Offshore real estate investing: The basics

Are you looking for ways to invest your hard earned money in real estate? If so, you might want to look at the opportunities available overseas. But why?

In investing, putting all eggs in one basket is a bad idea. This also holds true for real estate: Investing in properties in your home country is good, but you need to diversify by investing in properties overseas – very lucrative ones, I must say.

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Need some stats to back it up? A survey of 600 investors reveals that 52 percent of them will increase cross-border real estate investing allocations. The target: London, Paris, New York, San Francisco, Tokyo, and Sydney.

There are some solid reasons why you should follow suit:

1. Get your wealth off your government’s hand

The main idea of owning foreign real estate is to keep your wealth away from your government’s reach. That’s right; your properties overseas can protect your wealth, not only in value, but also in privacy (yes, it’s not reportable, unless it’s rented out.) Even though your home country’s government know your real estate whereabout, seizing it would be highly unlikely.

2. Diversify your investing portfolio

Stocks, check. Bonds, check. Precious metals, check. Real estate, check. If you want to up your portfolio a level, you should invest in those, but in overseas markets.

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An offshore real estate is one of the most lucrative ones, as it’s a tangible hard asset, and in many offshore jurisdictions, its value is rising at attractive levels.

3. More internationalization options

The idea of internationalization is not to peg your future in just one jurisdiction. Even if a second passport is not an option for you due to laws and regulations of your home country, you can create an opportunity for yourself by becoming a resident of that country, which can present more opportunities and safety nets for your personal and financial well-being.

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One of the ways to open up the residency option is via a property ownership in that particular country. Of course, every country has its own set of laws and regulations regarding your rights as property owners, but you can always explore the opportunities and consider your options.

I’m in! What’s next?

Okay – so, there are plenty of benefits for owning foreign real estate, indeed. Your next step would be learning how to do it properly. So, here it goes.

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Firstly, you need to think of buying real estate locally: Do the best practices on how to choose the right real estate. There are plenty of guides out there, but in essence, what you should do includes the following: Research your location, inspect the legalities of the documents, apply for a mortgage or any means of financing your purchase, and so on.

Now, investing in foreign real estate follows the same best practices, but with some additional steps and complexities. But fear not, investing in real estate overseas is shouldn’t be too complicated, if you know where to look for help.

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Indeed, in foreign property investing, who you deal with is more important than the property itself.

Eight steps to invest in foreign real estate

To get started, here are the step-by-step:

Step 1: Know why you want to buy overseas property

This is fairly straightforward; just like investing in local real estate, you should know why you want to jump through more hoops to invest in foreign real estate. Is it for protecting your wealth? Is it for accessing ‘untapped’ real estate market? Is it for getting a residency status or even citizenship?

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Be self-aware, and learn as much as you can – even before you start your overseas real estate investing journey. Most of the times, your reasons are what makes your investing/asset protection a success.

You should learn – even seek mentorship – from those who have the been-there-done-that experience.

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Step 2: Decide - buying as an individual vs. a corporation

Just like in the business world, the difference between individual vs. corporation lies in some paperwork that you should do, as well as the laws and regulations that you should comply to.

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Although it’s a more complex option, owning a property through a corporation can offer you much more than owning it as an individual. The main benefits include tax benefits and enhanced privacy.

Consult with your trusted lawyers, as well as offshore incorporation agents to find out about the available options.

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Step 3: Funding your purchase

To get started, you should know how to fund your purchase even before you start your property search, and how much.

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If you have the fund in full for your overseas property purchase, then it’s good for you; however, if you don’t, then you should consider taking an overseas mortgage. It shouldn’t be challenging to do so, really.

However, you need to decide the jurisdiction of your property, as every jurisdiction adopts different funding policies; and to do that, you need to do the following step.

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Step 4: Are you eligible to buy a foreign property?

You should start to think about your eligibility: Can you actually invest there? If so, how difficult it is to invest in there?

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That said, you should understand local real estate laws: What types of properties are allowed? Who can own properties? Most importantly, can you really buy it as a foreigner?

Not only the laws, but you should also understand about the costs – the local taxes, the paperwork processing fees, and so on.

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Step 5: Start your search

Finally, you can start your search. Local real estate listings are good places to start, but ‘insider info’ is still the best place to look for lucrative opportunities. But how to get the insider info?

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One tip: You should talk with local real estate agents overseas, or even do your own search – and actually go to the location and learn as much as you can.

Please note: Not only one or two, but you should build a list of properties you’re interested in. Analyze them and choose one or two that you want to explore deeper.

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Step 6: Do your due diligence

Now you should analyze the property of your choice closely.

Research the title of the property to find out whether the seller really owns the property. Learn about the bills – are they actually paid? How about the environment – would there be, say, a flood during the rainy season? If it’s a pre-construction property, you should learn as much as you can about the developer’s track record.

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Step 7: Set offshore accounts up

Okay, now you’re ready to buy the property. But wait! Before you can actually buy the real estate, you should set accounts that enable you to finalize your purchase.

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You should open an offshore bank account (and setup an offshore company if you decide to buy the property as a corporation) to make things a lot easier – i.e. To apply for a local mortgage. You should also setup an insurance account for your property.

Step 8: Purchase the property!

Take the leap of faith, and congratulations – you’re now a foreign property owner.

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Conclusion

So, there you go – as you can see, it’s not as complicated as it sounds; however, please note that research and analysis should be your main focus in investing in real estate overseas. You just can’t afford to gamble your money away on a questionable piece of real estate.

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Consult with trusted lawyers, real estate agents, international business service providers, and fellow foreign real estate investors. Again, whom you consult with is often more important than the property itself.

Good luck with your real estate investing endeavor!

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