Rational investing in real estate abroad is an investment technique that scares many people because it is a fairly new and innovative investment concept.
A major problem of many retail investors is that their minds are mainly moulded to look for reasons not to do something.
And this is certainly the case when it comes to investment properties abroad.
Retail investors generally regard them as unsafe, unstable or even dangerous. Often simply out of fear of the unknown.
As a result, they do not delve deeper and miss out on all the opportunities to build up their assets faster and more efficiently than is possible with traditional real estate investment methods.
The following are tips that address certain concerns and dispel some outdated assumptions about investing abroad.
Table of Contents
- 1 Take off your blinkers and embrace globalisation
- 2 Listen to experts by experience (and not to theorists)
- 3 Do not trust your gut feeling: Rational investing in real estate
- 4 Figures are more important than feelings when it comes to rational investing in real estate
- 5 Emotions often undermine your chances of financial success
- 6 Analytical thinking is the key to rational investing in real estate
- 7 Innovation is crucial for long-term financial success
Smart money investing in real estate is definitely not about reinventing the wheel.
It is all about investing where it makes financial and mental sense for you and your personal situation.
In other words, it is not about where it can be done easily, close by and in your comfort zone.
Wealth and fortune do not just fall into your lap. You should build your assets consistently over the long term.
So if you want to do that with investment property, you need to find out where you can achieve your goals. After all, that is what rational investment in real estate is all about.
Perhaps the property market where you live is overheated with unseen high prices. As a result, buying to let is no longer interesting in terms of return.
In such a scenario, you want to know how you can still use real estate to grow your wealth with a nice return.
Perhaps it can be done by buying real estate abroad, in locations that are not nearby.
For years, this was considered unwise. Experts often warned of the unknown, often by painting a picture of financial doom.
In fact, thousands of retail investors have already discovered that the world has more to offer than a few square kilometres around the local church tower…
Remote investment in property abroad is now possible in a way that is almost identical to investing in property in your own backyard.
Listen to experts by experience (and not to theorists)
It is wise to listen to the advice of women and men who have gone before you.
Someone with investment experience in the real estate market who can give you tailor-made advice is worth their weight in gold.
We can easily fool ourselves by listening to someone who pretends to be smart but actually has zero first-hand experience.
Above all, listen to experts by experience who have already achieved financial success with investment property.
Do not believe something just because others say it is or can be so.
And do not build plans based on assumptions that have never been tested in practice.
The advice of someone with a great deal of experience is always of golden value. Make abstraction of diplomas.
After all, a smart real estate entrepreneur with practical experience does not always have a sexy diploma (but does have a dose of common sense).
Do you know someone who knows the tricks of the trade thanks to years of practical experience, in good times and bad?
Then that may be the right person to get critical feedback
Rational investing in real estate is thus certainly not something you need to do without a sounding board! Find an expert who can give you some advice!
Do not trust your gut feeling: Rational investing in real estate
When it comes to investing outside the country, this topic usually provokes special reactions.
One interlocutor reacts with interest and listens attentively.
The other reacts with resignation or even defensiveness or disappointment (because the local economy is losing money and investment).
Frequently recurring topics and questions in the context of investing in foreign real estate are the following:
- How can one manage all the tasks involved in investing in rental property if the property in question is abroad?
- Can it be interesting to choose a professional property management company?
- Do they have to go on site frequently to do hands-on troubleshooting and inspection visits?
- Is it possible to invest without risk [AVAILABLE SOON] or at least limit it? In other words, how can you make sure that a developer or contractor doesn’t make off with your money?
- How to find suitable developers or contractors abroad?
- Are there special insurances against non-payment or damage, and can contractual guarantees be worked out in terms of rental income?
For most private investors, investing in foreign property is a big adventure that raises many questions, which is logical.
Moreover, it feels strange to invest in stones so far away from home.
Nevertheless, it is important to remain rational; it is primarily about the figures and not about your feelings.
