When making your first tentative steps into the world of real estate investment, it’s likely that you chose to buy properties you were familiar with, in markets you had experience of. For most first-time investors, that means investing in real estate properties that are quite literally close to home.
There’s no denying that the strategy above is a smart one. You can use your experience of the local market to find the best deals, which helps to give your investment career a boost right from the outset. Given how beneficial choosing to invest in property close to your own home’s location is, it’s easy to presume that your next properties should also be in a location you’re familiar with.
Is this true, though? Perhaps; knowledge is knowledge, and if it was useful with your first property then it might well be useful for your subsequent investments. However, there is another aspect to consider: by focusing too close to home, you might be overlooking the potential of properties further afield— and perhaps even as far afield as overseas.
If you find the idea of property investing in a foreign country daunting, then you might want to read on. We’re going to look at why foreign property investment can actually be as sound a decision as investing close to home and why, in fact, it may actually be the very best decision…
#1 – A truly diverse property investment portfolio
One piece of advice that never gets old in the world of investments is that you need to have a diversified portfolio. In the property world, this tends to mean investing in a range of different properties; for example, you will want to have properties that are suitable for the family market, the corporate market, and so on.
However, a truly diverse property investment portfolio shouldn’t rely on a single housing market. Let’s say that you have a range of properties that are suited to different buyers and tenants, but the properties are all located in the same geographical area. If the housing market collapses in that area, then your “diversity” isn’t actually particularly useful, because all of your properties are still subject to the same changeable market forces.
When you expand your property portfolio overseas, you’re essentially splitting your risk. If the housing market collapses at home, then you still have your overseas portfolio to rely on. This allows for a truly diversified portfolio that removes you from the whims of a single geographical housing market.
#2 – The expanding global community
Globalization is not a new concept, but it’s undoubtedly one of the buzzwords for the 21st century. The business world is constantly expanding, meaning that there is a consistent market for excellent properties in business-friendly countries. Hong Kong is an excellent choice for those focusing on business-friendly countries, while making the most of Singapore’s HDB BTO launches can allow you to invest in a thriving country that is beloved by the corporate world. If you can harness this continued trend towards globalization and expand your property portfolio to reflect it, you’ll have a steady stream of tenants or potential buyers from the corporate world. It’s worth remembering that business is a world that is known for its deep pockets, which can only be good news for your return on investment!
Of course, you can look to cater to business tenants and buyers in your home country, but property prices are likely to be far, far higher than they are overseas. By choosing to invest overseas, you capture that all-important business demographic, but without the high prices associated with property in the west.
#3 – Lack of market saturation
Property investment, on the whole, is considered to be a good investment choice. There is something about investing funds in actual bricks and mortar that appeals to people, and can seem to be more valuable that simply manipulating numbers on a screen. It’s likely that you chose property investment for the same sort of reasons.
While it’s always wise to choose an investment that is considered to be a safe choice, it’s also worth noting that everyone else is doing the same thing. Property investing has become more and more common over the past couple of decades, changing from the preserve of corporations and becoming something that individual, private investors can enjoy the benefits of. As positive as this change has been, there’s also no denying it has lead to some elements of market saturation.
The more competition there is for properties, the more you’re going to struggle to find a fantastic deal. If the property market has been “tapped out” by keen amateur investors in your home country, then expanding overseas simply makes the most sense. There’s an entirely new market for you to explore, and you stand a better chance of getting into a new, upcoming area without a horde of competition nipping at your heels. While you will inevitably have to compete with local developers, if you choose your country wisely, you should enjoy far more freedom than you might on home soil.
#4 – Cut your holiday costs
Finally, this reason may seem flippant, but it’s still worth considering! If you choose to buy property in a country you love, then you can be sure of affordable vacations to that country for as long as you own the property. A lack of hotel fees should mean you can vacation more often, and you’ll truly be able to experience the “home from home” feel.
Furthermore, when you’re not at the property, you can still generate a fantastic passive income by renting the property out to other holidaymakers. This is well worth keeping in mind, as it’s well known that holiday lets are able to command higher prices than renting to standard tenants.
While it may be tempting to restrain the borders of your property portfolio to locations you are familiar with, as the above show, expansion into foreign markets can actually be a hugely beneficial decision. If you’re tempted, it’s well worth investigating the options— you never know, it might just be the best investment decision you ever make.