Building Your Diversified Global Property Investment Portfolio
Tomorrow we’re publishing the first issue of my newest advisory service, Global Property Advisor (GPA).
I’ve written and edited many global property investment services. This is the best. First, because it reflects my now more than 20 years of experience. Second, because it is being launched at the start of the current Golden Age of property investing overseas.
And, third, because it takes a more organized and thereby more investor-friendly and turn-key approach than any property investment service I’ve ever known, including those I’ve produced myself.
The inaugural issue is in the final stages of production as I write. I’ve just finished my Editor’s Note to readers of this premier edition… which I share with you below…
Welcome to the first issue of Global Property Advisor. Our goal with this service is to guide you as you work to establish, build, and diversify your international property portfolio. To this end, in each issue we’ll provide both information and opportunity. Knowing how to navigate international real estate markets is as important as choosing which purchases to make.
The cost of buying, the cost of selling, and restrictions on what you can do with a piece of property are just a few of the things you need to consider before investing in real estate anywhere, but these questions become even more important when investing overseas. Some markets are easier to navigate than others, but every market you consider will come with nuances and challenges different from your home market.
In this inaugural issue of Global Property Advisor, I begin the conversation by setting out my ideal “model portfolio.” Diversification is a primary objective and agenda when investing in real estate overseas. My ideal model portfolio shows 11 different types of property purchase opportunities available around the world.
You may not want to include every one of these categories of real estate in your portfolio. For example, some people don’t like the idea of timber because the investment period before any cash return is at least 12 years, depending on the type of trees you plant. On the other hand, timber offers the best return to risk ratio of any investment, real estate or otherwise. I have timber in my portfolio and am currently adding more.
Others may not like indirect real estate investment options such as REITs, hard money loans, or investing directly in a development company. That’s okay. These investments come with higher risks and less control and don’t suit every investor.
As you’re getting started at this and maybe even long term as you’re building up your portfolio, you’ll likely be overexposed in some categories. Don’t worry about that. It takes time to achieve a high level of diversification in terms of property type and market. Use my portfolio pie chart as a tool. You don’t have to emulate it exactly.
My real estate portfolio has included every category of my model portfolio at some point. Currently several categories are missing because I’ve exited from previous holdings but haven’t found a new opportunity in that category I’ve liked enough to pull the trigger on. I’m not going to buy something just to fill in a blank in a pie chart, and you shouldn’t either.
Do consider each investment in the context of your long-term goals. Are you trying to create cash flow for retirement? Are you trying to grow your wealth quickly and willing, therefore, to take more risk? Are you trying to build a legacy portfolio for your kids? Is personal use a priority, meaning you’re looking to make investments that double as holiday or second homes?
To get you started building whatever kind of property investment portfolio you imagine, this premier issue features two different types of opportunities. One, in the Dominican Republic, is what most people think of when they think about investing in real estate overseas. It’s a chance to invest in a beachfront resort condo that you’d then rent out.
The second investment opportunity this month, in Mexico, is a hard money loan. A hard money loan is when an individual investor lends money to a developer. Generally, when you make this kind of loan, you should get some kind of real estate as collateral. In the case of the opportunity I feature this issue, you get a condo in the building that the money is going to be used to complete as security.
These are good examples of opportunities for different investment goals. One is longer term. The other carries more inherent risk and therefore greater expected reward.
Every issue of Global Property Advisor will include a running review of all GPA portfolio recommendations to date, with notes to update you on each opportunity over time. At the top are the specific current investment opportunities featured in this issue. These are followed by recommendations I’ve made in the past that remain active and good buys…
“Lief, can one purchase into the mango plantation through a self-directed IRA? If so, where can we learn about the steps to do that? Thank you.”
Yes. The sales team at InvestGPS, managing sales for the developer, can help with information on how to set this up.
Or you could contact a self-directed IRA custodian directly. We recommend Midland IRA.