The Secret To Successful Overseas Real Estate Investing

“I’ve told the buyer from Dublin that the other buyer, the gentleman from Cork, is considering by how much he’d be willing to increase his offer,” John Rohan explained in a hurry as he burst through the door into the little room where Lief and I sat waiting.

“However, the other buyer, the one from Cork, he’s gone. He said he’d reached his limit and excused himself from the bidding. He’s left the building. Our buyer from Dublin doesn’t know this, but it won’t be long before he figures it out.

“This is your chance. If you’re selling, you’re selling today, now. I believe I can push the Dublin bidder up another 50,000 euros, but that’s all I’m going to get out of him.”

With that, Mr. Rohan looked squarely at Lief and then at me, gauging our reactions.

I glanced over at the monitor mounted on the wall to our right. The room where we’d been told to wait while John Rohan presided over the auction for our home in Waterford, Ireland, had no windows. The monitor on the wall was our only glimpse of the activity going on around us. It showed the auction room itself, where we’d watched, starting an hour earlier, as Mr. Rohan had opened bidding for our Lahardan House before a crowd of about three dozen.

John had prepared us by explaining that most in the room would be bystanders, there just to see what the house might sell for. In the end, we had five serious bidders. Three pulled out quickly, leaving the gentleman from Cork and the gentleman from Dublin, who’d been going back and forth, first in the main auction room and then, eventually, from two separate, private rooms where John Rohan had escorted each in turn, for more than 30 minutes.

The year was 2004, and the Celtic Tiger was roaring.

All Ireland was watching all the time to see by how much more property values had appreciated since the last time they’d checked.

We’d purchased our Lahardan House, the property on the block that day, about six years earlier. John Rohan’s projected selling price of nearly US$1 million at the euro-dollar exchange rate of the day, had us tripling our investment.

Why were we hesitating to accept it?

Because overseas property investing isn’t only about the money.

I’ve hosted conferences on living, retiring, and investing in real estate overseas for more than 30 years. At the opening of these events, I ask the crowd in the room a series of questions.

First: “How many of you are thinking about buying property overseas for investment?”

A few hands shoot up.

Then: “How many of you are considering purchasing a retirement residence in another country?”

A flurry of hands in the air.

Finally: “How many of you would like what I’d term a ‘second home overseas,’ a place you intend to occupy, full- or part-time, in retirement or sooner, if possible, but that you hope could earn some income when you’re not using it yourself?”

At the suggestion of this, practically every person in the room raises his hand.

These folks seem to understand something that it took Lief and me years to figure out—namely:

Buying real estate overseas makes so much more sense when you do it as part of a bigger-picture plan.

What Buying Property In Ireland Taught Us

I didn’t set out to become an overseas property investor. However, when my husband of but 3 months, my 8-year-old daughter, and I arrived in Waterford, Ireland, nearly 27 years ago, we needed a place to live.

I like old houses the way some women like new shoes and was drawn to the idea of owning an Irish Georgian-style house in the country, a place surrounded by rolling green fields dotted with roaming sheep and spotted cows and bordered by low stone walls and tidy hedgerows.

My new husband didn’t object, and, after a search that extended nearly a year, we purchased Lahardan House, a 200-year-old stone house on 6 acres that became our first home as a new family.

Lahardan House was where my daughter Kaitlin, born and raised to this point in Baltimore, Maryland, struggled with the transition to our new life overseas and where we welcomed our son, Jackson, born in Waterford just two months after we’d moved in. It was where Kaitlin learned to ride a pony, in the front pasture, and where Jackson learned to walk, in the forever muddy back garden.

Lahardan House was our first overseas renovation adventure. The old stone house was dripping with damp, its timbers riddled with rot, when we bought it. In time, we transformed it into a comfortable and cozy home kept warm and dry by the big Stanley stove in the kitchen.

Lahardan House was also our first overseas property success story, and not only because, in the end, we accepted the offer that John Rohan coaxed from the gentleman bidder from Dublin, putting aside our emotional attachment to the place and more than tripling our money. More important, our experience with Lahardan House taught us the fundamentals related to buying and selling real estate overseas that we’ve learned to respect most, key among which is this…

The best purchases are made with your calculator, yes, but also with your heart.

When my husband Lief Simon and I went looking for a house to buy in Ireland years ago, I was shopping for rolling green hills, centuries-old stone walls, tumble-down outbuildings, and classic Georgian symmetry. He was shopping for the best cost per square meter, projected rate of appreciation, and anticipated ROI.

Today, dozens of often conflicted purchases later, we finally understand that the secret to success buying and selling real estate overseas is recognizing that each of these seemingly competing perspectives is important and that each deserves equal weight in any buy decision.

