All Forum Posts by: George Gammon

I'm going to have to slightly disagree with Russell. I agree it is better to invest within driving distance if the ROI is similar to what you can achieve outside of that distance. For me, I prefer to look at a total risk adjusted return.

Let's look at extremes to understand the concept. Assuming there's more risk in a property outside driving distance you have to ask yourself how much more risk? Try to quantify it, then measure that against the increased ROI (assuming there's an increase). If you can achieve a 5% return within driving distance with a 2 risk factor (risk based on a scale of 1-10) but outside the driving distance you can achieve a 20% return with a 3 risk factor it's wise to at least consider the property further away.

If our imaginary scenario was reality I'd suggest a portfolio with both local and distant properties.  

This comes with the assumption you have access to good property managers.

As far as international investing more specifically, I know of several countries where the risk is far less than the US.  Remember, most other countries don't have real estate markets fuelled by low interest rates and excessive debt.  What's riskier in terms of appreciation, investing in a market that give's loans with 1% down and 3% interest (US) or a market that requires 40% down and 10% interest?  Also remember, in the US, the government always has the first lien on your real estate.  If you fall behind on your property taxes the local government will foreclose and take your house.  We demonize banks for foreclosing on people and forget that our governments do the same and potentially to a greater degree.  I've invested in several countries where the governments don't have the power to take your property and have more stringent personal property rights than the US.  I'm not saying the US isn't a good place to invest (I own several properties in the US), I'm only saying there other options out there that may have a better risk adjusted return.  

I'd start local, as Russell suggests, but keep an open mind to other opportunities. ;) 

Good luck,

George

I've done several deals internationally, most recently in Medellin, Colombia.  Happy to answer any questions or would love to discuss with other investors that have done the same.