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Investing in Overseas Real Estate

For the ambitious real estate investor, one of the most interesting ventures can be the purchase of an overseas property.

There are many of us who would like to one day retire overseas, and even quite a few of us who would like to move abroad while we are still some way away from retiring.  If we are adaptable individuals, perhaps with one or two foreign languages in our vocabulary, we can often find that the challenge of living and doing business overseas can be an enjoyable one.

Of course, for those of us used to doing business predominantly in a domestic setting, the practice of buying a house abroad can often be wildly different to the idea. Depending on where you plan to buy, there may be restrictions on foreign nationals buying or owning property.  You may have to pay larger taxes, and you may face different and sometimes strange rules regarding exactly what you can develop, where you can develop, and how you do it.

For this reason it is essential to do your research.  Overseas real estate is a tricky way to make money, because you will need to commit a large amount of your time to being present on site. Many people try to avoid too much time spent away by appointing a project manager, but to paraphrase an old saying: “Who manages the project manager?”.

If you want to guarantee a profit, you will have to take an interested involvement in the development, and if you are planning to lease the property to tenants you will need either to employ a trustworthy individual or managememt company, or move – temporarily or otherwise – to the country in question.

Buying and selling real estate is one way to guarantee an interesting business career – but it is not without its drawbacks. One of those drawbacks, the significant risk factor, is part of what makes it interesting.  But if you can play the game well, you need never become one of the many people who falls under the intense pressure of trying to turn a profit.  Sometimes, real estate is as much about trying to minimize short term loss on a deal when there is potential for a long term hold strategy to maximize profit.

Whenever you buy a property with the intention of increasing its resale value, you do it with some amount of optimism.  The mere thought of “If I can get this work done, source the materials and get it to market on time and on budget, then I will make a profit”, leaves open three ways that things can go wrong.  Maybe the work will not get done as well or as quickly as you had hoped. Maybe the materials will prove harder to source than you had planned for, and as for the schedule “, well, unforeseen circumstances make fools of us all. The fact is that sometimes, despite your best efforts, you will see your intended profit begin to shrink – and sometimes, it will disappear altogether.

It is at this point that you will be tempted to bring everything to a sharp conclusion and just sell for whatever someone will give you. This is a big mistake.  If you hold on and set a new, realistic deadline and price you can at least cut your losses, and maybe live to develop again.

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