Everyone knows that investing in property is a very smart way of making money.
But, a lot of people are very limited with their investments. They only buy properties that are close to home and are missing out on a range of property overseas.
In this piece, you will see the main advantages in investing in foreign properties. Read them if you want to expand your property portfolio and start earning more money:
Overseas Tax Laws
A huge benefit in investing overseas is that you deal with different tax laws to the ones you have at home. For example, at home, you may be forced to pay a hefty piece of property tax on each investment you own.
This can cut into your profits, and force you to make less than you could. However, if you invest in property in a different country, you have to abide by their tax laws which could be a lot more lenient than the ones back home.
This gives you the potential to invest in loads of properties and pay a reduced tax or, in some rare cases, no tax at all. There are many countries in the world that have a lot lighter tax regulations.
Tax is one of the biggest pains for all property investors. The main issue is that the more properties you own, the more tax you end up having to pay. If all your properties are in your home country, and it has tight tax laws, you could miss out on so much money.
There are loads of examples of people that failed to make a profit on their property investment because of tax. So, if you can explore foreign territories with lighter tax laws, it will be hugely beneficial for you.
Different Housing Markets
Another main advantage of investing overseas is that you get to tap into other property markets. This can be widely beneficial as the housing market elsewhere could be far better than the one in your home country.
Take your money elsewhere, and it might be easier to find a cheap new house for sale, meaning you spend less cash all in one go. What does this mean?
It means you can potentially spread your fortune by making multiple property investments in an overseas country. Whereas if you stayed in your home country, that same amount of money might only get you one or two houses.
Also, investing in the foreign property market means your investments don’t get affected by anything bad that happens to your local economy. If things go bad for you where you live, then your foreign investments don’t get hit by the crunch and continue to be profitable for you, although be aware of that countries local economy.
Diversification Of Investment
If you speak to any seasoned investor and ask them for their top tips to make a profit, they’ll all include the same tip; make sure you make diverse investments. Never stick all your eggs in one basket, as it raises the risks of your investment.
Instead, put your money in different things, and you stand a much better chance of making money. This tip can be used for investment in general, but also for property investment. If you’re spending all your money on local properties, then you’re running a risky line.
But, invest in properties in different countries, and suddenly all your assets are spread out and more diverse. It touches upon the point I made about different housing markets not being affected by bad things that happen to your local economy.
With a diverse property investment portfolio, you have assets all over the world. That’s the key here, you never want to put all your money into properties in one country.
Buy a few in one place, then a few in another, and another, etc. Be as diverse as possible because diversity reduces risk.
Multiple Holiday Properties
Finally, there’s another benefit of overseas property as it gives you loads of different holiday properties around the world. So, if you and your family fancy jetting off somewhere in the summer, you’ve got lots of houses that you can stay in for free.
Granted, this isn’t a benefit that helps your investment grow. However, it’s still a definite benefit for you, as you get more out of your investment as it grows over the years.
As you can see, there are plenty of benefits to investing in property overseas. It’s certainly a way of reducing risks and boosting the potential for profits.
Surely there are disadvantages too? If this idea is so amazing, why isn’t everyone doing it? Why are some people still nervous about investing overseas? In truth, there aren’t that many disadvantages, but the ones there are do scare some people a little bit:
Harder To Manage Your Portfolio
The thing with overseas investments is that they’re so far away from you. This makes it impossible for you to manage them on your own.
You’ll need to hire a property management service in different countries to keep an eye on everything. This is especially important if you’re renting your overseas properties out to local residents. You want to make sure everything is okay and that they’re looking after the property and not damaging anything.
When the investments are local, it’s much easier to manage them. Often, you can do some of the management yourself and take trips to your properties to inspect them.
Foreign Housing Markets Are Harder To Read
We know that investing in different markets is a positive as it lowers risk and there’s the potential to buy cheaper properties than back home. However, for some, investing overseas is difficult as it means you need to read different housing markets.
You’ll need expert opinions, and you might struggle to pick out a good foreign investment. For example, a certain property type may be a good investment back home, but that doesn’t mean it’s a good investment in a different country.
With that being said, there are clear benefits to investing in property overseas. If you’re a veteran in real estate investments, consider expanding your portfolio with some foreign purchases. It’s also a great idea for retirees that are looking for ways to spend their pension fund, if a big enough pot.