When you hear about international real estate investments, one of the first things that probably pop into your head is real estate investors who travel the globe to take advantage of low prices and profit on rentals. That might be the gist of it, but why should real estate investors have all the fun.
While real estate investors who purchase properties at low values and turn them into rentals, jeopardizing the area’s economy, tourism traffic, and don’t do anything to help the local economy bounce back can have a negative impact, individual investors who purchase property for their own use, do not. The reason for this is that while individual investors can rent their property and draw tourists to the area, they can also live there, at least part-time, start a business and help the economy grow in a stable manner. Many expats tend to start a new life when they relocate to another country, and many areas of the globe, while incredibly beautiful, fall victim to depopulations with the youth leaving the area to live in bigger cities.
In this article, we will showcase some of these places that either fell victim to depopulation or overwhelming tourism that transformed the economy into one that is dependent on it entirely. International real estate can also be an excellent opportunity to diversify your portfolio as a real estate investor.
- Pros and Cons of International Real Estate
- International Investment Opportunities
Pros and Cons of International Real Estate
Owning a home abroad, either as a second residence, a holiday home, or a retirement home, sounds fantastic in most cases. Just imagine getting to spend summers in a simple, historical, and mesmerizing small village in the Italian countryside. That’s what dreams are made of. Even if you only get to enjoy it every other weekend or during longer holidays, a holiday home exceeds the American dream and transforms it into an International dream. Having your own little piece of heaven can also quickly become a nightmare if you don’t know what you’re getting into.
For that particular reason, we made up a list of pros and cons of owning property abroad. However, the most important thing is to do your homework and not jump in headfirst in the pool because you might realize too late that there’s no water in the pool.
Pros of buying an International Property
The holiday home of your dreams that you can enjoy whenever your schedule allows you to. It might be a flight away, but it’s yours to enjoy. You won’t have to worry about hotel stays or reviews to find your holiday destination, and it doubles perfectly as a retirement home. Everything you need is already there; you only have to get yourself there and make the most of it.
An easy rental would be an option, especially if you chose destinations with heavy tourist traffic. Many international real estate investors cover the cost of their properties in a few years in heavily visited cities in Europe because no matter the weather, they have tourists throughout the year.
A holiday destination for your family or friends will come at an affordable price. You will quickly become the most popular out of your group of friends with a holiday home overseas, and when your kids are all grown up, they can take prolonged holidays with their friends and families to visit you.
A great investment opportunity as most real estate properties, buying a second home overseas can increase your net worth in a matter of years if you choose the right area. A local economy that is thriving or starting to develop means that property prices can grow at an incredible rate.
A holiday on a budget is a given, seeing as you won’t have to worry about hotel costs or other related fees. The only expense will be the flight there and money for necessities.
Cons of buying an International Property
One holiday destination for a prolonged period of time might deter many people from international real estate investments. Still, if the economy is growing, you might find yourself capable of changing your holiday home every few years. However, a property abroad, as mentioned above, can easily turn into the perfect retirement plan.
Maintenance can be a struggle if you’re not constantly living in the home, and a property that is not used can deteriorate over time. This can be fixed with rental arrangements, local friends that can help you out with management and maintenance, or, why not, a cleaning service that takes care of the place when you’re not using it.
The initial and ongoing maintenance costs can be high but are with any other property you own. Owning a second home abroad and renting it when you’re not there also requires cleaning services and maintenance, but the rental fee will cover those costs.
Exchange rates for the currency of the country you purchase property from will fluctuate. That is a given. The Swiss francs had an immense impact a few years ago on many people, and there is nothing you can do to influence these changes.
Legal differences are a given when dealing with another legal system as every country has its own laws, taxes, and regulations regarding just about everything. While there are those laws that are the same in most countries, many have slight or significant differences. Take taxation in most European countries. Their tax system has nothing in common with the US tax system.
International Investment Opportunities
Picking the right country for your international property won’t be the easiest venture. You can find some excellent investment opportunities even inside the US, but the international market can have a bigger appeal. While some countries may have incredibly affordable properties in the market, their economy might not thrive locally. You might find a dream destination for holidays in these situations, but your return-on-investment won’t be as profitable. It all depends on what plans you have for that property. If you want to rent it while you’re not there, the best idea would be to purchase a property in a highly touristic area, and for that, we can look at some inexpensive international resorts that attract many tourists.
If, however, you want to have the perfect retirement home with little consideration for the potential profit you might make, small villages are ideal. The best scenario would be to prospect the market and purchase properties that will appreciate significantly in a few years, so you can sell and buy in another country once the area loses its attractiveness for you. There are many ways to go about this, and the choice is entirely yours. Doing a swot analysis before investing would be a great idea so that you covered all your bases.
