leverage To Build A Global Property Investment Portfolio

“Kathleen, I’m 24 years old. I just recently signed up to your new Global Property Advisor. I am wondering about the strategy for people who are starting with little capital (a little over US$17,000). Of course, this will increase over the time as I save from my job.

“If there’s some advice on how to start for a person like me with little available investing capital, it would be much appreciated.”

— Desmond W., United States

Global Property Advisor Editor Lief Simon responds:

It’s not easy to start a real estate investment portfolio with just US$17,000, especially overseas, where it’s difficult to obtain leverage.

With a very small getting-started budget, focus on markets where you can borrow money locally (assuming that you have the income otherwise to qualify for financing). The Dominican Republic is one of the best options for this. Property purchase prices are low, and foreign buyers can borrow in the country up to 80% loan to value.

It’s possible to buy in the DR for as little as US$50,000. Remember, though, that not every low-priced property is a good buy. That is, cheap doesn’t necessarily equal good investment.

Another option would be to buy a pre-construction condo in a market with good appreciation potential. A typical down payment is 10%, so you can get in with little capital. The risk is not having the future payments in time. You’d need to be sure you could come up with the payments when they were due (as would be stipulated in the pre-construction purchase contract). Again, a market where you could get financing if you wanted or needed to would take some of the pressure off. You could borrow locally for the (typically big) final payment (due when the building is complete).

Super low capital investment opportunities exist, but they are few and far between. I invested a couple of years ago in a cemetery plot offering in the UK. You could buy a package of 10 for 10,000 pounds, and the developer offered payment terms.

I know a developer in Colombia currently offering an investment opportunity you can get into for as little as US$25,000.

Meantime, while you’re looking for a low-minimum-investment opportunity to get started building your portfolio, begin educating yourself on the markets you’re interested in (the best locations, closing costs, market quirks, etc.) so you’ll be ready to act when the right opportunity presents itself.

This—both current opportunities to invest and market insights and fundamentals to help you investment safely—is the focus of my newGlobal Property Advisor. More details are here.

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