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Oct. 12, 2022

70: Investing in International Real Estate

70: Investing in International Real Estate

Where are your favorite vacation destinations? Columbia, Spain, Greece? What if buying real estate in those countries are easier and less expensive than you thought? In today’s episode Alan discusses international real estate. Every investment has...


Where are your favorite vacation destinations? Columbia, Spain, Greece? What if buying real estate in those countries are easier and less expensive than you thought?

In today’s episode Alan discusses international real estate. Every investment has risk, But Alan breaks down exactly why the reward outweighs the risk in his opinion.

With all that you learn in this episode, tell us where your dream international property would be!

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Read the transcript here:

All right this is a fun episode for you world travelers out there. We are gonna be talking international real estate, buying properties in a foreign country's pros, cons, when you should do it, why you should do it. And you're gonna learn my favorite perk that comes with international real estate.

Welcome to Real Estate Maximalist. I'm your host, Alan Corey, the author of "A Million Bucks by 30" and "House FIRE", Financial Independence and Retire Early. I teach the House FIRE Method for you to retire early through real estate. I'm also a top agent with a real estate team, the Alan Corey team in Atlanta, and I've been investing for over 22 years, but I find it much easier to just say, I'm a Real Estate Maximalist.

Okay, International real estate sounds exciting. Sounds maybe expensive. It sounds farfetched. A dream maybe to buy a place in a different country. Depending where you are. It could actually be cheaper for you and easier for you. And so I'll tell you why I'm sort of thinking about this, uh, subject. I met someone who has several international Airbnbs and it seemed.

like he set himself up for a pretty good life where he has short term Airbnb in Switzerland and then Taiwan and you know, four or five other different countries. He was actually looking in America for another property and he can rent it out and obviously travel himself and stay in those properties. And that's always been my catch with short term rentals or vacation homes is a lot of people go into these saying, "Hey, I also want to stay there myself."

Which is interesting because I always make a differentiation between what is a lifestyle decision and what is an investment decision. And this is really trying to make the best of both worlds where you're saying, "Hey, my lifestyle would be great. I, I wanna live there for part of the season." And of course, that eats into your spreadsheet decision because the times that you're using your vacation rental, it's not making money for you.

So it's hard to justify. A lot of times paying a premium cuz you're in a vacation destination or maybe a different country and say, Hey, this is gonna make me money when I'm not there. It can. Right? It can. It's just a different assessment because now your own biases are coming in because you're trying to create a lifestyle decision within this like, well, "when I visit for two weeks out of the year, I want to be on the beach" even though

you probably could have some guests that are completely fine paying a premium to be two blocks from the beach, right? Or, "Hey, I wanna be right on the ski slope and have, walk out and, and go skiing rather than having to, uh, drive six blocks to the mountains." And so once you start inputting your own personal preferences, it no longer really becomes the best investment decision making vehicle.

But what it does is, hey, you can have an extra lifestyle decision that's supported by the rental income. You can make an investment. You're but, but it, you're leading. It's like what foot are you going to lead with? You really have to make that decision, so take that into consideration. That's always been my hangup, like if you're gonna buy vacation rental, I try to tell people just don't ever want to stay there and I think you'll make better decisions.

And what I'm learning from a lot of folks who have bought properties with the lifestyle in mind, they never go because the money is so good, Sometimes it does kind of work out that benefit. Just know you're gonna be taking money outta your own pocket a lot of times with this second or third home option. And I also have clients who feel obligated to always use their vacation home if it happens to be vacant rather than go into another destination.

And so they're reluctantly using their investment as a lifestyle choice, it just sort of sours the vacation for them. That changes the mood because they're like, We could be going here for vacation, but we are gonna go to our V R B O that's vacant. So, um, just know that these sort of things play out. But if you kind of go into purchasing properties that you're never gonna live in, I think then there, there's some opportunity there.

And that applies locally if you're buying within United States. Right? Vocation rentals, all over. But let's take this a step further and and say what's play out? What happens internationally? So international, obviously, you're gonna have to deal with a different way of buying properties, financing properties, locating properties, managing those properties.

And you're really gonna have to put your trust in in the local team there.

Let's first talk about financing. Financing. A lot of foreign countries don't want to give you mortgages on properties because they don't trust you. You're not a citizen, You don't have income in that country, and they can't verify a lot of income that you have. And if you happen to default on a loan, It's gonna be very difficult for them to come chase after you.

