A household property income in another country is a great way to earn extra income. It’s also an excellent opportunity to create a vacation home or a place to improve your retirement nest egg.
Although having property overseas could simply be chalked down to having a shrewd diversification strategy, it can be much more than an abstract investment idea.
When you think about it, you may be making a mistake by viewing an overseas condominium or beachfront bungalow as a similar investment to owning a stock or bond. You can’t do much with a paper investment except file it away. However, a house is something else entirely. You can live in it and enjoy your life a little more. Do you really want to set aside a wonderful opportunity like this, putting it on the shelf and occasionally pulling out your calculator to see how well it’s doing.
Foreign real estate is a different kind of investment. It’s far more exciting, especially if you take an active interest in managing it. While you may still want to send money online to pay a property manager who collects money from your rentals, you are missing out on a marvelous opportunity to reinvent your life if you only keep it fully rented all year long.
While foreign real estate is certainly a great way to diversify your portfolio and increase your net worth in the long run, if you just focus on a monetary return on investment, you are missing out on at least 7 benefits of owning foreign real estate:
1. You can use it to follow the sun. Rather than stick around suffering through another harsh winter, spending your time digging your car under the snow and clearing the driveway, why not use your property as a home in the sun. By buying property overseas, you are saving more than enough money to afford to take the winter months off from work. To give you some perspective: If you were to buy a beach property in New Jersey, you would pay about half a million dollars. Yet, you can get a bigger and more luxurious house on the beach in Brazil for less than six figures.
2. You can use it as your retirement home. Think about the advantages of retiring where the cost of living is lower. By retiring overseas your money will go much farther. Depending on where your property is located, you may be paying pennies on the dollar. You are probably already noticing that you have to spend more to get the same amount of food during your weekly grocery trips. On top of that much of the food is filled with additives and preservatives that will ruin your health. Contrast this to living in a place where you can enjoy an abundance of fresh fruits and vegetables at a much lower price. What’s more, you will probably also live in a bigger home and enjoy plenty of surplus income.
3. You can experience a richer life. Living and working where you do now offers you a narrow cultural experience. Everything is predictable, boring and all too familiar. By visiting your property on vacations, you are also stepping into a different culture. Immersion in an enriching cultural experience will expand your possibility thinking and your enjoyment of life.
4. You can tap into true investment diversity. By owning property overseas, you can experience two kinds of investment diversity. First, you can diversify outside the US economy. If all your investments are only limited to the US, you don’t have true diversity. Second, you can enjoy the diversity that comes from using different currency. If the value of the US dollar plunges overnight, you may still be able to enjoy considerable purchasing power in the other currency.
5. You may discover unexpected investment opportunities. On your vacations or trips abroad to check up on your property you may also be exposed to other real estate investment opportunities that would allow you to leverage the buying power of the US dollar to get a better deal than local investors. Speaking of opportunity, another thing to consider with an overseas home is that you have a better chance for foreign residency should you decide on it. Overseas may help you secure a residency visa if you are looking for another place to live.
6. You can save money on your tax bill. Your travel costs are tax deductible. The cost of your trips to keep an eye on your overseas property is a deductible business expense.
7. You will benefit from owning a hard asset. While technically any stock you hold can drop to zero value—think of Enron or Pan Am—your overseas property is a hard asset. In addition, you can consider it a form of international asset protection. Should you get sued in the US for any reason, the courts have the power to access your bank accounts. However, it is much more difficult for someone suing you to get their hands on your Rio de Janeiro.
Your overseas property is an income opportunity. You can rent it out for the times of the year when you don’t need to occupy it. However, it is also an excellent way to enjoy at least 7 other benefits.
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