Investing in international real estate markets is a growing strategy for many reasons. For once, some developing countries are experiencing high rates of growth in real estate, and the potential yields are attractive. But before you decide to purchase property or real estate interests in other countries, it’s important to consider some factors that may affect your experience. Here are a few to start!
Understand Local Rules
Laws and regulations governing property development, taxes, and financing vary widely from country to country, and they may differ substantially from what you are familiar with in the United States. Many countries have strict rules for non-citizens wishing to purchase or develop land.
Additionally, financing property in other countries may involve more paperwork and more money upfront. U.S. mortgage lenders will not finance property out of the country, and many countries won’t lend to foreign investors. If you can get a mortgage, it will probably require a large down payment. If you don’t have cash, consider investing with a real estate development company.
Some countries are more investor-friendly than others. For example, in Thailand, foreigners are prohibited from owning land. If you wish to invest in the growing housing market in Thailand, you must do it indirectly by being associated with Thai-owned firms. On the other hand, some countries such as Mexico welcome outside investment. The close location and familiar culture of Mexico also make it an attractive investment for a vacation home, rental properties, or larger developments. Low property taxes are also a plus. Although you won’t be able to buy ocean-front land, you can own property away from the shore, and many growing urban markets, such as Mexico City, offer good potential.
Know Real Estate Market Trends
The real estate market experiences highs and lows just as any investment area, but keep in mind that foreign real estate markets may not follow the same trends occurring in the U.S. Before purchasing property or investing in a development, take some time to watch the market trends, assess the future demands for property, and consider how competition and demand may affect your choices.
While real estate tends to be a sound investment, both at home and abroad, it’s essential to be well informed before making investment decisions. When you decide which country from which to buy or invest in property, do your due diligence in learning what might affect you and your investment now and down the road.
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