Overseas Real Estate Investors?

Question

Hello. I was curious if there are any folks in here that live and invest overseas. I ask because since I am overseas and cannot use my VA loan, I'm warming up to the idea of investing in European markets.

Ideally Portugal but I'm open to other places as well. Would love to here about exoerices and welcome any advice

Mike Lambert · Answer

@Kit E.

An overseas mortgage could cover 50 to 80% but, even if that's on the lower side, I'd still take the overseas mortgage because then I can still use the HELOC from something else.

You're just comparing the HELOC with the overseas mortgage and look at which is better. If you use the overseas mortgage to buy the overseas property, you can still use your HELOC to buy another property in the US. If you use your HELOC to buy the property overseas, you can't take a mortgage on the overseas property to buy another property in the US. You're leaving your equity in the overseas equity untapped to your disadvantage.

If you have no other use for your HELOC (like you don't want to use it to buy another US property) it makes sense indeed to use your HELOC to buy the property overseas if the conditions of the HELOC are better. And, of course, if you can't get an overseas mortgage or if the conditions of that mortgage don't work for you, by all means use the HELOC.

Kit E. · Answer

@Mike Lambert  The deal is that most HELOC's will get a better rate than overseas mortgages.  Not many locations overseas want to give foreigners home loans.  If they do they it might cover 65% of the loan not 80% like here.   Many of the things we take for granted in the US just don't exist for real estate investing overseas.  The one disadvantage of using a HELOC is FX risk but that is dependant on your income sources also.

Mike Lambert · Answer

@Kit E.

Yes, the HELOC won't finance an overseas home purchase directly but you can use the HELOC for that purpose. You can also use the HELOC to buy a car or pay for a holiday for that matter. The bank doesn't care how you use the money.

It's inferior to getting a mortgage but it works great if you don't have the cash and/or don't have any other (better) usage for the equity in your home. In that case, it might be better to use a HELOC even if you can get a mortgage overseas as long as the conditions of the HELOC are better than those of the overseas mortgage.

Kit E. · Answer

@Joshua Biggins   People forget to mention you can use a HELOC on an overseas home purchase.   I have been watching expat videos on Portugal and it looks affordable anywhere but Porto or Lisbon.

Also if you are a military or GS employee you can transfer your TSP to self-directed IRA and rent out the property.

Israel Sternbuch · Answer

Really depends what you are after... So you have to think about it, and that - depending on your budget - will allow you to formulate a clear strategy.

Portugal can be very interesting, I would suggest you stick a bit closer to home (SW Germany, in your case!).

Mike Lambert · Answer

Hi Joshua,

Then maybe you're in luck that you can't use your VA loan. Jokes aside, Portugal is a great place to invest and can be a better one than many areas in the US.