As the United States economy drags itself ever so slowly out of recession investors find themselves looking offshore. Economies in Latin America and Asia continue to grow. Foreign real estate investments in these regions and elsewhere hold promise for investors for a number of reasons. Foreign real estate investments can take advantage of regional growth, convey tax advantages to the investor, generate cash flow as well as capital appreciation, and provide a degree of asset preservation not available in United States investments. As with all smart investing, fundamental analysis of investments is important but when an investor puts in the time and effort profits can be spectacular. Here are a few thoughts about foreign real estate investments.
Invest Where There Is Growth
The Chinese economic miracle continues despite the worst recession in three quarters of a century. A collection of smaller Asian nations are still referred to as the Asian tigers because of their economic prowess. Mexico and Brazil are vying to be the new Latin American super power and little Panama on the land bridge that connects North and South America is growing as fast as China. Where there is growth, there is wealth and where there is wealth, property appreciates in value. One does not need to start a business in Panama City, Panama. As we note in our article, Three Good Investment Ideas, one can buy commercial real estate in growing market like Panama and collect rent checks as property values go up. Even in good markets there are business failures. Buying repossessed properties in a country like Panama can be lucrative if one has the services of a local firm that will scout out investment opportunities.
Did someone say, “tax haven?” Much that is written about tax havens is a bit overblown. The ability to “hide” assets offshore may well be a thing of the past if it ever really existed for most people. However, nations looking for foreign investment often provide unique and valuable opportunities to those willing to engage in foreign real estate investments on their territory. Many nations have bilateral taxation agreements. Picking the right place to invest in real estate could be a matter of picking a country that taxes you at a low rate and spares you the pain of paying taxes “back home.”
Unlike investing in foreign stocks via ADR’s the rent checks from commercial property in Bogotá, or Buenos Aires can be banked in Colombia pesos or Brazilian reals. The Colombian peso performed the best versus the US dollar of all currencies in 2012.Bank the proceeds from your property offshore, make good interest from the local bank, and watch your assets, denominated in a healthy foreign currency, growth as US debt eats into the value of the US dollar.
Something That You Can Touch
This applies to real estate everywhere. Land and what is built on are tangible assets. You can take charge of a real estate investment and make changes as needed. When the time is right you can sell you foreign real estate investments or you can use the equity to buy more foreign real estate investments. There is a learning curve for learning how to invest in foreign real estate. However, one does not need to invest a dime (or ten centavos) until he or she is ready.