Seeking Advice on Property Investment for Renting - Budget of 300K

[Federico Dallo]

Hello everyone,
I’m new to this forum and a beginner when it comes to purchasing second properties. I’m European and my wife is American, and we’ve been considering buying a property to rent out. We don’t have everything figured out yet, but we have a budget of around 300K to invest. We live near Nashville and are interested in a seaside or lakeside location. We’ve been considering the United States, Europe (Spain, Cyprus, Portugal), or the Caribbean, but we’re not sure how to proceed and would like to avoid any major bureaucratic or administrative difficulties.
Do you have any useful advice or specific locations you would recommend?
Thank you!

[Jacob St. Martin]

Hello Federico, 

Congrats on having 300k saved up and ready to invest, that is a huge first step! Honestly, the first question that you and your wife need to ask yourself is whether this is primarily an investment or primarily a house for fun. 

Based on your post it kind of sounds like you want a beach/lake house but like the idea of it making money too. Is that a good assumption? Another big question is, do you want the headache of self-managing a short term rental? As a short term rental owner I can tell you they are not passive and can be a headache. If you don't want the headache of management that is fine but will limit your options. 

First, let's talk about U.S. versus international. While the idea of owning internationally is attractive, in reality it tends to be much harder to buy property in other countries (especially European countries). First, many European countries require you to be a citizen, and in some cases a permanent resident, to buy property. Second, even in countries that do allow foreigners to buy investment properties relatively easily (like Spain), you typically have to come up with much larger down payments (like 40%+) as a foreigner. Third, you will almost certainly need to hire a STR management company if you buy internationally which often makes the numbers difficult. You may be able to bypass some of those hurtles based on your country of origin/where you have friends and family but in most cases investing in the U.S. will be way easier and will yield a better ROI.

Within the U.S. if you want to avoid the bureaucratic nightmares that often follow STRs you will probably want to invest in a well established STR market that already has laws favorable to STRs. If you buy in a market that does not yet have rules on STRs, they will someday and you don't know what direction they will go. Also if you do not want to self-manage, you will need to be in a market that has established STR management companies.

The big downside of these established markets is that they tend to be expensive and hard to make cash flow. This is where we will go back to your primary goal (Owning a cool property that you use sometimes vs. a pure investment property). 

If getting the highest ROI is your goal then you will want to self manage your airbnb and you will want to do it in a market that is not already saturated. I would actually recommend looking near where you live in nashville. Certain areas of the city have outlawed airbnb but others allow it. Because of this the supply is relatively low which means the ones that do exist tend to make good money, especially if you theme it toward bachelor/bachelorette parties. It also has the benefit of being local which is great training wheels as you learn how to be a killer host.

Now assuming that you mostly want a cool property to stay in sometimes near water and don't want to spend a ton of time managing I really like the outer banks in NC. It is a very well established market with solid, steady revenue, and it is beautiful to visit. There are also great management companies there if you don't want to self manage. Another option is that you could partner with an investor who will do the work of management and help you find a great deal. I partner with investors in this way and would love to talk you through how I structure that type of deal. If you aren't interested in that I'd be glad to connect you with a killer agent in the outer banks. 

Best,

Jacob