So what options does that give you? Whether you live in America or Canada? Typically you're gonna have to find your financing in your home country, whether that's a HELOC on your current property, a home equity line of credit, which is basically a direct line on that equity of your home. Maybe you do a cash out refi on a investment property, pull out some cash.

Way it's gonna work is you're gonna have to find your own financing on your own properties or just come outta pocket and probably buy these properties in the foreign country in all cash. It's gonna be very difficult to get mortgages and loans unless you really sort of follow through and wanna set up a business, show some income coming in in their country.

You really wanna take it where this may be a place where you're operating business out of. Um, otherwise it's gonna be really difficult to get this financing on these properties. But before you turn, I just wanna tell you some of the prices here, um, and some of these homes are obviously gonna be cheaper than they are where you are, maybe even in your hometown.

I wanted to quickly jump your, cuz this is my favorite, favorite part of international investing is that there's countries that when you purchase real estate as a foreigner, you get the ultimate perk. I can't think of any other perk in real estate that is better than this, A passport. Some countries will give you a golden visa, citizenship, or permanent residency if you just buy a property in their country.

This is a way to incentivize wealthier foreigners to help purchase property in their country. Stabilize it. Create tourism, have you come and visit your own properties and hire staff to manage it. It, it's, it's actually a really smart perk for a government to provide if you're not as prosperous country. And there's countries in really exciting destinations where it only cost $200,000, you have to buy a property for $200,000 in this country.

It's a beautiful country. It's a destination, and they will give you a passport on top of that. That is amazing to me. And it can also be an investment. It's you're buying it in cash, but you could also rent it out, right? You could do a short term Airbnb internationally. So I've got a list, I just wanna talk you through these and really open your mind about buying real estate and using it as one, Hey, I can rent it out and make money.

Right? Ideally you get a HELOC or a credit line or something at home, purchase it in all cash over there. I know I'm anti cash, but the way I look at it is if I'm pulling out of a HELOC, I'm really financing it. Um, as long as the property I'm buying, I can rent it out to cover those HELOC payments. But for $200,000, you can also buy a property that makes you money and it comes with a passport.

In these foreign countries, St. Kitts and Nevis, Columbia, Dominica, Antigua, and Barbuda. These are a country I've been to. South America, Caribbean Island, beautiful countries for tourism. Your, your dollar goes really, really far there. And wherever I travel, I always look at the property values. I'm always looking at the property values.

I'm always pretending, Hey, if I bought something here, either if I lived here, Or if I rented it out, what would it look like? And as this podcast gets released, I'm actually in Spain right now looking at properties. I say I'm looking at properties. I, I haven't followed through. I don't own anything internationally yet, but that's fun for me.

That's what I want to do. I wanna do all the touristy sites. I wanna see all the, you know, the nature, the mountains and everything, and the coastlines and the beaches. But everywhere I travel, I've gotta go at least 1, 2, 3, 4 properties. That's just exciting for me. So, um, in Spain, where I'm at now, $500,000, that's the minimum for Spain to get a golden visa, which seems great for, um, a country, right?

A bigger country, not a small country. I wanna, I wanna give you some, some more countries. These are all countries that I can see myself living in, investing in, be excited about. Here are the golden visa countries that have a $250,000 minimum. Granada, Lativa, Montenegro, Greece. I know some of these countries have had some sort of financial crisises going on, and uh, I know

Greece had an opportunity where you could buy properties for a dollar, some small towns in Italy as well, as long as you renovate it and make it your primary residence. Um, and a lot of times those renovations end up costing, you know, $200,000 or more. But, um, same sort of, uh, concept 300 K, minimum Cypress, Panama, St.

Lucia, 350k minimum purchase price for a house in order to get a golden visa. So this list, obviously there's cheaper homes in all these countries. You can still buy it as a foreign national in all these countries. I'm specifically giving you minimums that come with citizenship or permanent residency, which you know, who knows if we go to war, Your country goes to war similar to Ukraine or Russia.

Citizens had nothing to do with that. It's two governments making decisions that affect the citizens. Imagine if you had a property in another country. Good or bad, right? You, you could quickly move your family and, um, have citizenship somewhere. And a lot of these things, if you have a passport in let's say Granada, it's also a tax haven.

You get a lot of tax breaks if you live there for over six months out of the year. But their passport allows you to travel to other countries that maybe your current passport doesn't allow you to travel to. So it could be sort of a global entry ticket to other countries as well. $375,000 minimum.

