You Need To Be Diversifying Into Hard Assets Overseas Right Now—How Can You Do That In The Face Of COVID-19 Travel Restrictions?
Traveling to make a real estate purchase in another country is complicated if not impossible right now.
COVID-19 restrictions mean Americans can’t go anywhere in Europe.
Panama has again extended its ban on international flights. Right now, this country is saying it will open Tocumen International Airport July 23, but I’m not convinced. I think that event could be delayed further.
Belize expects to open up its international airport Aug. 15.
Meanwhile, of course, real estate opportunities continue to present themselves worldwide.
We global property investors don’t want to miss out… but neither do we want to act without carrying out our due diligence.
That’s why, last week, I hosted a real estate webinar during which, with the help of contacts on the ground in each case, I unveiled three new global property investment opportunities that are among the most tempting I’ve identified in my entire career. In every case, I want in myself.
These weren’t run-of-the-mill new global property investment opportunities. These were Pocket Money Beachfront opportunities, as we named them.
That is, each of these three offers was at the beach… and each one was priced for US$50,000 or less.
The idea was as tempting to our Live and Invest Overseas readership as it is to us. More than 800 of your fellow readers registered to participate in the webinar… and dozens of them are right now following up to make purchases.
One of the offers was the launch of a new phase of the Brazil project I’ve been recommending for more than four years… while the other two were first-time offers, never before available, one in Northern Cyprus, the other in Mexico.
Over the two-and-a-half hours of the webinar, my contacts from each of these markets walked us through the details potential investors need to understand.
When buying property overseas as an investment, you don’t necessarily have to like the property. Rather, an investment buy should be made because you feel confident that the property will rent well and is likely to appreciate in value. If you’re not going to be living in a place, what do you care about the color of the bathroom tiles or the layout of the kitchen?
That’s why it’s easier to make a property investment without making a visit to the property in person than it is to buy a place you intend to call home. The developer can and should send you photos and videos for a completed project and renderings for a pre-construction project. You can and should be able to see what you’ll be buying. Then you do your math, make your projections, and decide to buy… or not.
Remote due diligence is another byproduct of pandemic restrictions and not only when buying overseas. In fact, more and more people are buying homes in the United States virtually due to the complications and restrictions associated with viewings right now.
The virus restrictions are also leading sellers, especially developers, to come up with inventive ways to make their properties irresistible from a distance. Discounts are becoming important, some developers are making deposits refundable if you change your mind after travel restrictions are eased and you’re able to come take a look in person, most all developers are offering live virtual tours, and developers in general are more flexible right now than they’ve been in a long while. Financing is increasingly possible, and terms are increasingly appealing.
I believe the current logistical complications created by COVID-19 travel restrictions are going to be a fact of our lives for some time to come. However, you don’t have to let that keep you from getting in on the tempting real estate deals being served up across the globe right now. You can continue, even now, to diversify your investment portfolio by moving some of it into hard assets overseas. If you’re all in the U.S. stock market, I’d say that’s exactly what you should be doing with some sense of urgency.
Throughout my career, one of my real estate investing mantras has been that you should visit the country, the location, and the property in person before buying. You want to get a feel on the ground for the area, the developer, and the specific asset.
That said, I’ve bought as many as a dozen properties over the years without visiting them first. Some of those investments worked out well… others didn’t… in about the same ratio as for the more than two-dozen investments I’ve made after putting boots on the ground.
One property I bought sight unseen I continue to own and still have never visited. It’s a piece of land on the coast in Canada. I bought it years ago on the recommendation of a friend I trusted but without a clear idea for an end game. Now I have one.
A Plan Comes Together
I mentioned this 7-acre parcel to my son the other evening, and his face lit up. Jackson wants to go visit the property as soon as we’re able. I’m thinking we should build a log cabin there together sometime in the next couple of years.
Of course, you have to assess your risk tolerance as well as particular property and market risk factors when considering buying property without seeing it in person first.
When I bought an apartment in Buenos Aires without seeing it, I trusted the real estate agent who I’d been working with and who had already helped me to buy other apartments I was happy with. The agent sent me photos and detailed the numbers. I weighed the risks against the potential rewards… and pulled the trigger.
Then I arranged, with help from the same agent, to have that apartment renovated… again, without ever stepping foot in the place. I wasn’t able to see inside the apartment for more than a year after the rehab had been completed because it rented immediately.
In the end, that investment was a home run from every perspective, earning me double-digit rental yields and then eventually selling for more than 100% more than I’d paid.
On the other hand, I bought a pre-construction apartment in England in a city I didn’t know that played out to become one of the biggest losers of my career. I closed on that purchase in 2008. It’s impossible to say whether the absolute loss I experienced in this case was more to do with the global property crisis that followed within months of the purchase or the property itself. Honestly, I try not to think about it too hard. Painful memory.
Not being able to visit a property in person before buying is a risk, but so, too, is losing out on an excellent opportunity. Again, you know your own stomach.
Meantime, I’ll keep doing my job by identifying and presenting the best of the global property investment opportunities our current global climate is creating.
Turn-key, by the way, is critical in this context. Not only can you not travel to scout an investment before acting… but neither can you go visit after you’ve invested to outfit for rental, for example, or otherwise manage the asset.
In our world right now, you want a property that requires no in-person effort… at least not until travel restrictions are lifted.