As an investor, you need to look for good deals. It’s actually the deals that make you money. In this view, you can acquire properties in the country where you reside. It is also possible to invest abroad either in your home country or in another country. If you choose to invest abroad, it is important to master certain information. So, under what conditions can you invest in rental real estate abroad? How to invest in real estate on an international scale?
What are the advantages of investing in rental real estate abroad?
****** Investing in rental real estate — A matter of know-how
You may also like : How to Succeed in Real Estate?
Many people want to know how to invest in rental real estate abroad. This article will answer that question by detailing the information. Thus, it will allow you to master the points you need to analyze and especially to know the mistakes you should not make. What is the advantage of investing abroad? Is it better to invest in your country? Regarding some of the questions you are asking, the answer can be positive or negative.
There are several advantages to making a smart rental real estate investment abroad.
Related reading : How to produce CBD in France?
First advantage: Geographic diversification
As an investor, you can invest in rental real estate internationally. Having properties abroad also secures you regarding your assets. Indeed, when you have goods in different countries, you have the advantage of keeping part of your assets when problems arise in one country. Not all your businesses will suffer the effects of issues that occur in one country. Geographic diversification provides you with security for your business.
Click HERE to receive 1 hour of free training
Second advantage: Double protection
Having properties in several countries or abroad gives you double protection. Indeed, if you have problems that lead to the seizure of your assets by the state, the state has no authority over your properties located abroad. In fact, it may have issues with the operation of the business you are developing in your country or any other problem.
In these circumstances, the state in which you reside cannot seize your assets abroad. Investing in rental real estate abroad thus provides you with double protection.
Third advantage: Inheritance costs
When you own properties in other countries and transfer ownership, some countries allow you to exempt inheritance fees in terms of estate taxes. So, if you want to pass on a property to your loved ones, investing in rental real estate abroad can be an interesting advantage.
Fourth advantage: In case of relocation abroad
If you want to leave your country and move to another country, then having assets abroad will allow you to have goods that no longer depend on your home country. So, if you no longer want to have economic interests in your country, investing in rental real estate abroad is a beneficial option.
Fifth advantage: Purchasing properties through companies
If you own companies, you will be able to buy goods abroad through these companies because they offer credibility even abroad.
It is also important to analyze certain criteria before making a decision to invest in rental properties abroad.
Criteria to consider before investing in rental properties
Ten concrete points will be developed and will allow you to make an informed decision about investments abroad. How to invest in rental real estate?
First point: The profitability of the property
The profitability of the property must be taken into account first. Will the property bring you money? Indeed, the minimum is that the property is self-financing. It is therefore necessary to look for assets likely to generate a cash surplus. When you do business in real estate, your goal is to make a profit.
If you buy a property because it is trendy or because you just want to invest in real estate while losing money, that doesn’t seem reasonable. If you want to invest abroad, you must first analyze profitability based on the country. To do this, it’s very simple. For example, if you want to know the average profitability of a country, you can enter in Google “Rental profitability Portugal”.
So, you put the name of the country that interests you. This can include Portugal, Spain, England, Brazil, Thailand, Morocco… These are data available on Google. Before making the decision to invest abroad, the profitability in that country must be higher than that of the country in which you live.
Second point: The stability and growth of the country
To invest in a country, it is important to ensure its stability and growth. This is a criterion that seems obvious. Imagine investing in an unstable country or being expropriated. It could also be a country where politics change or where taxes vary from one moment to another. These are factors that are not conducive to your activities.
We must therefore be aware that there are stable countries that were previously considered third-world countries. These countries have experienced changes today. I invite you to explore these avenues. To invest abroad, do not necessarily choose trendy countries, but rather countries where people have not yet invested. These are actually the countries that have growth potential.
Third point: Cash flow
Be careful not to invest in countries where there are speculative bubbles. Some people want to invest in Florida, for example. They also think about apartments with sea views and others. These are, moreover, projects with criteria that are a bit trendy.
Nevertheless, it is necessary to ask a few questions. Is there profitability? In terms of taxes, is the project interesting? In terms of geo-diversification, is the project interesting? This is not always the case. In some cases, the project may be profitable. However, it is important to be vigilant.
In fact, when you make a real estate investment, remember that the goal is not to pursue the sexy character of a property. It is not about being catchy either. The main thing is then to have a cash flow. Most of the properties I bought do not have a sea view. They are not sexy but they generate a lot of cash.
So be cautious when investing so as not to be seduced by the trend effect. Do not invest in a country marked by speculative bubbles either. In fact, the risk is to make a purchase when prices are rising. It is also important to know that bubbles deflate after a certain time, whether in real estate or any financial investment.
Fourth point: Taxation
Find out about the tax system of the country where you want to invest. It is also important to know in addition to taxation, notary fees and whether or not there is a property tax. Also consider whether tenants have to pay a housing tax. How are rents taxed? How is the resale of real estate? How can we proceed regarding inheritance rights?
These are questions for which you must find concrete answers before investing in rental real estate in a country.
If you live in one of the countries that tax real estate the most, I advise you to be careful. In fact, if you are used to investing in your country, for example, and it is a notary who supervises the transaction, you should also know that this is not the case in all countries. In other countries, the law is not the same. So it is not necessarily a notary who will carry out the transaction. It could be a lawyer or others.
