Overseas Real Estate: The Route to a Richer, More Interesting You

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Scenic streets in historic center of Cascais, Portugal
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Editor's Note: This story originally appeared on Live and Invest Overseas.

It’s been exactly one year since I took over as editor of Overseas Property Alert (OPA), and much has changed. The world isn’t the same place that it was 12 months ago.

Despite this, I stand by one of the earliest statements I made as editor: Investing in property overseas is the smartest thing you can do with your money.

Re-examining the fundamentals, here are the core reasons why this still makes sense.

1. It Can Make You Rich

middle age man pointing to cash
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Overseas property can make you rich through cash flow and capital appreciation. Your apartment in Portugal or condo in Belize can earn you high-yield rental income when you’re not using it.

There’s more to it than just buying any property in another country, of course.

You have to identify the right opportunity in the right market at the right time to find a profitable opportunity … but generally, you can expect net yields of 5% to 8% from your overseas rental investment.

You can also make money through capital appreciation if market factors come together to make the value of your investment exceed your original purchase price.

Appreciation is harder to predict, and we don’t recommend it as your primary investment strategy … but it’s certainly nice to have. Even better is when you get both cash flow and capital appreciation from the same investment over a short investment term.

These kinds of opportunities are rare, but OPA Director Lief Simon and long-time Live And Invest Overseas correspondent Lee Harrison have a few standout examples from their long investment careers.

2. Having Property Overseas Can Make You More Interesting

Barcelona, Spain
Maxim Apryatin / Shutterstock.com

Buying property overseas makes you more interesting because it makes travel and adventure part of your life.

You’ll travel to interesting destinations to identify the place where you want to make your property investment.

Ideally, the place you choose will both meet the market conditions necessary to generate cash flow and be somewhere you enjoy spending time.

In other words, you don’t have to choose between cash flow and the allure of a holiday home in the Caribbean or some romantic Old World city. Your investment could combine the two.

Your property investment is motivation to visit an interesting place. Each trip you take to check on your investment property is tax-deductible on your U.S. tax return.

Plus, it could double as your vacation home, providing free vacations for your family and friends. Imagine inviting all your friends to your beach house in Costa Rica or your apartment in Medellín, Colombia.

3. It Can Fund Your Dream Retirement

Cascais, Portugal
Olezzo / Shutterstock.com

Retirement in the United States is in crisis. The average annual Social Security benefit for a retired worker is $22,884. That’s just slightly above the poverty threshold ($17,710) for 2022.

Meanwhile, people are making “hardship” withdrawals from their 401(k)s to cover everyday expenses as inflation decays their budgets.

The solution, from our perspective, is to retire overseas.

A Social Security budget can go much further in many desirable locations around the world than it does in the United States. It can even afford a luxury-level lifestyle in some cases.

Instead of something to fear, moving overseas can turn retirement into an opportunity to have some fun.

You can have an adventure while you reinvent yourself — the places you spend time, the foods you eat, the people you interact with, and more.

Property and Your Dream Retirement

Retiree in Paris, France
Lena Ivanova / Shutterstock.com

Property comes into play with your dream retirement in a few ways.

It puts you in the market in a place where you plan on spending significant amounts of time. If prices are appreciating in that market, buying can lock you in at favorable prices and allow you to enjoy some healthy gains if you decide to resell later.

Plus, if you rent out your property prior to retirement or when you’re not using it, that rental income can help offset carrying costs. It can also build a nest egg of local currency for you, so that you’re not as affected by exchange rate fluctuations down the line.

On top of this, by buying overseas, you can afford a retirement home that you might not be able to afford back home. In key markets overseas, even beach property can cost a fraction of something comparable in the United States.

4. Property Investment Overseas Can Protect You From Risk

Satisfied couple holding a piggy bank for their IRA investment
AshTproductions / Shutterstock.com

Overseas property can protect you from risk because it moves money outside of the United States and into a different market. That market may be immune to disruptions in the U.S. market and fare better than in the United States during a crisis.

Your overseas property could also be a store of value in a different currency in case the U.S. dollar suffers a slump or crash in value. It can also enhance your privacy, as it’s one of only two asset classes that Americans are not required to report to the IRS every year.

The IRS likely leaves foreign real estate alone because, even if it wanted to, it’d be unable to seize or force the sale of your second home in Belize, your penthouse in Colombia, your beach house in Brazil, and so on.

Lawyers, former spouses, friends, ex-employees, and so on are likewise blocked.

Buying property overseas can reduce market risk, exchange-rate risk, risk of seizure by the U.S. government, and liability risk. U.S. courts can’t seize your foreign property.

In short, buying property overseas lets you put an egg in a different basket.

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