It is a popular misconception that real estate investment abroad is a lot more difficult than investing in your own locality. Admittedly, commercial real estate investment is much more widely conducted on an international slant, but when it comes to residential investment, almost all are focussed in the investors' own area.
It could be argued that this is a good thing. By a long shot, residential investment is dominated by buy to let investment; buying properties and renting them out to tenants. Because the most successful investments are those in the best areas, most investors focus on their locality because they have an understanding of what areas are good beforehand, which cuts back on the research time -- this is really important right now when investors are trying to snap up below market value properties before they are beaten to it.
That said the advantages of adopting an international real estate investment strategy are not to be sniffed at, not least the fact that the number of real estate investment opportunities to be found around the world are obviously far far greater than those found in any one country or locality. As well, as that here are some of the other advantages.
Currency Exchange Rates
Adopting an international approach to real estate investing allows us to benefit from currency exchange rates -- this is especially true of volatile times. If we time an overseas investment right we can start the investment with up to 20% instant equity, likewise investment returns coming from a strong currency are higher in real terms, and mortgage repayments in foreign currencies can be made cheaper in real terms. Of course, in each case the opposite is also true.
When the world is at our oyster there are a whole host of benefits that we can seek in the field of taxation. Some countries have zero VAT, zero capital gains tax and others put capital gains tax on a sliding scale, with a lower rate paid the longer you hold the property. For example if you hold a French leaseback for 5 years you pay no capital gains tax on the sale price. One can seek the guidance of international real estate investment services in order to maximise the benefits of differing tax laws.
Diversifying your portfolio across a range of countries is spreading your risk, as oppose to putting all your eggs in one basket. For example, a real estate investment in the UK today has been at the mercy of severe rioting, so those who have a diversified portfolio will be glad strong returns coming in from Brazil will offset any losses in London.
Investing abroad can be a daunting prospect but it needn't be difficult. Around the world there are thousands of real estate investment trusts investing in international real estate, some focussed on particular countries, and continents, others on an international scale, giving the investor control of where his money is being invested.