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How To Invest in Property Overseas
The housing market in the United States has been down for quite some time now and a lot of investors are shying away from the market because they were burnt so badly in the housing crash.
While the domestic market may be in trouble for a while longer, there are still lots of investment opportunities outside the United States.
Here are few tips before you start investing in property overseas…
1. Look for stable countries
Your money should be invested in the real estate market in safe countries with stable governments.
Avoid countries with political unrest like Egypt and Iraq and instead look for countries with growing economics like China, Australia and Brazil.
2. Check home prices
Be sure you do your due diligence on overseas home prices so you know what's a good deal and what's not.
Home prices vary rapidly from country to country, just like they do in different parts of the United States. For example, you wouldn't want to compare home loans in Australia to home loan prices in South Africa as they are two completely different markets.
3. Compare home loan rates
Banks will often charge higher rates on overseas investments because of the higher risk. Check with your financial institution and ask them to put together a spreadsheet so you can compare home loan rates in different parts of the world.
You'll need to keep your borrowing costs as low as possible so you can maximize your rates of return. Try to compare home loans at smaller, local banks with multinational institutions that specialize in foreign loans. You might even be able to get your bank to match or beat the terms of a bank with better rates.
4. Check the tax rates
Overseas tax rates vary considerably so do your homework on the different tax liabilities and deductions you might encounter. Some countries may require you to pay extremely high property taxes while others may offer economic assistance to new homebuyers.
You might also have to pay US income taxes on any profits earned, so be sure you take that into consideration when calculating your profit margins.
5. Determine your profit expectations
Both the banks and your loan partners will want to know that they will be repaid and will make a profit on their money.
You need to have an accurate forecast of the amount of profit that you can make and how many years it will take to reach that number. You should also forecast how many years it will take to breakeven based on a number of factors.
Investing in real estate overseas can be a very lucrative venture if you go through the proper steps and plan your investment properly.
Good luck Penny Hoarders!