All Forum Posts by: Mike Lambert

Europe is as big as the US and the differences between markets is even bigger because Europe is made up of different countries. Like in the US, there are good and bad areas for investing. The area around Nice isn't the best area to invest (although you might get some nice capital gains there) but here are plenty of areas that are great and where you can get much higher returns than you generally get in the US. Real estate is local.

@Taylor Dasch

You can buy the property in your own name if it's outside the so-called restricted zone. If it's in the restricted zone (within 31 miles of the coast or 62 miles from an international border, you have the choice between using a bank trust and paying the fees mentioned above or using a Mexican corporation and bearing the costs of establishing and maintaining  the corporation. Given the latter costs, a corporation can be the best solution only if you buy multiple properties. Bear in mind that the fiscal treatment of the two options in Mexico is different (withholding tax on the gross income with the fideicomiso vs cost deductions with the corporation).

@Mark Hafner

I've been investing internationally for many years but it's very difficult to answer the kind of questions you ask without writing a dissertation so I'd encourage you to ask more precise questions in the forum. If you know what you do and why you're doing it, there's no need for the bad and the ugly, which I personally haven't experienced.

@Jonathan Greene I'm not sure what you mean by "most will not cash flow as an out-of-country investor" as it might suggest that the cash-flow of a given property has something to do with the nationality or residence of the owner but, in any case, you're absolutely correct that, historically, the net rental yields of LTRs in US cash-flow markets like the Mid-West have been typically higher than in the average European market, although that wouldn't be the case for many other US markets like California or New York. Mind you, with mortgage interest rates in the US being so much higher now (and seemingly for the foreseeable future), I wouldn't be surprised if LTRs in Europe would cash flow better than in the whole US nowadays (to be verified).

This being said, I don't and would never invest in LT rentals outside of North America  as I wouldn't want to face unfavourable landlord/tenant laws as a foreigner. Most people who invest internationally invest in short-term rentals and, unsurprisingly, that's what Mark is asking about. ST rentals are much more profitable and command cash flows are often higher than in the US if you buy the right property in the right market.

As an international investor, I find Ladislas Maurice interesting but there are different types of international investors and most international investors I know wouldn't go through the hassle of what he does for the kind of returns that he gets. Indeed, you can get higher returns than that in the stock market at the click of a mouse and, when investing internationally, you'd typically want a higher return than you can get domestically or in the stock market, unless you're mainly looking for diversification or parking your money.

On another unrelated note, I love your latest podcast episode. BP should make you a guest host! :)

@Jacob St. Martin

The situation in Switzerland is particular and completely different than in the rest of Europe. Switzerland does impose some restrictions on foreign and non-residents buying property but you can still buy and several members of my family actually own property there. In any case, I doubt many people on BP would want to buy properties in Switzerland given the very low returns that can be achieved there. Most foreign buyers are high net worth individuals who want to park their money there in a safe haven and they don't need BP.

No restrictions apply to American buyers in the countries they'd generally want to buy, including those mentioned by Federico and many other popular countries.

When it comes to Spain specifically, some more conservative banks will ask you for a 40% downpayment (that would be the maximum) but that isn't the rule. Some other banks will tell you 40% to manage your expectations but if you have a good credit and a the deal makes sense, the down payment shouldn't be above 30%.

As to the managing of properties, if you can self-manage out-of-state in the US, there are no reasons as to why you couldn't do it internationally too and some investors do.

@Federico Dallo

I'm an investor based in Canada, which is a market quite similar to that of the US. While I've owned property in the US and Canada, I decided a few years ago to focus on real estate outside of Canada and the US. So, as you can imagine, I completely disagree with the opinion that investing in the US is better. While I could write a whole dissertation as to way, I have no appetite to enter into a kind of discussion in which too often egos become prevalent over helping one another.

What I would do if I was in your position is to ask about investing in the US to somebody who actively invests there and ask about investing overseas to somebody who actively invests in Europe and the Caribbean and then draw your own conclusions. So feel free to DM me if you think I could help.

The other reason for me to reply to you is to debunk some untruths that are being circulated about international investing, as it could help all readers who bump into this thread.

It's not true that many European countries require you to be a citizen or a permanent resident to invest in real estate there and certainly not in the countries that you mentioned. I had never heard or read that one before so I'm not sure where it comes from. Actually, an ever growing number of Americans are investing in Europe and they're welcomed with open arms. Also, while you might have to put down 40%+ in some countries, it isn't typical and, again, it's not the case in some of the countries you mention. Don't take my word for it though. A 2-min Google or Chat GPT search will confirm.

Hope this helps.

@Anna Pugolovko

I'm afraid you're way too late to the party. I started investing in the area in 2017 but stopped a few years back as it's being completely overbuilt. But, ultimately, it could work if you don't mind a low ROI.

It could make sense if you look at a lifestyle rather than an investment purchase and you're just happy to cover your costs. Mind you, it would be much less expensive to rent when you go there given the very low nightly rates due to the overbuilding. Also, I'm not sure why you'd want to buy close to the station, as that would probably one of the worst places where you could buy IMHO.

Hope this helps.

Feel free to shoot me a question.

Hi Natasha,

You can choose between the two. In doing so, bear in mind that the cost and admin of a corporation is higher and that the tax treatment is different:

1. With a fideicomiso, the first $200k is tax-free when you sell.

2. With a fideicomiso, the gross income is taxed through a withholding tax whereas, with the corporation, the rate, you can deduct expenses but the taxation rate is higher.

Hi @Natasha Rooney, you can do either or.

@Alex Scattareggia, the withholding tax, as you suggested, doesn't have to be an issue providing that your property is profitable enough. As you mentioned, you can get overall higher profitability than in the US or Canada but, like in those market, long gone are the days when you could buy any property and make a killing as an STR.

Too many people go to Mexico and buy any property because it looks good. That can work for a lifestyle buyer but isn't ideal for an investor. Investor needs to do their home work.

So, @Hannah Tate, great job asking the community for help. You're on the right path.