Lief Simon is the Director of Overseas Property Alert . Lief has lived and worked on 5 continents and traveled to more than 70 countries. His real estate investing experience began more than 20 years ago with a multi-unit building in Chicago.
After selling that building for a leveraged total return of more than 1,800% in 2 ½ years, Lief began to diversify internationally. In the two decades since, Lief has personally purchased more than 45 properties, investing in 26 different countries around the world. He has developed land, managed rentals, and flipped pre-construction buys. Lief has more experience buying and profiting from real estate around the world than any other individual investor you’re likely to find anywhere.
How should one hold property overseas? That’s a regular question at conferences… especially my Global Property Summit each year. The best option depends on the person, the property, and the country where the property is located… and even what funds you’re using for the investment.
Use IRA funds and, generally speaking, you should set up an LLC to hold the property. In fact, for some countries, you’ll have to use an LLC because an American IRA isn’t an entity that other countries recognize. They just don’t know what to do to title a property owned by “XYZ IRA Custodian, Inc. FBO John Smith, Account #12345.” …
Last year I wrote to you about a truffle investment in France. Today I’m writing to tell you it’s sold out. So many OPA Readers bought in to the project that the developers have had to move to Spain to get more land, to plant more trees, to make more truffles. And the Spanish investment is equally as attractive for three reasons… …
Theresa May battles on in the U.K., getting little sleep, I imagine, as she racks up frequent flier miles jetting among EU capital cities trying to save her Brexit deal. Whatever happens—soft Brexit deal, hard Brexit deal, or no deal but an unceremonious divorce between the U.K. and the EU—the consequences will be many.
And those consequences will lead to opportunities.
No matter how big or small your real estate investment portfolio, it should include agriculture.
We live in a world with an exploding population and dwindling arable land. We’re looking at more than 9 billion people on this planet by the middle of this century, a sobering reality that is translating to a global race for farmland.
Billions of dollars are being spent each year on research in efforts to prevent a disaster… and, of course, to make a tidy corporate profit.
Genetic engineering (GMOs) is usually at the forefront of this agro-tech, but the mere mention of the phrase “GMO” scares off a lot of hungry consumers. …
In today’s complicated world, international property stands out more strongly than ever among investment options because it is both a hard asset and one of the best current opportunities for generating cash flow while building real, long-term wealth.
I recommend Panama for two things specifically— apartments for rental and agricultural opportunities.
Panama City, where resale transactions have slowed, is and will continue to be a buyer’s market through 2018. I see this year as a chance to buy on a dip, because, long term, I remain bullish on the Panama City rentals market.
Yields continue strong though not as strong as they were a couple of years ago, primarily because rents have softened.
Argentine, Colombian, and Venezuelan buyers have helped to keep the Panama City market stable and growing over the last 10 years, even while other markets in this region struggled or even collapsed.
Today, North Americans and Europeans continue to invest, but it’s Panama’s new relationship with China that I predict will fuel this economy through its next stage of growth. If the Chinese come in volume, as they did in Vancouver in the 1990s, Panama City property prices will soar to new levels.
The second big opportunity for making money from real estate in Panama in 2018 is through productive land. This country’s interior is a fertile bread basket. Individual investors can participate in organic plantations for turnkey agro-profits.
Brazil is a big country of many different property markets, some more interesting than others. I recommend focusing on the Fortaleza area. This coastal region is a top destination among Brazilian tourists. Rentals targeting the local holiday market can earn better than 8% net yield reliably.
The Brazilian real remains stable against the U.S. dollar (at around 3.30 reals to US$1, as of this writing) and historically weak relative to the rate of 1.6 reals to the dollar of a decade ago.
Good yields and a weak currency make this country a strong buy for 2018.
In the Dominican Republic, I recommend focusing on the capital, Santo Domingo.
The Dominican Republic is enjoying continued strong growth, as well as increasing foreign direct investment. All those business travelers coming to get in on the country’s economic boom pass through Santo Domingo… and they all need places to sleep.
Meantime, tourism figures continue to impress, as well; this country saw more than 6.5 million tourists in 2017, up from 5.9 million in 2016.
A furnished rental for either of these markets—the business traveler or the holiday-goer—can be an excellent source of cash flow and, if you buy right, should enjoy good capital appreciation.
One of the best opportunities, specifically, is to invest pre-construction in an apartment intended for the business traveler market. Businesspeople staying longer than a week prefer an apartment to a hotel.
Note that it can be possible to qualify for financing as a non-resident. I don’t recommend financing property overseas, however, unless you are sure you can cover the mortgage payment even without any income from the financed property.
That said, Santo Domingo city apartments rent well, and you should have no problem covering your mortgage payment from your rental income.
I like Thailand for agriculture primarily but think this country deserves attention for its strong economy and expanding tourism industry, as well.
The downside in Thailand is that restrictions are placed on how foreigners can own property. Foreigners are only able to own land leasehold.
A foreigner can hold freehold title to the construction on the land, but, unless your house is portable, you might not take comfort from that.
Foreigners are also permitted to own condos freehold as long as they don’t own more than 49% of the total area of the condo building.
For this reason, the condo market is where most foreign investors focus their attention. A condo is also cheaper and easier to manage as a rental than an individual property.
Bangkok was the number-one visited city in the world in 2017, according to one survey. This city last year received more visitors than London or Paris. Again, that’s worth the would-be property investor’s attention.
Property markets in Portugal have been on the move since 2015. Some neighborhoods in Lisbon, for example, are now priced beyond what I believe makes sense for a property investment. Other areas of this city, however, continue to offer good value and opportunity, especially if you’re up for a renovation project.
In 2018, I recommend focusing on the lesser-visited areas along the country’s Algarve coast and the Porto region north of Lisbon.
