Tuesday, September 22, 2009

International Real Estate for Investment and Retirement: A Primer

An investor in international real estate has to consider a lot of factors before deciding on a particular property. The key issues span the gamut from global trends in real estate to local features of the target neighborhood.

In seeking out a suitable property for investment, the first order of business is to gather background information on the target markets. For this task, the relevant factors span the gamut from the macrolevel of the economy to the microlevel of the property. An example of the former is the prospect for economic growth in a target country, or the affordability of housing in relation to local wages. Meanwhile a sample of the latter is the character of the neighborhood or the plans of the local government for urban development throughout the district.

A second point is that a serious investor has to take the trouble to visit the country in person. In fact, the visitor ought to make the journey more than once in order to get a decent feel for the country, the region, and the neighborhood. Without the broad-based perspective, it is well-nigh impossible to figure out whether the prices on the market are reasonable for the area.

A third aspect involves the direction and speed of movement for the local market. In particular, the investor has to figure out whether the price level is headed upward – and if so, how quickly.

A fourth factor is the choice of a reputable agent who can help the investor with the logistic and bureaucratic issues in buying a local property. The agent should also be a valuable source of information in discussing relative merits of different niches within the locality. A competent agent should also have some informed opinions on large-scale trends within the target country as well as the entire region.

A fifth task for the investor is to talk to their financial advisor and tax counselor in order to explore alternative vehicles for buying and managing the property. An example in this vein is to weigh the relative merits of purchasing the property directly as a private individual versus holding it indirectly after setting up a holding company. The financial as well as legal implications will depend on a raft of factors ranging from the personal circumstances of the investor to the tax regulations in the target jurisdiction as well the investor’s country of residency.

A sixth factor is the exit strategy. Before taking on a big responsibility, it’s a good idea in any aspect of life to know in advance how things will wrap up in due course.

In the case of real estate, the investor has to figure out a number of things before even buying a property. Examples of this sort include the expected length of the holding period as well as the mode of disposal at the end of the planning horizon.

To sum up, an investor in international real estate has a slew of issues to consider. The good news is that there is plenty of background information in the realm of bits as well as bricks. 

Further Information

The following article provides more information on the challenges and opportunities in buying property abroad: International Real Estate for Investment and Retirement: A Primer and Guide to the Best Resources.  Moreover, the writeup provides a number of guidelines for avoiding common mistakes that beset investors in foreign real estate. Another significant feature of the article is a guide to the top resources for investing in property abroad.