A significant feature of owning rental properties is that there’s no need to stick to a single local market with today’s technology. On other occasions, buying outside of the town or city where you live can be far more profitable and offer you new opportunities and perks. You may even want to consider buying rental property in another country. There are numerous solid reasons to do so, from diversifying your investment portfolio to planning for retirement. On the flip side, purchasing property internationally can also be a difficult process. That being the case, it is important to know as much as you can about your desired location and financing options before buying property abroad.
Why Go International
For a variety of reasons, investors may decide to obtain a rental property in other countries. For some, it offers a way to diversify a real estate investment portfolio and achieve higher returns. Several investors prefer locations that tend to attract tourists but have a low cost of living. In some situations, these areas can make for higher rental income. Another compelling reason to invest in international real estate is to prepare for retirement. While many areas in the U.S. can strain the average retirement income, there are numerous places around the world where costs are lower, and retirement funds can last much longer.
Things to Know Before Buying
Unquestionably, there are many things you need to consider regarding your ideal location and property before you invest. These include:
- Laws: Every country has specific laws that govern real estate transactions. Not understanding the applicable laws can lead to issues, from property rights disputes to delays in the purchase process. Be sure to learn the laws that apply in your case!
- Citizenship and Ownership Rights: In some countries, property can only be owned by citizens. Different countries may also have different ideas about what constitutes ownership, and establishing or passing on that ownership may change from how things run in the U.S.
- Currency: Instabilities in currency are very common and difficult to predict. When performing any huge financial transaction, you have to be prepared for currency exchanges to be rather fluid and, in some cases, may experience losses as a result.
- Stability: Staying anywhere outside of your country of residence comes with certain political risks, especially if the country’s government in which your property is located isn’t stable. You may risk losing your property, income, or related assets if worse comes to worst.
Another significant consideration of buying rental property internationally is financing. Few U.S. lenders will even think about loaning cash for property outside of the country, which leaves investors with a range of alternatives. Many investors pay cash or use funds from a retirement account to purchase a property outright.
This is pretty much the best route to take, though the most expensive. In other cases, you may be able to qualify for Golden Visa or other country-sponsored programs or work with lenders in the country where the property is located. Just be cautious for scams; many would-be scammers regard foreign investors as prime targets.
If you’re a remote investor looking into purchasing rental property in Minnetonka and the surrounding areas, Real Property Management Viking can assist! Our Minnetonka property managers work with investors of all sizes to help assess properties, locate off-market deals, and much more. Contact us to learn about your options.
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