Portugal is another country where it’s possible for a non-resident to get a mortgage.
I’ve been sold on the Paris real estate market for decades and have owned in this city for about 15 years. Prices go up and down, as they do everywhere, but, for my money, a piece of Parisian real estate is one of the surest imaginable stores of wealth long term.
Though it’s strength is waning as we move forward into 2018, the U.S. dollar is still creating euro bargains for American buyers.
One of the most impressive features of the French property market is the fact that foreigners are eligible for property loans within the country. In fact, French mortgages for foreigners are at historic lows of less than 2% interest… with loan-to-values as high as 85%.
Put concerns about the drug cartels aside. Mexico remains a top destination among Canadians and Americans for both tourism and retirement and is enjoying good growth in the local tourism market as the country’s middle class continues to expand.
Top markets include Puerto Vallarta on the Pacific coast and Playa del Carmen on the Riviera Maya. In both of these popular tourist towns, a rental property can generate an excellent yield.
Mexico offers financing options for non-residents, generally from U.S. lending institutions set up in Mexico specifically for that purpose.
I believe the tourism and resident expat markets on Belize’s Ambergris Caye will continue to expand through 2018 and beyond, meaning this still-undervalued Caribbean island is another good choice for a rental investment.
Elsewhere in Belize I’d focus on Cayo where quality rental accommodation at a reasonable price is hard to come by. If you were to build a high-quality rental, you could make a good yield by pricing your property competitively relative to the local hotels that you wouldn’t let your mother-in-law stay in.
The attempted coup in this country in 2016 has kept many foreign investors away since. Meantime, values in Istanbul have surged.
Istanbul was the world’s 11th most visited city in the world in 2017. That was behind brand-name cities like Paris, London, New York, and Hong Kong… but ahead of other major cities, including Berlin, Barcelona, Rome, and Los Angeles.
In addition to tourism growth, Istanbul and Turkey in general are enjoying strong economic growth as the population increases and the middle class expands. I see both tourism rentals and student rentals as appealing rental investment options.
One of the biggest selling points for such an investment in Istanbul is the low cost of entry. A rental unit in this market can be within most any investor’s budget.
Turks And Caicos
At the other end of the budget spectrum is the higher-end Turks and Caicos.
Ordinarily, a high-end property does not generate the level of net rental yield that can be possible from a lesser investment. Long-term rents for a luxury-standard house in the United States, for example, don’t generally reflect the premium price of the property.
A luxury purchase in the Turks and Caicos can be an exception to this rule. It can be possible in this Caribbean market to earn a net rental yield of 8% even from a high-end investment.
Banks in the Turks and Caicos will lend to non-residents. At the price points of the luxury rentals in this market, you definitely want to be conservative with any mortgage you take out in case rental income slows for any reason.
Plus: Holding Real Estate In A Roth IRA… And Finding Paradise In Mexico
As a real estate investor seeking out property deals in different countries around the world, one of the things that I pay a lot of attention to is the performance of the currency in the market where I’m considering investing. While a currency’s performance is not necessarily a deal breaker, it can transform a good deal into a great deal… if the timing is right and luck is on your side.
All that said, I do not advise you to try to time currency exchange rates when investing in real estate. No one can reliably predict which way exchange rates are going to move. But if you are presented with an investment opportunity in a country whose currency has moved dramatically in your favor, then you should pull the trigger.
One of the real estate markets that has my attention now is Brazil, specifically, the region along the northeastern coast. At the time of this writing, the Brazilian real is trading at 3.59 reals against the U.S. dollar. That is, U.S. dollar-holders have seen their buying power in Brazil increase by almost 150% since 2011.
There may never be a better time to purchase real estate in Brazil.
In fact, we’ve identified an excellent pre-construction investment opportunity along Brazil’s northeastern coast that I believe makes sense from an investment perspective and …
Plus: “…I Would Not Go There If They Gave Me A Villa.”
May 19, 2015
Panama City, Panama
Dear Overseas Property Alert Reader,
Building a diversified real estate portfolio overseas isn’t easy. In addition to the time it takes to scout countries and identify properties for purchase, you also need a fair amount of cash, as financing isn’t an option in many countries (and isn’t easy in some where it is available).
To be invested in even two properties, you’d need at least US$100,000… and that would get you a hectare of agriculture and maybe an investment lot in a development or possibly a very small rental apartment somewhere.
Another option for broader diversification is through a development company with projects in multiple countries.
Most real estate developers focus on one country, meaning that, even if they have several projects going and allow investors to participate in them all, your diversification is still limited.
One development company I know is operating in multiple markets. Their target buyers are North Americans, specifically North American retirees. This group has taken an approach similar to that of Del Webb when he broke out of Arizona and started building for retirees in multiple U.S. states.
The marketing strategy is straightforward—sell the customer what he wants rather than what you have. To that end, this group is developing expat retiree-friendly projects in Belize, Nicaragua, Costa Rica, and Panama. They are working to add additional development communities in other countries where American and Canadian retirees are focusing their attention, including Ecuador and Chile.
Because you’re reading this letter, I assume you get the big-picture premise at work behind this group’s strategy. Retiring overseas (as you know) is a fast-growing idea whose time has come. The challenge for many retirees considering their options overseas is finding housing of North American standards at better or even the same pricing as back home. Construction materials in Central and South America don’t cost much less and can even cost more than in North America. It is lower land values and cheaper labor costs that mean housing can be less expensive than up north.
It’s possible to buy super-cheap housing South of the Border if you’re ready and willing to go local. However, local housing in Latin America can be a shock for the North American buyer. Going local can mean going without hot water, without air conditioning, without a washing machine or dryer, without a fitted kitchen, etc. North American retirees considering options beyond North America are looking for a better lifestyle for less money, not to downgrade and make do. …