If you’re reading this article, then something about offshore real estate investing has piqued your interest, and you likely have some questions about how real estate investing is possible and whether or not it’s even a feasible option.
In this article, we’ll try to answer your questions by sharing reasons why offshore real estate investing might be great option for your situation and some tips on how to successfully invest in offshore real estate. More specifically, we’ll help you answer perhaps one of the most pressing questions in offshore investing: Just because you CAN buy offshore real estate property, SHOULD you?
Why Offshore Real Estate Investing?
First, let’s discuss the various reasons why you might be considering offshore real estate investing and the reasons why you should perhaps consider it.
Income Generation
Offshore real estate investing can be a great addition to your wealth management strategy. Real estate is a common diversification strategy, and offshore real estate is preferential for the various reasons we’ll discuss. It can also be a great gateway to new currency diversification and even other investments. Offshore real estate investing can yield higher returns than you’ll find in domestic markets. For example,a property in Australia might only yield a 2% margin while a similar property in Cambodia might yield up to 10% in rental profit and another 15% annual appreciation.
Vacation/Retirement Home
Also, investing in real estate can offer a great option for a second home or vacation home. If you’re looking for a retirement option, then offshore real estate investing could open the door for a cheaper retirement. For example, many offshore jurisdictions offer lower costs of living, which could help you retire cheaper and truly make the most from your retirement funds while also enjoying an exciting new culture. Plus, traveling back and forth could, in some cases, be used as a tax deductible travel expense.
Tax Benefits
Speaking of tax benefits, offshore real estate investing can offer an array of tax advantages. For instance, did you know that there are no capital tax gains on foreign property used as a primary residence? In addition, you can earn tax deductible mortgage interest and take advantage of the 1031 exchange on like-kind property.
Hedge
Owning an offshore real estate property is also a great way to hedge against things that are generally out of your control. For instance, if you are serious about asset protection, then you can use offshore real estate investments as a way to hedge against unstable and volatile domestic markets. Offshore real estate can also be kept more secure in the case of a lawsuit, and it can be used as a way to protect against political and economical turmoil in your home market.
So, if all of those sounds agreeable, the next step is to secure the property; but how does a foreigner go into an international market and purchase real estate?
How to Get Started
Real estate is tricky no matter where you are, and it’s important to remember that you’ll want as few people between you and the seller as possible. Even in a language barrier situation, this is very important. That said, how to get started?
Decide Which Jurisdiction & Find an Agent
Perhaps one of the first things you should do, aside from decide which jurisdiction you’re going to buy in, is to find a real estate agent there who speaks your language and knows the market. It’s tempting to go online and search out properties yourself, but you won’t get the same experience. In fact, you’ll probably come out less than desirable financially if you try to do this yourself.
Finding someone on the ground who can help you decide on an area and find the right property is key.
The Cheapest isn't Always the Best
Next, don’t settle for whatever is cheapest. In many cases, the cheapest property can cost you the most in the long run. While it might be more expensive to buy in a capital city, you’ll more than likely be making a better investment if you do. The right location will pay for itself!
Cost Considerations
Last, you need to understand that the costs of owning a real estate offshore go on beyond the purchase. There will be costs such as transfer fees and maintenance costs. If you buy in the right jurisdiction, these costs might not be huge, but you’ll still need to be prepared for them.
If you have an offshore company already, you might be wondering if you can use it to secure offshore real estate. The answer is yes, sometimes. You’ll have to check with your jurisdiction first to see what’s allowed.
Conclusion
No two real estate transactions are the same, but if you have the right team on your side, offshore real estate investing can be an integral part of your asset management and wealth protection strategies.
MAY
2021
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