Investing abroad can be a smart move if you’re in the real estate business. Whether you flip properties or are interested in rentals, there are opportunities all over the world. However, there are some things to keep in mind before you dive into a foreign property deal.
Familiarize Yourself With the Housing Climate
Vancouver. San Francisco. London. These cities are becoming synonymous with overpriced housing. Many potential buyers can’t afford even the smallest of apartments, and are opting to live elsewhere.
Buying a property in such a city to flip or rent it might be a bad investment. You’ll be faced with offering lower prices (and hurting your profit), or waiting awhile before you find a buyer or renter who can afford it. Some cities are in the midst of a full-blown housing crisis – which affects buyers as much as sellers.
Don’t Forget Exchange Rates
Let’s say you have a budget of $100K to invest in a vacation home in France. You’re looking through listings, and you find a listing within your budget. But don’t call the realtor just yet. Make sure you’re taking into consideration the exchange rates between the two currencies you’ll be dealing in.
100,000 in Euros is over $111,000 with current exchange rates. You’ll need to adjust your budget to reflect local currencies, which might change what types of properties you can afford. Also, consider that there can be added fees associated with buying from abroad. There could be exchange fees, and other expenses you don’t encounter when buying in your home country.
There Might Be Language Differences
If you’re a native English speaker, investing in Ireland shouldn’t be a problem. Even buying in several non-English speaking European countries might not raise an issue, as many Europeans speak conversational English. But you should be prepared for some difficulties if there isn’t a shared language.
How will you create a listing for the rental property you just bought? Who will communicate with the tenants if they need assistance? Will you be able to learn the language yourself, or hire an interpreter? There are a lot of things to consider if your property is in a country with a different language.
Consider the Other Climate
This time, it’s the weather we’re talking about. You should understand any differences in the environment, and how they might affect your property. Evaluate the property itself, as well.
Some cities have a lot of basement apartment units. For features like basement renovations Toronto is an example of a city you’d want to study the weather. Find out how likely they are to flood, or if cold weather can cause basement plumbing to malfunction.
Or, maybe you’re looking at a property in an area that’s at risk for earthquakes. How much will earthquake insurance cost? What’s the likelihood a quake will damage your prospective investment? Make sure you appreciate the unique issues that could arise based on geography.
It Takes Research
Rome wasn’t built in a day, and your vacation villa in Rome won’t be, either. There are a lot of things to check off the list before you can even decide if a foreign property is right for you. Do your homework, and be sure your investment is a profitable one.
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