International Real Estate Investing

[Brandon Goldsmith]

Hello BP Community,

As I've been in school I have had the opportunity to travel quite a bit internationally. Having a huge interest in international markets and soon to be career in real estate, I am usually having questions real estate related in how other markets around the world are doing in comparison to those in the United States.

I am curious to know if many American real estate investors venture out to investing overseas and if so what originally made that specific market attractive and what the was the reasoning behind it. Was it for a new vacation home, Airbnb purposes etc. I also know the tax laws and regulations surrounding real estate can be drastically different but sometimes very beneficial depending on the area. I do have a lot of friends from Europe and Latin America, while talking to some of these people I have seen a trend of some investing in Central America and other parts of Latin America such as Colombia.What are some of the main things to keep in mind regarding international investing?

Any insight and knowledge to the topic would be greatly appreciated!

[Mike Lambert]

I’ve been investing internationally for a few years now. More specifically, my target area covers Mexico, Central and South America, the Caribbean and Southern Europe.

Your question is pretty vague and I could write a 5-page answer on it. Vague, non-specific questions generally speaking rarely have great quality answers but I’ll do my best in a short but meaningful answer here. Don’t hesitate to ask more meaningful questions to dig in though.

I started investing there initially to purchase vacation rentals that would pay for themselves. By doing so, I realized that international real estate is a great asset class to just investing in and diversify. The fact that I need to travel to those places (poor me ;-)) doesn’t hurt.

What are the advantages, apart from portfolio diversification and the travel/fun aspect of it?

Generally speaking, no one bubble caused by ultra cheap debt, with Europe being an exception if you invest in the wrong places but, even in Europe, the bubble are nothing like those in North America though. No multiple offers and little competition there. Local buyers are very unsophisticated so being North American can help if you’re creative. In markets where real estate isn’t priced in US dollars and too a certain extent euros, there are huge discounts available to the US buyer due to the enormous devaluation of the local currencies over the last few years. And even in countries where the quality real estate is priced in dollars, you get a huge advantage because your already low costs are in a devalued currency while your income will be in dollars if you do short-term rentals. As you can imagine, this advantage can be huge if, like me, you go into property development.

Currency fluctuations are a risk and the outcome might be positive or negative but, in any case, you reduce your risk because you diversify.

What’s very important to understand is that, to be successful, you’ll need the right connections on the ground and knowledge, which I had due to my previous career as an international banker covering the countries where I’m active. If you don’t have that, you might be better off investing with people who do.

International real estate is real estate so a lot of what you learn on BiggerPockets will apply. However, many of the strategies won’t work and you’ll need to follow the strategies that work where you’re investing. These can be very different from one place to another.

I hope this helps. Don’t hesitate to come back or contact me if you have additional questions. Also, you might check my answers to past posts on the subjects through my profile. I’m often told that there is a goldmine of information within them.