International Real Estate Primer

When you are looking at diversifying your portfolio, you may be looking at different bonds, equities, even real estate. Have you ever considered investing in international real estate? Though you may feel a little daunted at first, international properties now a days offer great investing opportunities for small and big investors alike.

Till recently, only major corporations and financial institutions would look to the international real estate market for investing opportunities. However, for achieving significant diversification, these companies would also need to invest significantly, in properties based in different foreign countries.

With the opening up of the global economies, the real estate market the world over has also started opening up and there are now attractive opportunities for even small investors like families, family trusts and individuals. In fact, there are added benefits to investing in international real estate for the small investor.

Many families and individuals now see a real chance to invest in a vacation home or retirement home in places like France, Mexico or Brazil. They can spend some time in their homes during vacations or after retirement till there is sufficient appreciation of the capital. Of course, many individuals may also prefer to just invest the money in land or other property, make suitable changes to it, and just wait for a few years till they get the desired returns on their invested amount. Once the value of the invested property appreciates sufficiently, the investor may choose to sell that property and invest in some other property that holds promise for similar profits.

As always, before making any investment, the person has to give careful thought to the risks and benefits. Before investing in international real estate, the same considerations as while investing in the domestic real estate market will have to be taken into account, but there will also be some added concerns.

• One of the major concerns while investing in any foreign land is in understanding the legal technicalities of the country. Especially if the country is just opening up its real estate market, it is possible that the legal framework is not yet well established or is still being established. Laws regarding real estate ownership or foreign investment have to be properly understood before proceeding with any kind of investment.
• Typically in the domestic real estate scenario, one only has to worry about the appreciation or depreciation of the value of the property. However, there is one more factor that plays a role when it comes to investing in foreign real estate. The currency exchange rate. Even if the property value appreciates significantly, if the currency of the land one has invested in is not doing well, there may not be real overall appreciation. Of course, it is always possible that the domestic currency does well and if even the actual value of the property does not appreciate all that much, the investor sees significant returns on his investment.

Small investors would do well to consider all these factors and possibly consult an international real estate professional before taking a decision on investing.