If you’ve reached that point in your career when you’re feeling ready and confident to invest in international real estate, then kudos to you, you’ve done an amazing job so far. While your success is to be admired, this doesn’t mean that the road ahead will not be a long and winding one, because investing internationally is another beast altogether, so you need to be prepared. For one, international investments can be quite financially exhausting, while the legal considerations and the logistics can be complex enough to deter even experienced investors from making a move.
This is why it’s important that you do your research, and create a comprehensive investment strategy for this new chapter in your career, a strategy that will minimize risks, maximize your ROI potential, and help you eliminate extraneous expenses along the way. Here are the five things you need to consider before investing in international real estate.
Build a flexible budget
First things first, you need to create a comprehensive financial plan for your new investment project, but that doesn’t just mean assessing the cost of procuring land or a property in a foreign country. Start by looking at land and property prices in various countries around the world, but focus on the destinations that fit your personal preferences (if you plan to relocate at some point), are easy to invest in as a foreigner, and offer various perks for overseas investors such as a golden visa, perhaps.
Next, include a spending category into your budget. This will be the capital you need to maintain your quality of life and your lifestyle habits in general without hindering your investment plans or jeopardizing the project. Finally, add a savings category to your budget as well. You will need to save up enough capital to create an emergency fund, and cover the costs of any additional fees that might pop up as you’re entering the market, engaging with local solicitors and real estate experts, and more.
Look into rapidly developing regions
You can’t expect to ensure a positive return on investment in a country with little potential for urbanization, modernization, or the popularization of tourism, all of which are the precursors of high demand and lucrative opportunities for investors. If these factors are not at play, then chances are that no one will be interested in buying or renting out your property. This is why you need to look into those regions of the world that are undergoing rapid development, such as Australian metropolises. Sydney suburbs, especially real estate in Northern Beaches are currently among the most promising investment options. Renewable real estate companies are making it easy for investors to navigate the legal system and gain ownership of land and property. Keep in mind that much like in Australia, the legal requirements for foreign investors might be complex, but that doesn’t mean that you should give up on a lucrative investment in a rapidly-developing region. Rather, get in touch with local consultants to realize your investment quickly.
Determine your own risk profile
Risk assessment and management are some of the most important elements of a viable investment strategy, whether you`re looking to invest in local real estate or if you’re expanding into international markets. It’s imperative that you know how much capital you can stand to lose in the case that your investment falls through – for any reason, whether an earthquake wipes it off the face of the earth, or if its value plummets due to unforeseen economic trends in the country.
What’s more, it’s important to weigh the risks against the rewards, and determine whether or not the rewards outweigh the potential setbacks in that particular market. You shouldn’t aim for anything less than a 10% ROI when you deduct all of the additional costs that might present themselves once the property hits the market. Ideally, you will calculate a solid 15% ROI, with minimal risk of unexpected expenses, socio-economic turmoil, or natural disasters.
Understand the future trends and projections
An investment opportunity might seem too good to pass up now, but what about its potential five or ten years from now? An experienced investor will not make any concrete decisions before they ascertain the long-term feasibility of a foreign market, the local demand for commercial and residential real estate, as well as the economic and cultural trends and how they might change in the future. Once you have this information, you can determine whether a region is truly worth your investment in the long run.
Invest in what you know
And finally, this is not a time to branch out into asset classes that you’re unfamiliar with, rather, this is a time to stick with what you do best. If you’ve had the most success with commercial real estate back home, then go ahead and leverage your experience and expertise to ensure success in a foreign market as well by investing in the commercial sector. Over time, and when you realize your projected ROI, you can branch out into other lucrative sectors, such as residential real estate, or even completely different investment classes.
Expanding your invest business overseas is one of the best ways to spread out risk, but more importantly, to make substantial financial gains from up-and-coming international markets. Before you make any decisions, though, be sure to take these tips to heart and implement them into your strategy in order to minimize liabilities and ensure a positive ROI.