Long-distance investing in real estate outside the country: Insights

Long-distance investing in real estate, also known as long-distance property investment, is a niche and specialisation in itself.

The investor who overcomes his fear of the unknown accelerates more often than not with investment properties abroad.

With the right approach, strategy and selection techniques, the right investment property abroad can be a reliable and highly profitable investment.

Find out below the mindset of a long-distance investor and some insights on buying and managing investment properties abroad.

Local investing versus long-distance investing in real estate abroad

Many of the concepts and strategies on smart real estate investing are also used by entrepreneurs running a business.

Whether it’s finding interesting bargains, renovating properties or managing rental properties, it doesn’t matter…

The fundamentals of real estate as an investment do not change, no matter where you buy, at home or abroad.

The difference between investing in real estate outside the country and investing locally is almost entirely between our two ears.

If you approach investing abroad as something difficult, risky and nerve-wracking, chances are these expectations will actually materialise.

Of course, investment property for rent offers enough challenges in itself that the whole investment process can feel overwhelming at some point.

But… Try to take an objective look at the work required to successfully invest beyond national borders versus investing locally.

It then quickly becomes clear that the two investment options and processes are virtually identical.

So the problem with investing in real estate outside national borders lies mainly in our (sometimes rather narrow-minded) minds and in our emotional reaction to it.

In other words, the problem is not in the investment arena or process itself.

Buying residential units abroad for rent is essentially no different from buying residential units locally for rent.

Outsourcing tasks is the solution: Don’t be a control freak

Are you afraid of the responsibilities and tasks involved in buying a first investment property?

Then you do not have to do away with investment property as an alternative form of investment.

Given the rising demand for investment property as a passive investment, a large ecosystem of service providers in the real estate sector has emerged.

In other words, it is perfectly possible to invest passively in real estate without any headaches or stress.

This is possible thanks to a streamlined and professional after-sales service (including management, leasing, maintenance, rental guarantee, etc.) from various investment property developers.

Passive investment as a necessity in long-distance investing in real estate

If you are considering investment properties abroad, you are actually forced to organise it passively.

This is of course an advantage because you take yourself out of the process of managing and letting. This way, the entire process can be carried out as efficiently as possible.

Fact: Some property investors spoil their investment by wanting to do too much themselves.

They lose sight of the hours they have invested, while the cost of these hours must be deducted from the gross return in order to calculate the net return.

When our inner control freak dominates the investment, it quickly becomes less efficient and effective than it could be.

Wanting to do everything yourself reduces the real net return (if you deduct the value of the hours invested from the gross rental income).

Moreover, it can weigh on your mental health and the risk of burn-out due to stress and frustration is much higher.

Opt for outsourcing tasks

The best investors, no matter what niche they are in, concentrate on what they are extremely good at.

They leave the rest of the tasks and responsibilities to others who can do it well enough, at least as well or better.

Investing in buy-to-let properties outside the country forces you to adopt that entrepreneurial mindset as well.

Since you do not live nearby, you should focus on building a reliable team and solid processes.

You then leave the operational side of things to a professional local service provider.

And if you look hard enough, you can also enjoy secure rental income through a contractually guaranteed rental guarantee.

Make objective cost comparisons

Not convinced yet? Stick an hourly rate on your time. Determine how much your time is worth on an hourly basis.

Then compare this hourly rate with the hourly rate of the potential service provider operating locally.

In many cases, you can rely on a local professional who is (much) cheaper than you.

This frees up your limited, scarce and precious time to focus on things you are good at (such as due diligence and picking the most interesting property deals).

Such objective and rational investing in real estate [AVAILABLE SOON] allows you to maximise your returns.

Tip: Respect your time. It is the only scarce asset in the world that you cannot get back or multiply.

Conclusion: Use a service provider if it is cheaper than you. Calculate your personal cost simply by multiplying your hours to be invested by your personal hourly rate.

In many cases, you will find that doing everything yourself is completely useless, short-sighted and unwise.

