In today’s post, Jane Bakerson shares 7 must know tips for investing internationally in real estate…
As we emerge from the global financial crisis a growing number of international real estate analysts are announcing a ‘second chance’ opportunity to get into overseas property at pre-boom prices. The prices may be tempting, but before you rush in take the time to consider the following 7 things to ensure you maximize your profits.
1) Define your objectives upfront
There’s not just one market for international real estate, but many individual niche markets. Clarify your goals up front for a tailored investing strategy and focus on markets that make most sense.
You’ll need answers to the following questions before you start to zero in on specific purchasing locations:
=> Are you buying for quick flip property?
=> Are you more interested in a lifestyle property in an established area?
=> Are you considering international real estate as part of an overseas retirement strategy?
=> Are you prepared to wait for infrastructure improvements, better amenities, or a sense of community down the line?
=> Are you counting on an immediate rental income?
2) Follow the tourists
A key indicator to review when considering an international real estate investment is tourism levels and visitor trends. Popular vacation markets often evolve into popular property markets. It’s a pattern that has played out across the world.
The trick is to get in early, just as a location starts appearing on the tourism map and when property prices are still low.
3) Tour with every real estate agent
Real estate in many international markets does not fall under a Multiple Listing System. The implication is that there is no single source to tap to get a list of all property there is for sale.
The only alternative is to put in the legwork yourself and tour with every active agent in your market place. There will be some overlapping listings, but each agent will have their own database of property options.
4) Get ‘In the market’
The most successful international real estate investors position themselves to be ‘in the market.’ They know that many of the breaking deals will spread by word of mouth and come in as ‘pocket listings.’ In order to get in front of these properties it’s important to spend the time building a local network of contacts that have access to sellers and ensure you can move quickly when the right opportunity comes along.
5) Title insurance
In many international markets title insurance is not compulsory. But the process of applying for a policy will require your attorney to dig deeply into the title chain of the property you are researching.
Reputable attorney’s may carry out due diligence responsibly even without the requirement of title insurance, but insisting on a policy will an additional level of safety to your investing.
6) Find a comfortable risk/reward balance
In this post-crisis era, investors are becoming more risk adverse and moving away from purely speculative plays.
We’re seeing the best investment potential in areas that can be classified as ‘middle markets.’ They’re not fully mature markets but can’t quite be classified as ‘emerging’ either. They offer the potential for upside but with less risk than purchasing in more undeveloped areas.
7) Don’t forget about re-sales
A significant proportion of international sales are made in real estate developments and master planned communities. In the current market it makes sense to seek out resales (i.e. sales from end user to end user) as these may be available at significantly below developer direct prices.
It’s a buyers market in real estate internationally. As you get in front of sellers you’ll find that you have more negotiating power than you have had in years. Put this to your advantage, follow the 7 tips set out in this article, and you’ll be well positioned to pick up choice real estate at a bargain price.