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How to Start Your Overseas Real Estate Portfolio
By Rhiannon Williamson
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Real estate is a tried and tested asset class and the majority of people agree
that as a long term investment commodity there is nothing really to beat it for
consistently returning strong growth and increasing yields...however, when a
country's housing market goes temporarily cold as real estate prices move
outside of the affordability gap, real estate investors often look overseas for
the development of their property based portfolio.
Currently the real estate
markets in countries such as the UK and US are slow and the ability to profit
from property locally is reduced - therefore more people than ever are thinking
about moving their focus abroad and starting an overseas real estate portfolio
to enable them to build a passive income for life.
If you would like to learn
more about building a passive income for life from investing in overseas real
estate here are the main five considerations to bear in mind to maximize
profit, reduce risk, increase yields and capitalize on opportunities as they
present themselves - but before we begin it is always prudent to mention that
the value of any investment can always go down as well as up, and that
investment decisions should be taken carefully and be made with the assistance
of qualified and experienced advisors.
Tip One - Real estate markets around the
world emerge, boom, go bust and re-emerge all over again, but they do so at
very different points in time as each market is heavily dependent on the
current state of the economy in the given country. As we all know economies ebb
and flow like the tide and there is no such thing as a guaranteed market where
property prices will keep rising. However, there are countries in the world
going through major economic change where the real estate market is emerging
and where the long term forecast is for a period of prolonged growth. An
investor who is not risk averse and who is planning an overseas real estate
portfolio should try and identify which countries have a strengthening economy
and an emerging real estate market.
Tip Two - Having found an emerging market
an investor needs to determine the key factor that makes an investment into
real estate in the given country a good decision. I.e., if a country's property
market is simply booming because of hype and an investor can see nothing to
support the long term success of the market then they should walk away. If an
investor can see massive room for growth but an interfering government who may
attempt to restrict property investors from taking their profits then an
investor has to decide whether or not they can still make enough profit from
real estate to make any investment worthwhile.
Tip Three - Having determined
that there is potential within a given market an investor needs to learn how to
harness the power of other people's money! As real estate is an expensive and
slow to liquidise commodity it is unwise to pay cash from personal funds for an
investment property, rather it's wise to raise finance at a low interest rate
from a secure financial institution. An investor should look into whether an
international mortgage or a local mortgage is possible and affordable when
buying overseas real estate.
Tip Four - As previously stated, over the long
term real estate is considered by many to be one of the most consistently
returning asset classes - the key to this consistent success is however the
'long term' bit! I.e., when buying real estate abroad for capital growth and
rental yield it pays to be able to keep that real estate for ten years or more
to ensure the greatest reward is derived from the investment.
Tip Five - And
finally, having determined that the key factors exist to suggest that a
property market has legs to run and that any hype surrounding its progress is
based on fundamentally accurate facts as detailed in Tip Two, an investor need
to ensure they buy real estate that will suit the market demand that is making
the real estate market successful! Therefore if the baby boomers are driving a
given market consider buying single level properties in secure communities, if
on the other hand the young professionals are driving the market think about
purchasing well located, designed and facilitated apartments.
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