How To Buy Real Estate Overseas
Spreadsheets And Romance—The Science And Art Of Global Real Estate Investing
Sept. 21, 2009
Panama City, Panama
PLUS:
- Where To Stay During The Trying-The-Place-On-For-Size Phase Of Your Retire Overseas Adventure...
- Journée du Patrimoine In The Other South Of France...
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Your Dream Retirement: US$1!
Here's the secret to realizing the retirement of your dreams overseas...and here's your chance to try it out for only US$1.
Start laying the plans for a retirement that so far exceeds your expectations...and even your current lifestyle...that if you hadn't read so many reports from people actually living it today, you wouldn't believe it possible.
Find out how for the cost of a single Greenback. I guarantee it'll be the best dollar you've ever spent. Don't take my word for it.
See for yourself, right here, right now, for the cost of a single sawbuck.
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Dear Live and Invest Overseas Reader,
Resident global real estate investing expert Lief Simon, also, coincidentally, my husband, and I have been shopping the globe for real estate together for more than a dozen years now. As with everything in marriage, it took us a while to work out a system.
Lief buys by the numbers. He researches market comps (sometimes no easy thing, depending on the market). He figures what we should spend--per square meter of construction or of land. He projects at what rate the market is appreciating and for how long this growth might reasonably be expected to continue. He has a clear investing objective for every purchase and an exit strategy in mind before he makes an offer.
I'm all for making money off our international real estate purchases, of course, but annual yield and long-term ROI aren't typically the tipping points for me when it comes to choosing one piece of real estate over another.
When we arrived in Waterford, Ireland, 12 years ago as newlyweds, we were eager to launch our new life on the Auld Sod, and I had a very clear picture of what that life was to look like. I wanted a big, old, Georgian-style stone house with land around it for chickens, maybe a couple of horses, and a garden. I never articulated this vision to Lief, for I assumed he shared it. How little I understood my new husband.
Lief's vision for our first joint property purchase overseas had more to do with diversifying outside the U.S. dollar and into the euro and buying into one of the fastest-appreciating real estate markets on the planet at the time than it did with a love of classic Irish Georgian architecture. The house we eventually purchased, LaHardan House, met all my criteria and delighted Lief, because, thanks to the property's sorry state of repair, the price was under-market. I got a renovation project, and Lief got a great deal.
Six years later, as we planned our move from Waterford to Paris, we wondered what to do with our Irish country home. Sell it? Or continue to hold and rent while we were away? Lief made the call. Time to get out of this frothy market, he determined. It's nearing its top.
We sold LaHardan House for three-and-a-half times what we had invested in it. I'd made the purchase and carried out the improvements. Lief timed the sale. He sold just as the Irish property market began to settle. (It has since collapsed.)
Likewise, in Paris, I selected the 300-year-old apartment in the historic center of the city that I wanted to buy. Lief was happy to go along with the purchase, because, as with LaHardan House, the state of the property meant the price was nicely below market. Again, I carried out the renovations, the finishing, and the furnishing, and then, fast forward a few years, as we prepared for our move to Panama City, again, we faced the question of what to do with the place.
Hold, Lief determined in this case. An historic city-center apartment in this market will retain its value, and we'll be able to rent it out for a reasonable yield while we're elsewhere. The yield has materialized according to Lief's projections, and the hard asset remains ours.
This has become the secret to the most successful global real estate buys we've made over the past 12 years. No, we haven't employed this strategy for every purchase--sometimes Lief has bought purely for investment in places where I have no interest in spending time and at least once I've bought a family holiday home that never would have held up under Lief's spreadsheet scrutiny. These purchases weren't necessarily mistakes, but they've proven the least successful from an investment point of view.
Lief may have another take on why this is so, but here's mine: Global real estate investing is both a science and an art. To enjoy the greatest level of success at it, you must analyze the market and run the numbers, yes, but you also must take a step back from the spreadsheets and view the purchase from a more human perspective.
Is this a place where you'd enjoy spending time and is this a piece of property you'd be happy to own even if it were never worth US$1 more than you paid for it, even if it never yielded you a single percentage point of return?
More sobering, is this a place you'd be OK being stuck with? You should recognize with every foreign property purchase you make that there's a chance not only that the value might never increase, but also that it might fall. What if the market turns and your house (or the beachfront lot, etc.) becomes worth significantly less than you have invested in it? We've all been made painfully aware recently that this isn't a theoretical question. Real estate values sometimes fall. Sometimes they fall hard.
If you own a piece of property you don't like in a market where you don't want to spend time, what happens if it's no longer valuable as an investment?
Then it's no longer valuable, period.
If, on the other hand, you choose your markets and your properties not only because they're places that hold out investment potential, but also because they're places where you want to spend time, then, if the investment return doesn't materialize as you're expecting it to, you're still disappointed, yes, but all is not lost. You don't mind holding on until the market cycle moves more in your
favor.
