A fundamental aspect of owning rental properties is that there’s no need to stick to a single local market with today’s technology. In other situations, 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 explore buying rental property in another country. There are numerous persuasive reasons to do so, from diversifying your investment portfolio to planning for retirement. Yet, owning property internationally may sometimes be a challenging process. In that case, it’s imperative to know as much as you can about your desired location and financing options before buying property abroad.
Why Go International
Investors consider purchasing a rental property in other countries for several reasons. For some, it offers a way to diversify a real estate investment portfolio and achieve higher returns. Many investors look for locations that tend to attract tourists but have a low cost of living. These places can make for higher rental income in some cases. Another primary reason to invest in international real estate is to prepare for retirement. While several 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
Undoubtedly, there are various factors you should know about your ideal location and property before you invest. These include:
- Laws: Every country has specific laws that govern real estate transactions. Unfamiliarity with the applicable laws can create issues, from property rights disputes to delays in the purchase process. It is recommended to know the laws that apply in your case!
- Citizenship and Ownership Rights: In certain countries, property can only be owned by citizens. Different countries may also have unique ideas about what constitutes ownership, and establishing or passing on that ownership may change from how things are performed in the U.S.
- Currency: Movements in currency are quite normal and difficult to predict. When finalizing any major financial transaction, you should 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, mainly 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 critical consideration of buying rental property internationally is financing. Few U.S. lenders will even consider loaning capital for property outside of the country, which leaves investors with a range of alternatives. Various investors pay cash or use funds from a retirement account to purchase a property outright.
This is likely the surest route to take, though the most expensive. In other instances, you could have the chance to qualify for a Golden Visa or other country-sponsored programs or work with lenders in the country where the property is located. Just be on the alert for scams; numerous would-be scammers view foreign investors as prime targets.
If you’re a remote investor looking into purchasing rental property in Davis County and the surrounding areas, Real Property Management Northern Utah can assist! Our Davis County 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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