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Buying a home abroad can be a great way to build one's property investment portfolio in the global market and enjoy life in another country.
"It's not a way to make a quick buck," says Larry Oberly, vice president of global franchise and business solutions for Re/Max LLC in Denver. "But it can be a good long-term investment plan."
When cultivating foreign property investments, individuals should consider using the services of a trusted online foreign exchange provider to wire money transfers for deposits and ongoing mortgage payments. An online FX service may also offer email market-rate alerts for preferable currency exchange rates and transparent bank-to-bank money transfers with no hidden fees.
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Here are some tips to consider for foreign property investments in the international real estate market.
While every country has its deals, there are certain destinations that hold the most promise in the current economy.
Thanks to their stable government, strong politics, burgeoning economies and good real estate prices, Panama and Costa Rica "lead the pack," Oberly says. The U.S. Virgin Islands, Cayman Islands and other Caribbean islands are also strong destinations, because they all have sound economies, politics and strong rental opportunities.
Mexico, on the other hand, can be hit or miss. "The West Coast and border towns are dicey because of the political climate and the drug cartels," he says. "Mexico City and the East Coast offer more secure solid investment opportunities."
In Europe, he recommends focusing on Spain, Portugal and possibly Italy. "Spain has an overabundance of supply, and there are definitely bargains to be had," Oberly says. Though he suggests caution when shopping in other parts of Europe until the economic crisis settles.
And in the Middle East, consider Dubai. "Dubai is one of those countries that was hot, then it disappeared, and now it's hot again," he says.
When buying a home abroad, be prepared for the lack of transparency, Oberly says. There are almost no studies showing where U.S. investors are buying overseas, and many foreign destinations have murky laws about ownership, titles and real estate taxes, he says.
For example in Brazil, it is estimated that a percentage of property titles are "cloudy," Oberly says, which means even if an individual buys the foreign property, it's unclear whether the title truly gives someone ownership. And in certain parts of Mexico, he says, an individual can't own the property; he or she can only secure a long-term lease.
To ensure that a property investment is sound, don't go it alone, he advises. Ask a domestic realtor for a referral in the foreign country and work with both agents to make sure the deal moves forward.
Before signing anything, research local title laws, trends, property values and the real estate tax ramifications of owning property in that country. "It's easy to get caught up in a love affair with a piece of property, but you need to do your due diligence," Oberly says. "It's got to be a balance between your head and your heart. This is why using a professional real estate agent on both ends can help ensure you have all of the information you need to make a sound decision."
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