Brazil, Panama, UK, and Spain are some of the best countries that you can invest in in order to diversify our portfolio. Brazil and UK are the best options as they offer capital appreciation and can be good value to your investment portfolio. Spain is one of the best markets as its properties are very low as compared to previous years and one can really benefit from this dip and can sell when prices are normal.
According to Shaun Martin, Owner, and CEO of We Buy Houses in Denver, “You might not face any legal challenges directly if you hire a licensed real estate broker. Challenges might surface because of language issues as communication might not take place as you want it. The difference between US real estate market and other markets might be in terms of taxation and valuation”. However, the market value of properties varies from country to country and even from one city to another within a country.
Risks Associated with Buying a Property
Boyd Rudy, Associate Broker at dwellings, says, “Whenever you buy property, you face a certain amount of legal risk. However, when you buy property in a foreign country, the risks can be even greater. For one thing, you may not be familiar with the local laws and regulations governing real estate transactions. This can make it difficult to understand your rights and responsibilities as a buyer”.
You might find temporary or permanent limitations on who can buy a property in a certain country because of various reasons known or unknown to you. Therefore, you need to discuss these matters with a professional real estate consultant before you decide to buy a property in the overseas market.
Transparency in Real Estate Market
US real estate market can be different from the overseas market because of certain aspects of transparency. In the United States, for instance, there exist rules that oblige sellers to provide specific information about the property to potential purchasers. You might not find such laws in other countries and it might become a hurdle in transparency. This issue can cause difficulty for you while purchasing a house in an overseas market.
Also, if someone wishes to acquire investment for buying such homes, you can not receive financing in the US. Apart from this, you might also find it too hard to hire a professional broker that can handle such problems.
According to Kim Chan, Founder and CEO of DocPro, “Foreign real estate market may not be as transparent as the US. Also, rental yields tend to be lower (most people will accept 3%) which may not be sufficient to cover the mortgage. People normally quote gross yield instead of net yield. So you will need to work out the actual expenses”.
ROI on Investment in Developing Countries
Developed countries that are mostly urbanized offer stable yet marginal ROI opportunities. Alternatively, developing countries can be considered a good option to invest and diversify your portfolio while expecting higher profits. According to Jacob Cane, a financial advisor at Premium Decorations, “Countries like China, Australia, New Zealand, and UAE are some of the best overseas markets that a US investor can look to buy. UAE has fewer legal hurdles in the real estate market because of its friendly and smooth policies”.
Uk is another hottest market for real estate because of its low base rate for mortgages. Taxation can be one of the major challenges while investing in an overseas market. However, hiring the right kind of tax advisor can really help you with these issues. US real estate market is very stable and makes it easy to predict ROI while other markets in developing countries are not stable and sometimes investment can be risky.
