Owning real estate overseas is one of the surefire ways to spice up your lifestyle by adding a strong dose of international travel and adventure. It can also make (a lot of ) money along the way and significantly decrease cost of living. In this article, we will discuss the 4 main reasons why people consider buying real estate overseas.
Buying a vacation property
Many of us spend at least some of your holidays in a place we love and where you regularly go back. Buying a property in that place that we can use for ourselves and rent when we don’t could turn out to be much more cost-effective. You wouldn’t have to find and pay for a hotel or a short-rental and you would feel at home when staying there.
An other perk of owning a second home is the ability to turn it into a profitable investment. If you buy the right kind of property in the right kind of location, you can generate a significant amount of rental income when not using it. The property could basically pay for itself, and sometimes even if you stay in it for a significant part of the year. It is also likely that the property will increase in value over time, making it a good store of wealth over the long term. In addition to being a solid financial investment, you save on numerous vacation costs (i.e., rental accommodations, eating out, renting transportation, etc.). Lastly, the icing on the cake: the travel required to scout for, purchase, manage and sell an international real estate investment can be tax deductible.
Buying a retirement home
Retiring overseas is a great option for individuals and couples of all financial means. The options are as varied abroad as they are domestically – your money will just go a lot farther.
So much so that you can even retire early, semi-retire, or explore that passion career you always wanted to pursue but didn’t because you thought you couldn’t afford it. In many countries, a couple could comfortably live an upper-middle-class lifestyle for under $2,000/month., or own a small mansion for roughly the price of a modest condo in a major city back home.
It’s unfortunate that the overall majority of North Americans don’t anticipate having enough money to afford the retirement lifestyle that they want. This is the result of decades of stagnating income in the face of constant increases in the cost of living. Yet, it doesn’t have to be that way! People who have worked hard all their life deserve to enjoy a nice retirement. In many countries, your retirement income will stretch much further than at home, allowing for a very comfortable lifestyle.
Buying an investment property
The problem with many investment portfolios is that they’re closely tied to the investor’s home economy and currency. They also simply lack diversification. Buying real estate overseas as a pure investment for cash flow and capital appreciation is a great option for portfolio diversification and risk management.
Real estate prices in North America have been artificially to unsustainably high levels in certain areas, fueled by cheap credit. Bidding wars are increasingly common. All of this has made it very difficult for investors to find profitable deals. In many overseas markets, there is limited availability of credit and it doesn’t come cheap. There are no bidding wars. Real estate prices are being supported by 3 main factors; real economic growth, the rise of a new middle and upper-middle class, the increase in tourism and improving infrastructure; there is a real and sustainable path of progress at work there.
Oftentimes, with the proper strategy, an investor can achieve much higher rental yields than in North America. For instance, by leveraging the lower property prices and maximizing income through short-term rentals will produce the biggest profit. In many foreign markets, short-term rentals bring tourism and jobs. The hotel infrastructure is insufficient. The type of properties that foreigners buy generally is way too expensive for the majority of the local population. As a result, there is little appetite for short-term rental regulation and this is unlikely to change anytime soon.
Buying a home to work remotely
Nowadays, it isn’t necessary to wait for retirement to move and live overseas. More and more people can work 100% remotely. COVID-19’s lockdowns and work from home requirements have accelerated this trend. Many entrepreneurs and remote employees realized that they could leave behind the harsh weather and high cost of living at home. They could golive in one or several idyllic locations with nicer weather and a lower cost of living. Some of them share their time between different cities. They are often referred to as digital nomads.
As a digital nomad, you could split your time between several locations around the world. While this often works best for singles or young couples, families also undertake the journey as well. Owning property in these places would make much more financial sense than renting at costly short-term rental rates. Indeed, instead of paying rent, it’d mean collecting rent on your properties when you’re not using them. This rent money could easily cover your living expenses, making you financially independent.
Buying real estate overseas can combine lifestyle and great returns. Those are the 4 main reasons more people consider buying real estate overseas. These are not the only ones, people will also consider residency, asset protection or lowering the tax bill as well. Checkout our article about