Mauritius and Portugal, $425,000 minimum. Turkey, Andora, Curacao, and then $500,000 Spain. 525 Bahrain. That's a healthy list of countries. Obviously there's more countries that gets, it just gets higher and higher, but I just listed 20 countries for under $525,000 that you can buy property in and it comes with a passport.

That, that to me is insane. That's, to me, if you're gonna buy internationally, start with these countries where they come with a passport. Cuz to me, having multiple passports gives you a lot of options. Right? And I'm always a fan of options. I never wanna be pigeonholed somewhere. I love having options. So this has gotten me excited at, uh, looking internationally.

So just some nuts and bolts. Let's say you buy this property internationally. Obviously you wanna do your research on if it's a property that can actually be listed for rent or uh, short term Airbnb. This is what my advice is locally, but also internationally. Cuz lot of districts now no longer allow that or they're changing the rules.

That's a risk that you run. Also, there could be political upheaval in these countries. There could be tropical storms, specifically the Caribbean countries. So make sure you get the right insurance and, and just know that there's always gonna be risk associated with this. But that passport off weighs a lot of risk in my my mind.

 Saw firsthand several friends and family who were affected differently traveling during covid and Coronavirus based on their passport. And if you had a British passport, it would've been treated differently and your test results could be different than if, let's say you had a Chinese passport or a Costa Rican passport, something along those lines.

So if there is sort of world events happening, having those options, it's a wonderful perk. If you're considering this, I would start by looking at airbnb.com and just seeing what things are renting for in certain locations. Do you need to have a pool? Do you need to have a hot tub? What's the price per night?

If you're gonna be getting a HELOC, would that be enough to cover your HELOC? The property management's probably gonna take roughly 20 to 30% of of those fees. The best website that everyone uses is AirDNA to really understand that markets VRBO, Airbnb, short term rental rates, how much they're getting, how often are, there vacancies.

That's sort of the data you're gonna want to have to make a decision if this is gonna be a completely a spreadsheet decision for you So keep that in mind. Lastly, get an international real estate agent. I've got Shaletha Litt Colbert on my team. Alan Corey team, she's certified international. If you want someone to talk to, please reach out to her.

She is an expert in this. She knows how to do international property management and negotiate deals internationally, or find you someone with boots on the ground. She's got multiple. International Airbnbs herself. She's actually in Costa Rica as I record this right now. Otherwise, I'd have her on the show.

But, uh, I will have her on in a future episode. But Shaletha Litt Colbert, she's on the Alan Corey team, reach out to her shaletha@alancoreyteam.com or on Instagram. She's @realestateislitt and she'll happily help you and point you in the right direction to get you everything you need internationally.

Wanted to spend this episode planting that seed in your head. Hey, international real estate could be cheaper than where you are. It could come with a passport. Things you never thought of before and it's fun. And if you're wondering whether you're a Real Estate Maxi, well, are you the type of person that when they travel, they go look at real estate?

Do you pick up those little magazines outside every single coffee shop and devour every listing and look at every photo? Cuz that's what I do. And this kind of helps me scratch my itch a little bit, maybe narrow my focus. Because when you've got 300 different countries to choose from, it's difficult. But if you've got 20 that come with citizenship, that under $500,000.

Wow. Okay. I wanna start thinking about this a little bit. Seriously. So if I don't come home from Spain, that might be a reason why I found a property and I'm staying and I'm buying it. But the good news is it'll also be an investment property so you can come rent it and stay where I've stayed and maybe our trips will overlap and you're gonna have to get a neighboring Airbnb.

I don't know. These are the problems that I want to have and look forward to having, having too many people visiting me in a international destination. So let's make it happen. Thank you to everyone who's been giving me excellent podcast reviews. Please keep them coming. I need that. That's the lifeblood of this podcast or podcast review.

So if you could take a moment and gimme your feedback on the new format, what information do you want? Whether you like this or not. Honestly, I don't care if it's a bad feedback. I just want your feedback, and I know Podcast medium's a bit of a vacuum, so you can also follow me and get in touch with me @RealEstateMaxi on Twitter, or I'm also quite active in the Real Estate Maximal Facebook group.

Happy to answer all your real estate questions in there as well. Thanks for tuning in to Real Estate Maximalist. I'm your host, Alan Corey.