After we sold Lahardan House, we took those proceeds, added about 20% to the pot, and reinvested in an apartment in Paris. For our money, we got less than one-quarter the space we’d enjoyed in Ireland. Not a sensible exchange of values, you might say, if you’re evaluating the transaction using your calculator alone.

We were moving to Paris so that our daughter could attend her final three years of high school in France and so that our little family could, meantime, sample life in the City of Light, a dream of mine since I was a young girl. We could have rented a place to live. We didn’t need to buy an apartment for our time in Paris, and, as I said, on the face of it, going by the numbers alone, buying an apartment in Paris didn’t add up. Yet that’s what we did.

Now, in retrospect, I can say that the apartment we purchased in Paris’ 7th arrondissement has proven, like Lahardan House in Ireland, to be one of the most successful investment decisions of our careers, again, we understand now, because it wasn’t made for investment reasons alone.

This apartment, which we own still, has evolved into one of our most valued assets, in part because it’s worth nearly three times what we paid for it, but also, more important to us, because it has become the cornerstone of our retirement.

We didn’t purchase this apartment as an eventual retirement residence. However, the more time we spent in Paris, the more we found we liked being in Paris. Finally, Lief and I agreed that Paris is a place we’ll always want to be able to return to. The apartment we bought to live in while our daughter finished her high school education and that we’ve held on to for occasional use and cash flow from rental income ever since, thereby, was transformed, organically, into a piece of our long-term retirement plan.

When you approach the idea of buying real estate overseas in this way, organically and in stages, it can be much easier to organize your dream life, whatever that is, than you might imagine.

What Is Your Dream?

That’s the place to start. What lifestyle are you looking for, and what other objectives are you hoping to achieve? In short, why might it make sense for you to think about buying real estate overseas?

Here are reasons why you would be smart to be considering this idea right now:

#1. Real estate is a hard asset

Like real estate anywhere, real estate overseas is a hard asset, and, in the current investment climate, hard assets are the most sensible investment class, the best choice for storing value…

#2. Buying for cash flow

A property investment overseas can come with the hope of capital appreciation, but, more important and more bankable, it can provide cash flow, both immediately and long term…

#3. Portfolio diversification

Real estate overseas provides portfolio diversification—diversification of currency, diversification of market, and diversification of asset type (rental, raw land, condo-hotel, etc.)…

#4. Profit

Real estate overseas provides the opportunity for you to position yourself to profit from both expanding and crisis markets…

#5. Retirement planning

Real estate overseas can double as a retirement plan—today’s investment can be tomorrow’s retirement residence…

#6. A second home

Real estate overseas can double as a holiday home, an investment that you and your family are able to use and enjoy from the day you make it…

#7. Legacy planning

Real estate overseas can be part of a legacy of wealth that you leave to your heirs…

#8. A safe investment

Real estate overseas is safe and private, one of but two remaining asset types that an American need not report to the IRS every year…

#9. Tax advantages

A real estate investment overseas can bring tax advantages, including deductions you can take on your U.S. tax return…

The Agendas Behind Buying Real Estate Overseas And The Real Reason Why You Should Do It

Reviewing this list of reasons to buy real estate overseas, you notice that, big picture, it breaks itself down into two categories—category 1: investment; category 2: lifestyle.

Different agendas that, as I’ve been suggesting, for the best results, should be considered in unison.

Another thing to notice about this list of reasons to put your time and money into the acquisition of real estate overseas is that, fundamentally, it’s all about diversification. This is the real advantage of this strategy—diversification of your portfolio and your assets, but diversification, too, of your life, your lifestyle, your retirement, and your legacy.

We are living at a time that presents the opportunity to take the investor’s profit agenda, combine it with the live-better-for-less agenda of the retiree, and transfer it overseas. An opportunity to use overseas real estate as both an investment vehicle and a strategy for a new and better life, both immediately and longer term in retirement.

Overseas real estate amounts to the surest strategy for creating and preserving legacy wealth while simultaneously reinventing your life and rescuing your retirement.

Thanks to global market events of the past decade, many options exist right now for where to buy to make money while also making a new life, and, thanks to our Age of the Internet, it is possible today to seize these opportunities easily and cost-effectively to build a new life while staying in real-time touch with family, friends, business concerns, and investment portfolios from the old one.

The best case is when you are able to find a piece of real estate in a place where you want to spend time, short-term on vacation and long-term in retirement, that also holds out the potential for an investment return, in the form of capital appreciation, rental return, or both.

So, this perfect storm of objectives should be your ultimate goal. A holiday home on the beach of Panama can become little more than a headache and a carrying cost if you ultimately decide you can’t abide life in the tropics.

Until next time,

Kathleen Peddicord
Founding Publisher, Overseas Opportunity Letter