Thus, you must first carry out certain checks to ensure that you will actually own your property. So I advise you to hire a good lawyer. Do not take the lawyer from the real estate agency or the lawyer recommended by the seller.
Fifth point: Real estate financing
Investing in rental real estate — Clearly define your financing
This factor is often not mentioned. How can I obtain financing for an asset abroad? How to invest in rental properties without contribution?
Investments in the Eurozone
If you are a French or Belgian resident and want to be financed in countries such as Spain or Portugal, the procedure is simple. Indeed, most banks have agreements. To do this, you will then follow a loan procedure. It’s like asking for a loan in the country where you are investing.
Investment in non-Eurozone countries
On the other hand, if you want to take out a loan to invest in rental properties in countries outside the Eurozone or for example in Eastern European countries… you must meet certain criteria.
First, look for the financing with which you buy the property. Let’s take the example of a person living in Belgium, France, or Switzerland and requesting financing from a banker in their country of residence to invest in Croatia, for example. The banker will feel that he is not in control of the Croatian market. In fact, he does not master the potential of real estate in Croatia and could not know if you are making a good deal or not.
Secondly, the banker will raise a guarantee issue. He cannot be sure of the repayment of the loan. For example, if you are French and request a loan, the bank will apply for a mortgage. This means that if you do not repay the bank, the bank will recover the guarantee and will be able to pay for it.
However, if the bank grants you the loan and you invest in such a country (Croatia), it will not be able to seize the guarantee. In fact, your property is unseizable and the bank will not be able to be reimbursed. For this reason, it will not agree to finance your investment.
Nevertheless, you can find an alternative. Indeed, the bank will agree to finance you provided that you already have real estate for which you are the sole owner in your country (France, Switzerland, or Belgium).
This is the case, for example, if you have a property worth one hundred thousand euros in France. Thus, the bank will agree to finance you up to seventy thousand euros to make an investment in Croatia. So, you have given a guarantee to the bank that will accept your loan application.
Sixth point: How to analyze a market?
It is important to master market analysis before investing in rental real estate abroad. To analyze a market, I will give you my strategy, which I develop extensively in my Imperium program. In this regard, I have already accompanied several entrepreneurs to make acquisitions in other countries.
To achieve this, I invite you to first consult the classified real estate listings of the country concerned. If you want to invest in Spain, for example, you need to enter in Google “real estate Spain” to access the websites of real estate agents. So, you look at market prices as well as cities.
Here’s how it works in a country where it’s a city, a neighborhood, or a street. In fact, the price changes from one street to another. Under these conditions, you cannot generalize real estate to a country. The price varies according to the city, the sector. Based on that, you will make a free market. So, you buy based on your bargaining power with the person.
Seventh point: Consult real estate listings on
reservation This is the second step in market analysis. To invest in rental real estate abroad, consult the booking platform. On this platform, you can look at the map to locate apartments and hotels that rent for short-term rentals. This indicator then directs you to places where there is rental demand. If you have a cluster of points concentrated on the map (in booking), know that this is where you need to have your apartment.
You can then buy in that area where there are concentrated points. Additionally, you can buy the apartment just on the outskirts of where there is a cluster of points. You will then make the purchase by trying to negotiate the price, positioning yourself, and looking at strategic places in the city or country.
Eighth point: Make the move to test rental in the
country Then, you need to travel by plane. So, you will stay in the country for at least ten days. To do this, take a small Airbnb apartment to actually test the rental in the country. By doing so, you will be able to invest in seasonal rental real estate.
Ninth point: Meet real estate agents and property asset managers
You will be able to meet real estate agents without necessarily buying real estate. Also visit managers or real estate agents who can provide you with all the information on turnkey real estate investments. By attending to these agents, you will receive advice on investing in rental real estate.
It is not necessarily to do business with them. In fact, these are people who sell everything included. This means they find you the real estate, renovate it, find you tenants, and legally accompany you.
These are people who are used to assisting foreign investors like you who want to invest abroad. They will provide you with information and offer you good deals. It is worth noting that you can find offers that benefit you in 5% of cases. Thus, you can do business with them in those 5% of cases. Otherwise, you would have the necessary information you need. It is worth noting that this information is useful if you want to invest in rental real estate abroad.
These real estate agents and others will guide you and inform you about craftsmen and other workers. This is the case when they advise you, for example, to be careful with workers because they may run off with your money. The same goes for lawyers whom you should not trust. They will also inform you about the risks associated with certain neighborhoods.
In this way, you take the information from these people (real estate agents, property managers, or people who usually assist investors like you) who already know the market.
Click HERE to receive 1 hour of free training
Tenth point: Meet craftsmen and
lawyers Investing in real estate — Working with specialized lawyers
After gathering information, I advise you to meet craftsmen and lawyers who are on site. In fact, the procedure is the same as if you were buying in the country where you live. You need to pay for the property in the old one that needs to be renovated. Then, you need to divide them and make rooms. This way, you can choose to invest in student rental real estate. To achieve your goal, you need a team of craftsmen.
If you meet the craftsmen, ask to see one of their neighborhoods or houses that they have already renovated. This will allow you to know how they operate and the delivery times of their work. You can also meet some of their clients to reassure yourself.
To find craftsmen, you can ask agencies that deal with property management (real estate agencies…). The craftsmen will show you their sites at your request.
See also the video: How to invest in rental real estate abroad?
Tag : the advantages of LMNP