Growth – both personal and professional – is the theme of 2023. As we progress into this next chapter, it’s vital to take inventory of how we can expand our horizons, perspectives, and networks. Building a presence in another country provides an excellent way to meet new people and explore new environments. Purchasing property in a different location can help to achieve this goal. Be sure to consider the following before taking the plunge and investing in real estate overseas.
1) The Landscape Is Shifting Rapidly
Portugal’s Golden Visa has garnered attention and participation from an international audience since 2012. Through this program, non-Portuguese people could invest in local properties and ultimately receive citizenship in addition to a potential return on their investment. Spain and Greece have offered similar programs as well. However, Portugal announced in 2023 that they plan to discontinue the program as foreign investors have priced locals out of the real estate market. This saga goes to show that law can change quickly, so it’s important to do your homework on the country in which you intend to invest.
2) The Decision Can Be An Expensive Endeavor
Makeda Smith serves as the CEO of Licensed and Unbothered, Savvy Chicks in Real Estate, and Global Heir. In these capacities, Makeda has established herself as a preeminent voice in the real estate ecosystem. When discussing the costs associated with investing abroad, Makeda divulges: “I wish that I would have accounted for unexpected costs like hidden repairs. Sometimes you don’t find out what is going on with the bones of a property until you start tearing it apart to rebuild it. This cost my husband and me an added $10,000 to $12,000 in expenses when it came to rehabbing a property. It was a cost that was definitely not in the budget, but we figured it out… We then realized the earning potential after that first sale which pushed us even further into real estate investing just because the rewards were great even with the mistakes we made.”
3) Be Prepared To Pack Your Bags
Each country has its own requirements for purchasing property and/or establishing residency through that investment. Be prepared to spend an extended period of time (typically several months per year or a total of multiple years) in this other location. This may sound exciting at first, but such a commitment requires considerable planning and logistics in order to execute this properly. Be able to budget your finances and structure your schedule so that you will be able to adhere to the policies required to complete the transaction.
4) Always Crunch The Numbers Beforehand
At its core, real estate is an investment. So you should anchor your expectations for returns based on deep preliminary research. Makeda explains: “You always want to start with the current value vs. the repaired value if repairs are even needed. You want to do market research on the trend of the last 3 – 6 months and review the current market trends to see where the market is potentially headed. Look at the past to determine the future market. Investing in real estate is a risk because there are no guarantees, but you must do your due diligence to make sure you limit the risks. I will always advise a client whether they are new or seasoned in real estate to have an inspection. It costs a few hundred dollars but can save you thousands.”
5) Ask The Key Questions
Scrolling through dazzling web pages and flipping through glossy brochures can make the process seem easy and glamorous. This is not always the case. Investors can be fooled or misled, especially when they are an ocean away from their potential purchase. When it comes to due diligence, Makeda suggests: “When you are trying to tap into unfamiliar territory it is wise to seek the counsel of attorneys, governments, and real estate agents…I would not recommend going to any country and investing without tapping into the local experts to help me secure the deal. I would advise a new international investor to ask questions like: ‘What are the costs to sell and buy property within a particular area? What are the property taxes? Where are most real estate transactions being conducted in the country? Where is the tourism and heavy population?’…”
6) Figure Out Which Countries Align With Your Goals
Do you have a consumer product line that draws inspiration and features products from a certain part of the world? If so, it could make a lot of sense to establish a presence in the local economy to help with sourcing materials and building commercial relationships. In terms of figuring out where to set up shop, it’s worthwhile to identify where your business needs intersect with different opportunities. Makeda shares: “I’m currently stationed to sell real estate in the Dominican Republic and Ghana. Some of these countries are not as heavily regulated as the United States, but it’s coming and this is why I am sounding the alarm for investors inside of the United States to start exploring other countries now. There is a window of opportunity that is open to us and I see that more people are willing to leave the US to explore real estate and business opportunities that are available.”
7) Leverage Resources About This Decision
Understanding mistakes that others have made when investing abroad can help to make your own experience more seamless. Fortunately, there are thought leaders who are openly sharing their nuggets of wisdom with potential new investors. For example, Licensed & Unbothered® will celebrate its fifth year of conferences in 2023. This event will educate and empower people who are dipping their toes into the pool of expanding their real estate portfolios overseas. Makeda confirms: “I want [attendees] to walk away that weekend knowing that they got so much accomplished from starting their trademark process to getting business funding, property funding, new business credit, creating their global brand to buying or investing in their first hotel or commercial property, creating their sales funnel, create new marketing strategies, plan for retirement and so much more.”
Time to put that passport to good use, BAUCE women. Your business, your brand, and your brilliance should transcend borders so that you can see all that the world has to offer.