There is nothing more glamorous and more daunting than investing in real estate in a foreign country.  There are a lot of pitfalls that must be avoided, but there can be some huge benefits as well.

If you don’t know much about the country, you don’t know the language and you don’t have any contacts, then you should probably stay home and not consider international real estate investing.  However, if you have a favorite vacation spot in an undiscovered area, then you might be able to make profits way beyond those you would make back home.  Those who invested in Costa Rica in the 1980s made a great investment because by the 1990s and 2000s it had become so popular that many property values had tripled or more.  The same could be said for Panama in the early 1990s.

Of course, you have to consider that you will be dealing with a different legal system and a different currency.  In the Philippines, for example, there is an abundance of cheap, white-sand beach front property.  However, you have to be a Filipino citizen or you are limited to 40% ownership.  In Venezuela after the oil strikes a few years ago, properties were very cheap, but you would have to deal with a controlled dollar market in which dollars were undervalued and because purchasing dollars is illegal there, you would have a tough time getting your investment out of the country once you’d made a profit.  So just because there are bargains to be had doesn’t mean it’s easy or wise to try to get them.  Do your homework and make sure you are up to date on the real estate laws and currency controls.

There is a saying about international real estate and it is, “Buy when there is blood in the streets.”  That doesn’t mean you should buy in a country with a raging war, but sometimes political or economic instability hides the best real estate gems.  I know of no better example of this than the economic crisis in Argentina in 2002.  That year, the Argentine government faced a lot of problems with their economic policies.  As a result, the peso tumbled and many banks were closed.  People lost fortunes overnight.  Suddenly thousands and thousands of people were selling their real estate for a cheap price so that they could keep their heads above water.  Rioters took to the streets and the crisis seemed very grave.  In 2003, it was possible to get what is now a million dollar mansion for around $100,000.  Vacation homes in Patagonia, a naturally beautiful region of southern Argentina were had for about half of their current value.  By 2005, the crisis was over and things returned to normality.  Those investors who were willing to go into an unstable market and buy when things appeared to be at their worst definitely came out on top.

Written for Richbitchitch.com by Rick Hyland

Getting Started In Real Estate Series

Part 1: Finding Cheap Real Estate

Part 2: Investing in Real Estate Abroad

Part 3: Real Estate Auctions Part 1 of 2

Part 4: Real Estate Auctions Part 2 of 2

Part 5: Should I invest in residential or commercial real estate?