Investing in real estate abroad can be exciting, nerve-wracking, and highly profitable. However, in order to reap the benefits of international real estate investments, it’s important to know the proper way to go about it. Otherwise, purchasing property abroad could become a quagmire of epic proportions.
“Investing in real estate abroad can be extremely lucrative, but the landscape needs to be navigated diligently, with significant attention paid to the rules and regulations of each country,” said Kevin Wolfer, CEO of Kennedy Funding. “It’s important to partner with experienced professionals who understand those local markets.”
These five tips will help you invest in international real estate the right way and avoid the pitfalls that inexperienced investors often encounter. Keep these tips in mind and your foreign real estate investments could become some of your best-performing assets.
1. Hire experienced professionals
When purchasing land or property in a foreign country, it’s important to work with experienced professionals. You should hire a lawyer and accountant that are familiar with the local area and consult with them regularly to ensure you are in compliance with all local regulations. Similarly, if you are partnering with a lender, choose a lender that has ample experience with funding international projects, as the rules are different abroad than they are in the U.S.
Borrowers are putting more trust than usual in these professionals when navigating a brand-new landscape. Be sure to surround yourself with experienced firms and companies to avoid running afoul of local law and culture.
2. Scrutinize surrounding infrastructure
Depending on which country you are considering investing in, the public infrastructure might not be reliable. When purchasing a property, be sure to closely examine the plumbing, sewers, and electrical infrastructure, as well as the roads throughout the surrounding neighborhood and the stability of the electrical grid at large. What are communications like throughout the region?
Some of the most lucrative returns could be realized when investing in developing countries, but solid infrastructure is something we often take for granted in the U.S. Ensuring that your property is connected to reliable infrastructure is an absolute must.
3. Understand the country’s laws
Every country has its own sets of laws, rules, and regulations. In some countries, it is even illegal for foreigners to hold property whatsoever. However, there are sometimes ways to get around these laws. For example, in Mexico, foreigners are not allowed to own coastal property but commonly do through the use of a Mexican bank trust. In this example, the land is owned by the trust, but the trust is owned by the foreign investor. Understanding local law and how to navigate it is a critical part of international real estate investment. It also speaks to the importance of hiring an experienced, local attorney who can give you much-needed advice and help you strategize accordingly.
4. Visit in person as often as possible
It seems simple but is often overlooked by international investors: if you want to acquire a property you should visit it in person. Once you do acquire it, you should visit as often as possible. So many things can go wrong in real estate, especially when you’re investing from half a world away. You need to inspect the property before you buy it and periodically return to make sure everything is above board. Naturally, you cannot always be there, so it’s important to locate and hire a reliable property manager for the rest of the time. A reputable property manager will be able to monitor your real estate, maintain the landscape, ensure security, and respond to any potential problems on your behalf. They will also keep you in the loop the moment any problems occur, allowing you to move to protect your investment quickly.
5. Understand your financing options
When you want to buy property in the U.S., you can typically just apply for a loan. In many countries, though, you cannot obtain a loan if you are a noncitizen. In other countries, capital markets aren’t even developed to the point where loans or mortgages are available. For these reasons, you should investigate alternative forms of financing prior to examining the market in a foreign country.
Direct private lenders can serve as a great source of capital when purchasing property abroad. Unlike conventional lenders, direct private lenders can invest in acquisitions as they see fit. Not only are direct private lenders more likely to take the risk investing in a foreign property, but the turnaround time from application and approval is much faster with a direct private lender than with a bank.
Kennedy is the first name in international real estate lending
When it comes to international real estate, Kennedy Funding leads the way. For more than 30 years, Kennedy has been funding projects abroad. If you’re looking for a team that is familiar with international governments, laws, and land values, look no further.
“We’ve closed more international deals than anyone,” Wolfer said. “With more than $3 billion in total loans closed, with several closed deals in Central America, the Caribbean, Australia, and many other global locales, we’re proud to be the go-to lender for international real estate acquisition or redevelopment.”
If you’re ready to invest abroad and need funding for your acquisition or development project, Kennedy Funding stands ready to get you the capital you need. See the difference a direct private lender can make for you, and get ready to add a new foreign property to your real estate portfolio.