I think of it as balancing the numbers with the romance. Lief and I stumbled into this global real estate investment strategy and, over the past dozen years, have put it to the test again and again. We've made together now more than two-dozen real estate purchases around the world. The ones we most appreciate--because we've spent time in them with our family or because (as in the case of the 150-year-old stone farmhouse on the side of a mountain in Istria, Croatia, that remains, despite all my best intentions to renovate it, a near-ruin) we dream of the day we and our children will be able to enjoy them--are also the ones that have proven the most profitable investments.
Kathleen Peddicord
P.S. I was reminded of the sense and the strength of this strategy this morning by an e-mail from a reader who registered last week for Lief's Global Real Estate Profits Summit in Panama City next month. The gentleman wondered about the cost of bringing his wife along to the conference with him. Because we respect the wisdom of considering any foreign real estate purchase as a team (husband and wife, father and son, two brothers, two sisters, two business partners, etc.), we invite every attendee to bring a significant other for half off the regular price of attendance. Full details here.
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Great Deals -- If You Know Where to Look For Them
It's a buyer's market right now -- and not only in Miami and Detroit. You've heard the stories, I'm sure, about tremendous housing bargains in the U.S. and Europe, where tapped-out buyers are abandoning their mortgages and their homes, leaving banks holding portfolios packed with properties they don't want and can't sell. Some of them are offering houses by the dozens at prices from the 1950s and '60s, just to recoup some of their losses.
But what's the future for a house in Detroit? Even Miami, with the intrinsic value of its beachfront, will take years, if not decades, to recover from its current depressed position.
The better options are places that people like you are just beginning to discover, places that right now hold out the potential for affordable retirement living and holiday homes...places with natural beauty, friendly neighbors, and safe streets...places that will continue to attract attention, new residents, and holiday-makers for generations to
come.
What's the secret to discovering the best opportunities for where to put your money in the world's most promising real estate markets?
Find Out More Here
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"This past weekend, France celebrated the Journée du Patrimoine," writes Correspondent from that country Lucy Culpepper. "This annual 'Day of Inheritance' is an opportunity to celebrate France's culture, natural beauty, historic architecture, and traditions.
"Every region, city, town, and many villages have organized programs of events lasting the whole of the third weekend of September. Here in the Hérault district of the Languedoc region of France, this 'other' South of France, there were 249 places to visit and things to do as part of the celebrations, from chateaux and museums to guided country walks and visits to vineyards in full production.
"And it was all free. We could have entered some of France's most hallowed museums and historical sites without paying a sous.
"Despite the alluring delights of Montpellier, Carcassonne, Narbonne, and more, we kept our itinerary local and visited the 11th-century Chateau de Puisserguier, followed by a picnic at Capestang, on the banks of the Canal de Midi.
"Puisserguier is one of 90 circulade Roman villages. It winds like a snail's shell from its bottom to its top, culminating in the chateau, originally a Roman villa made of wood, transformed into a moated castle at the end of the Empire of Charlemagne. By the 11th and 12th centuries, it had become the stronghold of the Marquis de Bermond, Lord of Puisserguier, a Cathar lord, in whose hands it remained until 1209, when Simon de Montford drove the Cathars from the region.
"Just 3 miles away, through rolling vineyard countryside, we picnicked overlooking the Canal du Midi. The canal is a World Heritage Site, flowing for 150 miles over 64 locks through the idyllic French countryside. We watched as vacationers on barge holidays cruised gently past...
"If this has whetted your appetite for next year, take a look at the Ministry of Culture and Communications' Journée du Patrimoine website, which lists many places of interest that don't show up in the average tourist guide. If you're not familiar with French, click on 'Programme' at top left, then 'Recherche Thématique,' then choose the 'Region' or 'Departement' from the drop-down menu."
You can read more about the Cessenon-sur-Orb, Languedoc, region of France in Lucy's full Retirement Report, available here.
"Kathleen, I have been checking hotel prices online in some of the countries you have recommended as cheap retirement havens, and they seem to be expensive when you consider that you would have to spend at least a month in an area to see if it was a place you would want to live.
"Do you have any suggestions for how anyone could arrange an extended stay in these areas for a very economical price?"
-- Ron P., United States
Indeed, dear reader, you want to try a place on for size before committing long term. However, during this getting-to-know-a-place phase, a hotel is probably not the best option for accommodation. As you're finding out, an extended hotel stay almost anywhere in the world can become expensive. Instead, try to find a short-term apartment or apart-hotel rental.
The best system for finding a short-term anywhere in the world, especially if budget is a concern, is word-of-mouth. You can search on the Internet, but, as with property for sale, the rentals you find this way are typically the most expensive, certainly if you search English-language sites. Your chances of getting a better deal are increased if you reference sites in the local language. Still, going this route, you're going to find only those properties for rent by locals with the wherewithal to advertise them on the Net.
More tomorrow... |
