8 Reasons to Buy Overseas Real Estate
President, Caye International Bank
- There was an upturn of 3.2% in the GDP figures in the third quarter of 2022, but the change is unremarkable.
- Despite indications of growth in some economic activities, most economists suggest the economy will continue to slow for at least the next few months.
- Financial markets and other investments in the US, including property markets, remain unpredictable, creating a demand for more tangible assets and the diversification provided by overseas real estate.
The Bureau of Economic Analysis readings for the third quarter showed a +3.2% change in the US GDP in the third quarter, compared to -0.6% in the second quarter. Despite growth in some economic activities like industrial production, retail sales, and job growth, many economists still fear the possibility of a lurking recession.
Investors tend to turn to hard assets at times like these, and since the US property market faces a price slump, they look for overseas property opportunities.
“There are many reasons why investors turn to overseas real estate,” says Luigi Wewege from Caye International Bank, “but one of the major reasons is seeking a haven from the type of economic volatility we currently face.”
Here are eight reasons to buy overseas real estate right now
1. Discounts Due to Currency Advantages
When buying with USD or another strong currency, you can buy much more property in a market abroad with a weaker currency. Currently, the USD is at historic highs, meaning enhanced spending power.
The current surge in the value of the US dollar is producing unexpected opportunities for property investors holding the currency in many overseas real estate markets. It’s at historic highs against the euro, the pound, and other key currencies.
2. Currency Diversification
Buying a house overseas allows you to gain the benefits of diversifying into another currency. Currency diversification through property enables you to gain the benefits of earning an income or equity gain of the property in that country’s money.
Buying with the current strong conversion rate for the USD can also mean that even if the property value does not increase in local currency, you will have appreciation if the exchange rates return to historical averages.
3. Cheaper Properties
Besides the advantage of currency savings, properties in many overseas countries are highly affordable compared to properties in many US beach towns. “Caye International Bank facilitates real estate loans in five currencies and low-interest rates, with negotiable amortizations and terms,” says Wewege.
4. Earn an Income
Whether you buy a second home or have your eye on investing some money, overseas real estate can generate an income that can help pay for the property running costs and create a nest egg in the local currency. Even if you plan to holiday at your overseas property, you can rent it out short term to others.
Remember that most European countries have lower rental net yields for long-term rentals, but these increase with short-term rentals, especially in the coastal areas of the Mediterranean.
5. Privacy And Tax Advantages
Americans don’t have to report their personal or rental overseas property to the IRS. Therefore, your foreign property remains out of reach to lawsuits, your ex, and the US taxman.
There are also some US tax advantages when you rent out the property. For example, the interest paid on your mortgage is deductible from your taxable US income, as is the cost of trips to check on your asset.
6. Diversify Your Portfolio
Investing some money on overseas real estate diversifies your investment risk because it’s in another market. But, as we said earlier, you also diversify your exchange rate risk and avoid liability risks.
7. Brings Residency Perks
If you want to fast-track residency to countries like Greece, Spain, and Portugal to access the Schengen Area, you can purchase a property as part of their Golden Visa Programs. In addition, some countries like Northern Cyprus and Montenegro don’t have a price limit on how much you can spend to receive residency.
8. Low-Cost Vacations
Besides investing your money wisely, buying overseas real estate means you can choose a place to holiday without adding expensive hotel stays. As a result, you can enjoy the benefits of holidaying (or even retiring) somewhere with a lower cost of living, and you can escape the cold winters of the US.
As you can see, buying overseas real estate makes perfect sense right now, especially if you want to diversify your investments and create an income in another country. In addition, your investment can provide you with a dream holiday destination and a financially secure retirement. For more information on investing offshore and in Belize real estate contact RE/MAX Belize!
By Luigi Wewege