The expat lifestyle has many benefits, such as traveling, living and working in exotic locations and often better compensation and benefits than that of domestic jobs. The expatriate life may be full of adventure, but one place that investors definitely don’t want thrills is in large investments. High earnings allows expat investors more disposable income for investments, but whether saving for a home, planning for retirement or seeking cash-flow from current investments, expat investors face obstacles and needs quite different from those of average investors.
Facing some of the problems
The expanded possibilities for ex-pat investors can be overwhelming: Should you invest in a Thai land share, buy emerging market stocks or purchase a property in your home country? Organizing one’s finances while living abroad often requires more brainpower and complex tax strategies may be needed. You may feel like you have fewer options and far less security than you did back home. You may fear that your distance from the property will hinder the proper management or that the mortgage will require a larger down payment or that your separation from the market will cause you to sell low or buy high. Financing, property management and market timing are very real concerns that hold completely different implications when the property you purchase is not a quick drive away.
A Few DOs….
The easiest solution is to enter a partnership or joint venture agreement with a real estate expert that understands the unique ins-and-outs that expat investors face.
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DO look for an experienced partner that focuses on investors living abroad and who can guide you, not just sell to you. Your tax situation, mortgage qualification abilities and the extra time needed to get documents signed and notarized all need to be taken into account.
DO find someone with a proven track record. Talk to your partner’s past clients, get referrals and find out how well their investment succeeded.
DO conduct due diligence on your partner and on the location where you are investing.
What is the area’s economic outlook? Does the investment make sense?
DO consult with a tax specialist and have a real estate lawyer read over all legal documents. You don’t want any surprises when you invest. This may seem like a boring, overly precautious step, but it is crucial.
DO Expect updates on your property. You should get a yearly update of how well the investment is doing and whether there were any changes in the market.
DON’T slip into the dangerous rut of analysis paralysis. What is your goal for this investment? Is it for retirement or income? Once you have a clear goal list, research three joint venture companies and choose one.
DON’T purchase on pretty pictures. Sunsets, ocean views and happy couples dancing in the sand are all great, but who will buy the property after you? Is this an emotional buy or are you investing in real estate to make a profit?
DON’T micro-manage; let the experts do their jobs. You don’t need to see every receipt for every light bulb that is purchased. Remember, your goal is to free up your time, not have more headaches.
DON’T let your taxes slide. Expatriate investors may often pay higher taxes than other investors. Go into the deal armed with knowledge of what your real ROI will be.
DON’T think every deal is a get-rich-quick deal. The fact is real estate is a proven long-term wealth generating investment. If you have the mindset of a day trader, then you’re gambling not investing. Invest for the-long term: a minimum of 3 years and an average of 5 years or longer.
There is no reason that you can’t have the expat lifestyle and take advantage of real estate markets all around the world. It’s essential that you realize your choices are ample, not diminished. Just remember that to be successful you must be aware of your end goal and take action accordingly. The devil is in the details and with proper due diligence your financial dreams are only a few sound investments away.