Investing in real estate is popular because of its potential benefits. For one, you can earn a decent income with little involvement after buying a property. Because of these benefits, buying foreign land and property should be one of your real estate investment ventures.
It might seem a bit overwhelming or scary since the property is abroad. But when done right, you could enjoy the following perks:
1. Establish International Vacation Property
Whether it’s the peak or lean season, you can always have a home to stay in when vacationing abroad. You can also travel to your home away from home any time of the year since accommodation isn’t an issue.
For instance, buying real estate in Ireland would be a good investment if you love spending your time off in the British Isles or Europe. You can buy 12-25k an acre for land that can turn into a residential or long-term vacation rental.
No matter how long you stay in a foreign country to take everything in, you won’t spend as much on accommodations. You always have a place to go home, so rushing to events wouldn’t be a chore. All you need is to maintain a livable property throughout the year. You can either hire a property manager or visit the country regularly to maintain your foreign home.
2. Earn Higher Returns
Another reason for buying foreign land and property is the higher returns. A good example is the property in the scenario above. You can rent it out when you’re not visiting the country. Alternatively, you can wait for the property’s value to increase before selling it. By doing this, you can get more from it after using it as a vacation home for years.
To earn higher returns, buying in most developed countries might not be the best idea. Although you won’t lose your investment, it may take time to gain from it since the real estate market can be somewhat cyclical.
For instance, you may fare better if you run a rental in a developing country than in most developed countries. The value appreciation may keep increasing yearly while you also earn from your rentals. You’ll help your position if you do your due diligence by understanding your prospective countries’ real estate markets.
3. Diversify Your Portfolio
Investing in properties from a foreign land is one way to diversify your real estate investment portfolio. Buying foreign property is excellent since you’re not putting all your assets in one market. You can protect some of your assets when one market fluctuates because you’ve invested them overseas.
For instance, the market in the United States may need to be faring better. This may be due to interest rates, geopolitical circumstances, and economic activity. If this happens, the value of your properties may decrease.
You can’t control the market’s uncertainties, but you can protect your wealth by diversifying your portfolio. Properties overseas may not fluctuate like your home country’s market. Thus, you only lose some of your assets in one market.
4. Have Foreign Residency
Besides having a vacation house overseas, you also have the opportunity to have a foreign residency. Most countries grant foreign residences when you buy real estate in them.
Having a foreign residency allows you to gain some of these benefits:
- Working and living in another country
- Travel from one country to another quickly
- Access to better healthcare and education
- Stability and security for countries with economic and political instability
- Opportunities for business and investment growth
You can also explore new entrepreneurial opportunities since not all countries allow foreigners to own or run businesses. But once you become a citizen of that country, you can access their market, from stocks to other wealth-building opportunities. It’ll also be easier for you to attract local customers, investors, and partners.
5. Enjoy Privacy And Tax Advantages
If you’re a US citizen, you must report your income and assets to the IRS annually. The IRS doesn’t classify real estate properties overseas as foreign financial assets. So if you own a rental or residential property in another country, you don’t have to report it to the IRS.
This is because the IRS can’t force the sale of second homes in other countries. They can’t even seize foreign real estate even if they want to. Moreover, you can also benefit from a tax return. You can deduct the cost of your trips to the other country where your real estate property is on your US tax return. Your taxable income can also pay the interest on your foreign property’s mortgage.
6. Have Safety Benefits
Most importantly, you can use your foreign property to safeguard your assets from geopolitical issues, natural disasters, and the like. You need to buy in safe or peaceful countries, making it safer to invest in real estate than when you do domestically.
For instance, buying foreign and land property may be an excellent option if you live in a country prone to disasters, man-made or natural. Because when you buy properties domestically, you have higher risks of losing your investment in the event of a natural disaster. And even if your properties in your home country get destroyed, your properties abroad won’t be affected.
Insuring your property can solve the problem of investment losses from disasters. At the same time, owning properties abroad can be a better option. That’s because you can save time and effort in building or renovating your damaged property. Most importantly, your cash flow from a rental property abroad will continue, unlike when you have to rebuild or refurbish your property after a disaster.
Conclusion
The benefits mentioned in this blog should answer whether owning foreign land and property is a good investment. Besides having a foreign residency and property, you can open more doors for growing your wealth while protecting your assets from instability in your home country. As such, you may want to consider this investment idea.
Blog from Editorial Staff
