International Real Estate

International Real Estate: 5 Advantages & 3 Strategies for Success

By Dr. Steve Sjuggerud, President, Investment U
Tuesday, September 16, 2003: Issue #273

“Global real estate will be the only major asset class that could deliver double-digit returns over the next five years.” - Barton Biggs, Chief Global Strategist and Chairman, Morgan Stanley Investment Pensions and Investments

Kathleen Peddicord has quite possibly seen more international real estate opportunities in out-of-the-way places than anyone on the planet. Currently on the hunt for deals in Panama, this Ireland-based U.S citizen is the woman to turn to when it comes to overseas property investing.There’s no doubt about it: Real estate may well be the best possible way for the average investor to safely amass a fortune Yet most U.S. investors are overlooking what I’ve found to be a simple truth: The best deals and the biggest opportunities in real estate today are not to be found within U.S. borders.

In preparing my upcoming book (called Safe Strategies for Financial Freedom), I realized we hadn’t talked about international real estate opportunities. So I turned to Kathie to contribute a few ideas. She turned in a marvelous effort. As you’ll see, following Kathleen’s advice on investing in international real estate can pay off immensely

Five Advantages Of International Real Estate & Three Ways You Can Profit
By Kathleen Peddicord,
Publisher of International Living

Take U.S. coastlines Sure, America has some gorgeous beachesand stunning seaside properties. But there’s a severely limited supply, especially of Grade A beachfront real estate and a burgeoning demand, especially among Baby Boomers. Even if your budget isn’t small, you’ll have trouble finding a seaside getaway on either U.S. coast that could be called a bargain.

Almost all resort property in the U.S. is already priced beyond the means of the average buyer. But the U.S. doesn’t have a monopoly on nice beaches.

Indeed, some of the most desirable property in the world right now does not happen to sit within the confines of U.S. borders.

I’ve been looking at the world this way for a long time seeking out top-shelf international real estate in undervalued markets, places where some special combination of factors – economic, political, etc. – allows you to buy at a discount (rather than a premium, as you’re forced to do in the U.S. right now).

The Five Advantages of International Real Estate

International real estate offers five advantages over domestic real estate:

1. Global real estate investments can appreciate faster than U.S. real estate. Because you’re buying at a discount, there is higher ceiling for appreciation.

Furthermore, with today’s technology, many people can work from anywhere on the planet. Why work in a Peoria, IL, suburb when you could work and live just as easily on the beach in Belize? More and more people are thinking this way and the market for non-U.S. real estate will continue to appreciate accordingly.

2. Global real estate offers you a safe alternative if things go bad (or worse) in the U.S. Many Americans fear for their constitutional rights, which seem to be taking a back seat to Homeland Security. I’d argue that no government is “good” government but many around the world are much less intrusive than that in the U.S.

3. Global real estate is an easy way to move some of your assets offshore. Few restrictions are placed on Americans related to the purchase of property overseas. And once you own property abroad, it’s extremely difficult for the government, creditors, or anyone else to get at it.

4. Your real estate investment can double as a personal retreat, part-time residence, or vacation getaway. You can take enjoyment from it while it’s appreciating in value generating rental returns safeguarding your net worth.

5. Global real estate investing can open the doors and broaden your horizon to a new lifestyle. How many investments work like that? Not many that I can think of. Plus, the wealth you build with your real estate investments abroad will go much further in a fast-growing developing economy than in the States.

There’s a global migration to places with great weather, little pollution, good views, a relaxed lifestyle, and low prices. Indeed, the Baby Boom generation is more open to the idea of a new life abroad than any before it and Baby Boomers have not only the inclination, but also the money and the time to pursue dreams of life in some far-off paradise. It’s possible, even easy today to live, work, relax, or retire anywhere you want.

It’s the investors who recognize this trend and identify its path who will profit most.

International Real Estate: Finding What’s Right For You

As an international real estate investor, you can primarily make money in three ways:

1. By purchasing property (land, a house, an apartment building, etc.), adding value, and flipping.
2. By investing in properties (a house, an apartment, a resort unit) that produce rental income (which exceeds holding costs) that can help compound capital appreciation.
3. By investing in raw land that you have reason to believe will appreciate in value in the coming years. This is a longer-term, buy-and-hold strategy.

And A Final Note From Steve

That scratches the surface on the basics. As for particular investment ideas, Kathie is currently in Panama and is optimistic on its prospects. She is also a big fan of Nicaragua. As she says: “It doesn’t take much imagination to see where this country is headed or to recognize the potential of an investment in real estate, especially beachfront land along this country’s south Pacific coast, right now. The situation is similar to that in Costa Rica and Belize in the late 1980s, when real estate prices increased by 500% or more in a very short time. And arguably, Nicaragua’s lakes, volcanoes, two oceans, waterways, and pristine rain forests offer greater potential than its neighbors.”

I agree with Kathleen. I can see Central America as an opportunity right now simply because people are less inclined to travel and buy far from home. For example, Bali was once thought of as a haven for honeymooners. Now it’s only thought of for the Bali bombing. Instead of traveling to the Middle East, Asia (with SARS fears), or even Europe, Americans are looking closer to home – and that’s good news for previously disregarded countries.

Good investing,

Steve

Today’s Investment U Cribsheet

If you’ve got a sense of adventure, and international real estate sounds appealing to you, a great place to start is with the free e-letter out of Kathie’s group, International Living.

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