Investing in the international real estate can be as risky as it is profitable. Unlike other types of investments, it generally requires a higher initial investment, as well as more research. However, it can be immensely profitable as well. There are many strategies you can employ to guide you through this process.
There are certain concerns that apply to all real estate investments, but international real estate comes with its set of unique challenges and opportunities. The strategies described here, factor in several criteria. Some are riskier than others, but at the same time hold the promise of higher return on investment.
Some may take more research but can help you mitigate potential losses.When you decide how you want to approach international real estate investment, consider these criteria.
1. Going for Less Obvious Investment Opportunities
Contrarian investing, or going against the grain has long been a strategy favored by many daring investors. Choosing to invest in real estate opportunities that don’t seem very popular is quite risky.
But you get the chance to corner a market before anyone else does.
Hawaii, Algeria or Iran might seem like strange countries to go skiing in and yet they all boast quite impressive winter resorts.
Investing in a ski resort in one of the well-established winter holiday tourist spots can be next to impossible nowadays.
However, if you go for the less obvious choices, not only can you gain access to a unique business opportunity early on, but you can do it with a smaller investment as well.
2. Invest in Emerging Economies
Investing in emerging economies has always a double-edged sword. One the one hand, it makes perfect sense, since real estate can be relatively cheap. However, many tend to avoid these types of investments since there are a lot of things beyond your control that can go wrong.
In the current international climate, however, investing in emerging economies is no longer as the perilous adventure it might have been once.
Most countries are now well-regulated and under the scrutiny of international organizations. Depending on your ultimate investment goal, you can often benefit from the high availability of relatively cheap labor.
On the other hand, it might be more difficult to find skilled labor. Still, as time goes on, skilled labor will emerge, as the demand for their talent grows. These changes tend to leave gaps in the service industry, as well as plenty of room for innovation.
Carving a niche for yourself early on can be a great investment opportunity, provided you have the time and patience to see your investment grow.
3. Study the Legislation
If you are more concerned with safety, you can choose a country to invest in based on their legislation. Many emerging economies encourage foreign investments, and they work to create a welcoming environment.
Naturally, before you jump straight into the international real estate market, you should always make sure you are up to date on current regulations regarding these type of investments for the country or region you are interested in. But you can use this research as a strategy in and of itself.
Going by legislation can give some insight as to what you can do to maximize your chances of success. Generally, countries that welcome foreign investors will also have plenty of opportunities you can seize.
If legislation encourages investments in the particular sector over another, this can be a good indication that that sector is in dire need of investors, meaning there is less competition and more chances to make a profit later on.
4. Go Out on a Limb With Failing Economies
There’s probably no need to mention why this strategy requires a lot of careful research and a backup plan. The low prices of real estate opportunities can be very tempting, but they obviously come coupled with the inherent dangers of an economy a unique set of challenges.
However, not even this strategy is as risky as it used to be. The financial crisis of 2008 created certain investment opportunities within this range that are more likely to payoff than others.
Greece, for example, which still is a popular tourist destination revealed that its economy had been in decline for quite some time. Real estate prices plummeted as a result.
Even though the country is slow to pick itself up, it is unlikely things will remain the way they are.
It’s also distinguishing between national and regional economies in this context. Some may remember the story about the Italian village that was being sold on eBay.
You could buy the village for 245.000 euros or around 270.000 USD. The village itself was in desperate need of repair but you can see why many would see this as a unique international real estate investment opportunity. Of course, this was just a novelty case.
You don’t have to buy an entire Italian village to make a profit. Looking for investment opportunities in regions in otherwise stable economies can help you get the best of both worlds.
5. Expanding Local Business Ideas
Spotting deals that have the potential to grow in a foreign economy can be difficult, especially if you don’t have a lot of experience with that particular culture. It’s difficult to guess what may or may not work if you are not confronted with the same issues on a daily basis.
If you have a genuine concern for this issue, you could start out by reaching out to local businesses. Find out their unique challenges when it comes to real estate and try to create conditions for them to thrive.
These businesses can act as your financial translators, and your relationship can end up benefiting the entire local economy. Whether it’s housing, offices or commercial real estate, no one knows better than the people living there.
6. Bridging Cultural Gaps Through Foreign Investments
In this global economy, foreign investments are not just about financial opportunities. Even though the ultimate goal might be making a profit, inevitably you will have to engage in a cultural exchange as well.
Cultural divides can ruin an investment opportunity that is not made with this dialogue in mind.
But you can also use a cultural gap to your advantage. Speculating cultural difference has been the cornerstone of the tourism industry, but you can use it in just about any field.
Investors usually focus on economic aspects when it comes to real estate, as well they should. But when you buy real estate a country, you also gain access to that culture and create a space in which you can share your own background.
7. Invest in International Real Estate While Keeping an Eye on Home Trends
Many of these strategies focus on what makes a particular country of region appealing for foreign investors. But you can also shift your perspective, and choose an international real estate investment opportunity based on trends that are popular back home.
People are more and more interested in the story behind a business, not just what it has to offer. Even something as seemingly straightforward as real estate can tell a story, and you can use this to attract investors of your own.
These strategies hopefully give you an idea of how you can approach the matter and the many different variables you need to account for.
Real estate investments should not be taken lightly, as there many things that factor into the success or failure of a transaction. However, it can be one of the most rewarding experiences both on a financial and a personal level.
About the author: Always up to date with investment and finance tips news, Harrisson Dawson is pursuing his dream as a professional writer. The capital market is a difficult place to make money, without the proper knowledge. That’s why Harrisson wants to share his insights with individuals through his work.
Zafar Yaqoob says
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No I don’t have any exposure to cryptocurrencies and do not want anyone to trade them. It’s too risky to invest in.