Lief and Kathleen share their failed real estate purchases overseas hoping that these experiences will help you to avoid making the same mistakes as you look to invest in real estate overseas.
Some lessons from Lief and Kathleen’s failed real estate purchase experiences include:
- Diversification is key
- Don’t buy a second unit in the same project (before the project is completed and seeing returns). You might run the change that the return on your investment is not as good as you thought it would be.
- Don’t buy something if you don’t know the market you’re buying into. You need to understand what’s on the ground. That’s why you need to visit the place or at least know the market very well before buying anything.
- Who’s going to rent or buy your property and who’s your competition. If you rely on a foreign market to buy or rent your property, make sure that that economy is doing and will continue to do well.
- The key to success is getting the right rental manager. You can have widely different experiences with your rental property depending on the rental manager. You could either have a very profitable investment or you could make no earnings at all. Therefore, you need to choose a good rental manager that has the capacity to keep the unit filled.
- Buy based on a reasonable expectation of cash flow, and not a promise of appreciation (which may or may never appear). When you buy a rental property, you want to make sure it will have cash flow but don’t count on appreciation for your income.
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