Access to meaningful property deals in terms of cash flow and returns

Long-distance investing in real estate abroad offers two major advantages:

1. Due to geographical reasons, you are obliged to outsource management (outsourcing of standard tasks is part of the mindset of top investors)
2. You can invest your hard-earned money in projects and locations that make sense. In other words, you are outlawed from buying an investment property where it really makes sense in terms of cash flow, yield, tax and capital gains potential.

Say goodbye to the local mentality

The world is globalising at breakneck speed. The choice is yours:

Are you going to stick to your local provider(s) or are you going to broaden your horizons and look across borders to make a good comparison?

How many retail investors with a real local mentality waste their time and energy looking for buy-to-let properties only in their neighbourhood?

Of course, looking for a bargain nearby is easy and in the comfort zone. But…

How likely is it to be a rock-solid deal compared to the countless other options abroad?

Indeed, investing abroad offers you the opportunity to buy an investment property where it is really good and interesting to buy.

It can indeed increase your chances of financial success if you look for promising locations that meet the conditions of a good investment property.

Long-distance investing in real estate abroad can be particularly interesting, in the right location, at the right competitive price and with a positive cash flow and promising capital gains potential. Possibly in combination with leverage.

Access to cash-rich, growing locations

In terms of investing in investment properties, the advice is simple: Go hunting where there is game. This advice also applies to making an offer.

If the property prices in a particular region are not interesting in relation to the cash flow, you should not continue to make bids.

Go and try your luck elsewhere, in a region where property prices still make sense.

When you build up the confidence to invest almost anywhere, this will become a very real possibility for you.

For example, try to buy properties in areas known for their good cash flow.

And possibly try to add value to the properties you buy through targeted improvement works.

Investing in real estate works almost the same way everywhere. The fundamentals are the same, the process is the same and the net return is the same.

When you understand the practice, the processes and the different tasks, it really doesn’t matter where your investment property is located. The process of acquisition, management, rental, maintenance and eventual sale does not change.

Tip: Try to build your property portfolio by buying in cash-flowing, growing and stable-value neighbourhoods that will benefit you for years to come.

Do not be the investor who walks around with blinkers on. Approach investment properties with an international mindset and say goodbye to the local mentality.

Don’t think you can only invest near where you live, but build up the knowledge, skills and ability to invest in rental property anywhere.

Fundamentals of investment property are identical worldwide

Lenders, property managers and construction and renovation companies can be found everywhere, at home and abroad, in different cities and in different provinces.

The basic principles of investing in real estate are the same everywhere. Real estate is and remains real estate.

Property prices fluctuate, property markets undergo cyclical movements, and so on. But the investment process is always the same.

Don’t let the fact that you live in an expensive location become an excuse to stop you from investing in real estate.

In fact, living in an expensive place with a fairly high cost of living is often a huge blessing because wages are usually quite high there.

So your purchasing power can be high through the strategy of long-distance investing in real estate abroad.

At the same time, technology (and the Internet) makes the world smaller and smaller every day.

We live in an age where information is easily available within seconds.

However, most retail investors do not benefit sufficiently or at all from this. In any case, do not try to become part of that statistic!

Long-distance investing in real estate via the Internet

It is important to reflect on the power of the Internet.

Modern technology provides you with all the means to achieve your goals as a real estate investor:

• There are numerous developers and agents looking for retail investors who are looking for a suitable investment property
• You can find contractors everywhere to work for you.
• In almost every region, you can find a professional and driven property manager who can manage, rent out and maintain your property(s).
• To sum up: Anywhere you can find professional partners (via the Internet or locally) to outsource operational tasks to.

Let the people who want to do the other work for you do the other operational work.

This strategy allows you to focus on your main task as an investor: Hunting down real estate deals, buying properties and negotiating sharp financing.

If you start thinking internationally, you will soon find that investing in real estate can be a lot more fun.

Moreover: Real estate markets are always in motion. At some point, the area where you currently live will become more affordable again. And then you will probably be able to buy there at a competitive price. That is, if you still want to buy there…