The birthplace of Renaissance, the cradle of Romeo & Juliette, and the home of the most encompassing outdoor museum, Italy has its fair share of real estate opportunities. Living in the center of culture, art, and history is a vision of heaven for many of us, but somehow we consider it unattainable. Well, I beg to differ and destroy the unattainability of this scenario. Homes for sale in Italy vary in prices based on location, age, maintenance, and size, but, for now, I’ll just say that for approximately $220,000, you can find a property that will generate revenue whichever way you use it. If that’s too much, no worries. There is also the 1€, the rough equivalent of $1.21. That is not a typo. These properties need around $25,000 in renovations in heavily depopulated villages and are sold by the administration to motivate international buyers to revive these areas.
Towards the Southern coast of Spain and the Isla Canela, there are some promising real estate opportunities ideal for those that want a peaceful lifestyle in family-oriented places right on the beach. Isla Canela especially is an area that is expected to grow economically in the near future as it is right in the middle of two Paths of progress that connect Spain and Portugal to the Northern European market and investors. This 4,200-acre island has everything that a family set on relaxing could possibly want. While the term island is loosely associated with it seeing as there is only a river that separates it from the mainland, the nearby Isla Cristina is also promoted as such. You can find properties at around $105,000 with little to no renovations required.
The capital of Panama, Panama City, is one of the fastest emerging global hubs in the world, currently in a place similar to Singapore in its early days. This means that while the city’s real estate might not be the most affordable, the chances of long-term profit are incredibly high. People from all over the world flock to this evolving city, and the real estate market is ripe for the picking, especially now in the post-pandemic era. From 2017 to 2019, property prices appreciated by approximately $100,000, and the trend will only increase. The global crisis impacted the local real estate, but this only means that this is the best time to invest here while prices average around $230,000 and before they start to appreciate again.
The country of Colombia has a negative reputation based on old news scattered through newspapers around the world. We are not here to deny those rumors, but we are here to shed some light on what current Colombia is like, especially in certain areas. In particular, we’re here to talk about Medellín, one of the most charming and most European-feeling cities you can see in Latin America. Mountains encircle this regional capital of approximately 2.6 million residents, so it doesn’t have a wide area available for growth. The scenery is astounding, and it is one of the third places across the globe ideal for digital nomads and has a big corporate presence for all ages. Prices vary between $90,000 and $200,000 but finding more or less affordable homes for sale isn’t too difficult, but long-term rental isn’t an option here.
If living on the Atlantic Ocean with a Mediterranean climate is not ideal living, I don’t know what is. The warm waves crashing down on the incredible beaches of gold sand are simply mesmerizing, and the weather completes the scenery of this heavenly destination. Portugal is a country that overcame a dictatorship regime in 1974, and, even with the 2008-2009 crisis, it managed to grow far beyond any expectations. This developing modern country found its footing fast, and investments in infrastructure went a long way to generate income. Now, with the Golden Visa program that applies to investors from outside the EU, Portugal is growing even faster. Through this program, you are required to either invest $500,000 in relatively new real estate or $280,000 in a home that is at least 30 years old or located in a low-density area. The Algarve area is particularly attractive for US residents, and the limits are the sea and the Spanish border.
While Mexico has plenty of attractive locations for international real estate investments like Riviera Maya or Cabo, the price tag in these areas might be a bit higher than we would want. This does not mean that those areas are not worth investing in or can’t bring a high return on investments, but everybody knows about them. Meaning that appreciation already happened, and the future growth might be more steady and less accelerated. San Miguel, however, might just be the next Mexican destination that has yet to be overcrowded by international citizens. This UNESCO World Heritage site is about 170 miles away from Mexico City and is 6,200 feet above sea level. The city’s rich history gives it a European feel while prices are relatively affordable. You can find properties that sell for approximately $166,000 that are expected to appreciate in the next few years.
Finding the perfect international real estate investment opportunity may not be the easiest thing to do. The reason for this is that, first of all, you’ll be dealing with a foreign country, culture, taxation system, and so on. Secondly, prices can vary, properties can differ in structural types than those from the US, and the cultural change might be a lot. However, once you find a viable property in an area you are fascinated by, buying a property overseas can be a dream.
Living on a property with an orchard in Portugal, owning an apartment close to Fortezza de Basso – the most important historical monument in Florence -, walking among history in Colombia or Mexico are all dream holiday accommodations. Still, you can purchase one if you take the time to look closely. Keep an open mind and let your imagination catch wings. You could be the proud owner of your second home, holiday home, retirement home with a little push and a slight pressure on your budget.
Let us know in the comment below if any of these destinations inspire you to daydream about your holiday home or if there is any other that we didn’t mention that sparked your interest. Like & Share this article with friends and family who might want to enjoy your holiday home abroad as well and give you the motivation you need to fulfill your dream home.