Saving for retirement is a lifelong process but everyone approaches it differently. For some, it means building a stock portfolio while others choose to rely on an IRA, 401k or another retirement account. Another option – and a compelling one for those with a lump sum to invest – is to put your money into real estate. International real estate in tourism-heavy areas, where property prices may be lower, can make for especially good investments.
How do you determine whether or not international real estate should be part of your retirement plan? Consider these four factors first.
Know Your Market
One common mistake that people make when trying to invest in real estate is that they don’t fully understand the area where they plan to purchase the property. That’s why it’s important to do your homework – the more you know about real estate investment and specific real estate markets, the more successful your investment will be.
Don’t be afraid to hire a real estate agent and other professionals during this process. While there are some costs associated with seeking help, you’ll likely spend more investing in the wrong property or overpaying for real estate if you try to go it alone.
Think Current Use
If you’re hoping that international real estate will help to fund your retirement, you need to consider more than inflation and growing demand. One of the most valuable things about international real estate is that you can rent it out in the years before you retire, bringing in what’s essentially passive income. In order to do this, you have to choose an area that’s in demand and that offers prime vacation opportunities.
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Let’s take Belize as an example. Belize is a beautiful area, popular with those interested in watersports and other natural adventures. If you choose to invest in property in this area, you may wish to develop rental resources for vacationers, such as tips for getting a fishing permit or where to go snorkeling for great views and few crowds. Creating such tools will help you boost your income from the property for years to come.
Watch For Development Trends
In order to avoid overspending when investing in international real estate, it’s important to understand global development trends. As of 2016, Colombia is experiencing a development boom, but has a very favorable exchange rate, allowing American investors to buy at a discount. On the other hand, real estate in Argentina is likely to be in high demand in the next few years, so you can get a jump on things by shopping that market now.
Consider Your Future
While all retirement investments are made with your future in mind, don’t forget to think about if you want to retire internationally down the line. Will you keep the property you buy and move there in the future, or will you sell the property and stay where you are? If you can make an investment in a place you’d also like to live in the future, this only adds to your long-term financial security.
In some ways, choosing to invest in international real estate means taking on another full-time job in terms of managing those properties (or you could hire someone to do that), but it can also be financially rewarding. If you love to travel, know a little about real estate markets, and are ready to think big in terms of your financial future, then international real estate could be the perfect choice for you.
re: “Another option – and a compelling one for those with a lump sum to invest – is to put your money into real estate.”
And the cool thing is that even if one’s money is already tied up in their personal residence, you can often leverage that to buy something with no money down. I felt weird asking the bank for that kind of loan at first, but they were unfazed by it, so apparently I wasn’t the first 🙂
Mind you, I haven’t bought internationally yet… so far, only local properties in the market I know best. But maybe one day…
I don’t know that I would personally invest in real estate internationally. I would imagine that it would be harder to manage and oversee than having an investment property close by. Something to consider though, thanks for sharing!
Thank you for elaborating things needed to watch out for in order to invest in international real estate! This is a good reference to keep for people who wanted to step-up their real estate investment.