Figures are more important than feelings when it comes to rational investing in real estate
There are not many reasons to be afraid when it comes to investing in buy-to-let properties abroad if you look at things from an investor’s point of view.
Investors focus on figures, financial plans, yield simulations, achieving economies of scale, outsourcing and optimisation.
Consumers/individuals, on the other hand, focus much more on feelings, which in the investment world is a poor strategy and approach.
As a retail real estate investor, you have to go beyond your gut feeling…
A thorough due diligence and analysis of all figures forces you to get serious about your goals and guidelines. There is no place for emotions and feelings.
In practice, quite a few people feel uncomfortable buying property in an area where they themselves do not live permanently.
One explanation is fear and negative thinking in general. What if this or that happens?
Well, in reality you are not buying a property but an investment.
Moreover, it can be managed by a local professional company in terms of management, maintenance, rental, optimising the occupancy rate, and so on.
In short, the investment risk of a property investment abroad does not necessarily have to be greater than a property for rent in your home country.
Emotions often undermine your chances of financial success
If you want to start investing in real estate and think that your feelings will be a good financial barometer, you are making a rookie mistake.
It may be scary, but decisions that once frightened you are eventually made on autopilot.
It just requires a different way of thinking. Acting emotionally means making an impulsive decision here and there.
Unfortunately, this is rarely, if ever, a smart course of action in terms of investment.
To achieve good returns in the short, medium and long term, you need to be sharp.
In other words, to beat other market participants (and the system), you need to make objective and analytically sound decisions.
Do not rely on your emotions or gut feeling but on simple, irrefutable due diligence.
Use your mathematical knowledge to analyse financial forecasts and return simulations.
And don’t forget to thoroughly review the contractual side of things. For such cases, legal and mathematical details are key.
Finally, you should also pay attention to possible service providers on site.
What services do they offer and at what rates? Do they have good reviews online and/or in the local community?
Again, this is a research task that revolves around information gathering and interpretation.
So there is little or no room for your personal emotions when it comes to rational investing in real estate
Analytical thinking is the key to rational investing in real estate
Investing in real estate should always be objective rather than subjective.
So always make time to analyse a particular project thoroughly, from A to Z, before actually investing money.
Optimally evaluating buy-to-let properties can only be done on the basis of an objective (numerical) analysis.
By learning to switch off your emotions, you can operate freely and liberally in the world of investment property.
This is in contrast to investors who let themselves be led by their emotions and often select the wrong or less interesting deal.
Do you wish to pursue success in the world of real estate as an investment? Then you absolutely must rely on a set of business parameters.
Put aside your gut feelings and start analysing the figures, information and data objectively.
Do you decide to trust your emotions and gut feeling after all? Then the chances are that you will make the wrong decision.
This can lead to huge financial consequences such as the loss of years of accumulated wealth.
In short, do you want to risk all your invested energy, time and money?
Probably not. Therefore, rational investing in real estate abroad or at home is the only right move and strategy.
Innovation is crucial for long-term financial success
In the real estate business, past success stories are generally not applicable to the present or new situations.
Each situation, each market and each period is different. It is therefore crucial to keep one’s finger on the pulse and stay mentally sharp.
What is going on? Are there certain regional evolutions in terms of environment, climate, population?
What are the expectations in terms of population growth, the local economy, job creation, growth of the tourism sector, etc.?
To achieve and maintain financial success, you must constantly anticipate changing times and situations proactively.
So try not to immediately dismiss innovative new business models that are presented.
The property market can be quite exciting for those who anticipate changes in the market and are quick to catch on.
Changing market conditions mean that the rules of the game change.
This gives an innovative retail investor with a vision the opportunity to also participate in a market that has traditionally been dominated by a few established values.
Nowadays, you can find several promoters who offer turnkey investment properties including management and rental guarantee abroad. Check the investment properties on offer for more details.