Whenever you are looking at buying real estate abroad, you must determine why you are buying and how you are going to use the property. You may be wanting to live full-time, part-time or rent it out. You may also be ultimately looking at reselling so appreciation will be your biggest consideration.
Location is key but you may also want to identify a market that is on the up and coming. This means that it:
- Could be an area where new infrastructure like a highway that makes getting to a destination quicker and easier
- increased investment – perhaps new resorts to attract well-heeled visitors
- New businesses opening up that will bring in workers
- Any other factor that will put real estate in that destination in stronger demand, to buy or rent
- Crisis market where pricing is temporarily depressed…but where there’s potential for pricing to rally once the crisis passes.
Whatever the case, make sure you have a strong picture of where the market is now—and where it’s heading.
This is important, whether you’re buying with rental income in mind or just for capital appreciation.
If you identify that the market that is on the up, investigate the type of real estate that’s in demand in that market. You will not do well on your rental real estate investment if you buy the wrong type of home.
Sure, there will always be some outliers to any rule in life. Maybe you know someone who’s making a fortune renting out their fancy penthouse in the middle of nowhere short-term, even though there’s no real tourist market. Perhaps you know someone who is making buckets of cash renting out a five-bedroom home in a market where most renters want smaller condos. Those kinds of cases certainly exist. I guess the owners got lucky…
You should buy the type of home that’s in demand in a location where there’s already a strong or growing market.
Now the internet has made it easier than ever to advertise your rental and find renters, even for homes in far-flung corners like Fiji and Patagonia. Players like VRBO and Airbnb jumped on the vacation rentals market, giving an easy-to-use platform to anyone who wanted to find a renter—and allowing renters to book homes at the click of a button.
Choosing the right property…identifying the right markets…making your rental stand out from the crowd…even down to choosing the right manager (if you decide to use one) will ensure your internally property investment is successful.
