Global Real Estate Investing Primer Part I

How To Buy Real Estate Overseas, Part I

Sept. 16, 2009
Panama City, Panama

PLUS:

"Will My Tricare Medical Coverage Be Accepted In Panama?"...
Distress Sales In One Of The World's Most Proven Markets...

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Dear Live and Invest Overseas Reader,

"The falling markets worldwide are creating crisis buy opportunities for both personal use and investment," writes resident global real estate investing expert Lief Simon.

"But...invest in a piece of real estate in another country? How do you get started?

"First, understand why you're buying--for investment or for personal use?

"The answer may not be clear-cut. And the best case is when you find a piece of real estate in a place where you want to spend time that also holds out the potential for an investment return (in the form of capital appreciation and/or a yield from rental).

"State your objectives and exit strategy expectations clearly for yourself and for anyone else buying with you. Every decision you make related to the eventual purchase is affected by the property's intended use. If you're buying straight up for profit, every decision is based on the numbers. If you're buying for personal use, even part-time, you'll make your choices based on many things, including some that can't be quantified in a spreadsheet.

"Now that you understand why you're buying, you need to decide where you want to buy what. I've been making specific "recession-market" recommendations in recent weeks (and will continue to do so). As you consider them (and the rest of the globe), think about:

The Path of Progress. This is a key factor when buying for investment but important if you're buying a retirement or second home abroad, as well. What infrastructure improvements are planned? A new airport, new train station, new highway, new hospital, etc., can mean a new universe of potential buyers...which is good news if you're buying as an investor looking to develop or to flip. These things, though, also translate to better living.
Inventory Supply and Demand. In Panama City, right now, for example, a glut of high-rise condos is coming online. These units were launched and sold pre-construction over the past two-plus years. Now they're being delivered...and their volume is one reason Panama's capital market continues to soften.
Costs of Acquisition. Remember that they go beyond agent commissions. Depending on the market, they can also include: legal fees, notary fees, registration fees, title insurance (we strongly recommend it), and transfer taxes (sometimes called "stamp duty"). In Ireland, for example, stamp duty can be as much as 9% of the purchase price.
Carrying Costs. Including: maintenance (a house on the beach requires a lot of it, for example); a caretaker (if you won't be in residence full-time yourself); property taxes (not every country charges them, and, in some countries, they're negligible); income taxes (if you'll be earning rental income); capital gains taxes (when you eventually resell...again, not every country charges them); other local taxes; property management expense (you'll need a property manager if you intend to rent); rental management expense (separate from property management and, again, necessary unless you're going to manage all the details of your rental investment yourself...something I don't advise); and homeowner's association/building/condo fees.
Economic Outlook. Critical if you're buying for investment, but you don't want to ignore the market climate even if you're buying purely for personal use. Markets move up and down...and then up again. At what point in this cycle is the market where you're thinking about buying right now? In which direction is it moving?
Opportunity for Diversification. In terms of market, type of investment, type of property, and currency.

"What kind of property should you be shopping for? Again, consider why you're buying. If it's for personal use, how much space do you need? If you intend to rent the place out when you're not using it, understand what rents best on the local market. An apartment or a house? One bedroom or two? Think in terms of cost per square meter when making comparisons.

"Where do you want to be? In the heart of downtown...or out in the country? On the coast or overlooking a river? In a gated community, a local neighborhood, or off on your own with undeveloped acres between you and your nearest neighbor? Consider climate, traffic patterns, transportation (where you settle determines whether you'll need to invest in a car, for example), the convenience factor, and nearby amenities (shopping, restaurants, nightlife, parking, etc.).

"Furnished or unfurnished? If you buy unfurnished, where and how will your source furniture?

"What's your budget? Everything follows from this. Be clear on it before you start shopping, and don't forget to include the costs of closing, attorney review, other due diligence, and title insurance."

Kathleen Peddicord

P.S. Lief Simon has invited 12 fellow global real estate pros from around the world to join him in Panama City next month for his Third Annual Global Real Estate Profits Summit. Over two-and-a-half days (Oct. 15-17), Lief and his team will address these and many other important caveats and pitfalls related to buying a piece of property in another country.

You'll have a chance at that event to speak with Lief personally regarding your own global property investment plans.

Go here now for full details of what Lief has planned and to register online. Or contact Conference Director Sofia Hogan with your questions (be sure to ask about any discounts you may be eligible for), by e-mail at Events@LiveandInvestOverseas.com or by phone at
1-888-627-8834 (from outside of the U.S. dial
+1-443-599-1221).

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The Smart and Experienced Money Is Moving Into International Real Estate...

But how do you begin? Where do you start?

Over three days in October, Lief Simon and 12 other international real estate investing professionals will discuss how and where to position yourself in world property markets for profit.

For instance, hear about a turn-key money-maker in arguably the most sophisticated city in Latin America. In a trendy neighborhood sought out by Hollywood moviemakers and tourists from North America and Europe, you could earn a reliable yield of as much as 18.2% per year, participating in this new 5-star rental investment opportunity.

Plus, you have personal use each year for your own luxury vacations (which could be tax-deductible, as you're visiting your own income-generating property)...

Learn more about this market, as well as over a dozen other unique globe-spanning opportunities, here.

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MAILBAG:

"Kathleen, you've explained that Medicare does not cover an American abroad. I'm a U.S. military retiree and want to know if my Tricare medical coverage is accepted by Panamanian doctors and hospitals?"

-- J.R., United States

Indeed, Tricare medical coverage is widely accepted in this country. At Panama's top-notch and state-of-the-art Hospital Nacional, as a Tricare recipient, you are responsible for the US$150 annual deductible (US$300 for a family). Once your deductible has been met, you can see any doctor, be treated on an inpatient or outpatient basis, receive ambulance service, physical therapy, X-rays, CAT scans, and many other tests and treatments at no cost, because you are a veteran.

Hospital Nacional processes the paperwork and submits the required forms directly to the Tricare offices in the United States.

In the cases of doctors, hospitals, and clinics that do not accept Tricare up front, you simply go see the doctor for treatment, pay for the services, then file your claim with Tricare.

Before you move to Panama, you must notify your health-care provider and Veteran's Affairs (VA) of your plans and request to be transferred to Tricare Prime. The VA will explain this in further detail when you get in touch.

***

"Kathleen, you have caught my interest. Tell me how to participate in the following market:

"'Distress sales in one of Europe's most popular beach resort areas, where families from all over Europe continue to vie for vacation rentals every year. You can buy here right now at discounts of up to 22% or more ... with financial incentives including cash back and no money down. Turnkey, furnished, and ready-to-rent in one of the world's most proven markets...'"

-- Bob L., United States

Full details (courtesy of resident global real estate investing expert Lief Simon and his team) at Lief's Third Annual Global Real Estate Profits Summit scheduled for next month (Oct. 15-17) here in Panama City. More here...