Investing in international or overseas real estate can seem a little too foreign, risky, and sometimes a bit scary. It all comes down to knowledge. How much do you really know about its benefits and what this venture can potentially do for your lifestyle? The key is to research and learn as much as possible before making a decision. There are some disadvantageous aspects to international investing but many have discovered those few but very favorable benefits. If you are trying to decide, here are four reasons why you should consider investing in overseas real estate.
1. A More Diversified Portfolio
Portfolio diversification is something any investor should strive to obtain. Overseas real estate investing allows for more benefits because it is considered a tangible hard asset that will ultimately benefit your retirement nest egg. Investing your money in a self-directed IRA, however, allows a better understanding within the process of overseas real estate investing. Instead of relying solely on a professional to manage your investment portfolio, you can work together to develop and manage those investments, allowing a more reliable rental income and cash flow within those foreign countries. Within this process, you are still able to retain control of the investment process throughout. The actual investment can open more avenues of income depending on logistics and structure.
2. More Tax Benefits
There are many laws that restrict U.S. citizens from keeping portions of their wealth in foreign countries. Overseas real estate is one of the few options you have for legally retaining finances abroad. Even though rental income has to be reported to the I.R.S., many of the expenses relating to owning property abroad are tax deductible. Travel expenses when seeking your investment, acquisition expenses, and maintenance fees after purchase are all tax deductible for U.S. citizens.
3. Privacy by Moving Your Wealth Abroad
When you make an investment in real estate overseas in your name, it is not reportable. This applies when you don’t use a limited liability corporation, trust, company, or other type of partnership or real estate fund. Again, rental income must be reported. You are essentially moving your wealth away from American influences. Your financial portfolio will likely be protected from U.S. government interference. These investments allow you to generate income in a foreign currency which allows additional investments in countries where the currency is appreciating. In addition to having financial privacy, your investment can serve as a vacation getaway.
4. Additional Income Options
Once you’ve acquired and developed your real estate investment, you can develop rental income from multiple sources. Your property can be developed as a single structure for a quick sell or one that has multiple units to rent. You can also develop property to serve as a time share. One very profitable advantage of owning overseas real estate is the fact that your investment may allow the opportunity to open bank accounts overseas. Owning foreign real estate justifies the need for foreign financial accounts. It allows you to also establish a sort of residency, although temporary and occasional. Owning overseas real estate is a hard asset and can serve as a potential retirement option. Therefore, if citizenship is a consideration, obtaining it will be much more obtainable.
These are four of the major benefits involved in foreign real estate investing but there are some negative aspects and downsides. Considering the work, politics, and costs involved in investing in this type of real estate market can definitely be a deterrent. Of course there are several risks involved, tons of legalities, mounds of paperwork and of course a huge financial burden. However, when you leverage those negative aspects with the many benefits involved, it should be much easier to decide whether you are willing to dive into this form of investing. Be sure and research avidly and hire professionals. When seeking your investment team, search for and read reviews and data that display success rates and investment advantages. You want to minimize your risks by starting with the correct procedures instead of learning from trial and error.
Informational credit to Accuplan Benefits Services, a self-directed IRA provider and 401K administrator.