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Unexpected Benefits Of Buying A Rental Apartment Overseas

09 Mar
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Unexpected Benefits Of Buying A Rental Apartment Overseas

Coronavirus, The Tokyo Olympics, The Copa America 2020, And Other Strategies For Spiking Rental Returns

To identify the ideal rental property for investment overseas, first you consider the market and satisfy yourself that it’s got legs and upside…

Then you evaluate the specific property’s expected income, expenses, and return on investment…

Finally, you research and vet the associated risks and make sure you’re comfortable with them…

And you pull the trigger.

Then, sometimes, extraordinary situations… things you might not think to factor in… can increase the reward potential.

A reader wrote to me early January to offer me his apartment in Tokyo for the upcoming summer Olympics before he made it available for rent by strangers.

I attended the Olympics in Atlanta in 1996. When the reader got in touch with his invitation, I had a flash of memory. I spent days back then figuring out my tickets.

I did a quick search online to see about ticket availability for Tokyo. The process is as complicated as in 1996, probably more so. I took a pass on the apartment.

Then the coronavirus hit, and, while the Japanese government is trying to remain calm, it’s impossible to say right now if the Games will even take place. If they do, many people from outside Japan who planned to go will stay home. The reader’s hope of making some serious rental income for those few weeks appears to be dashed.

Why You Shouldn't Chase These Opportunities

The 2024 Olympics will be taking place in Paris, and I’ve had similar ideas as this reader. I’ve thought about renting out my two apartments here during the weeks of the Games.

More likely, I’ll try to get tickets and plan to be in town myself. That’s one apartment occupied. The second one is used as an office when we’re here and no longer set up for guests, but it might be worthwhile buying a cheap Ikea bed to put in one room so I could rent out the place for a few weeks at big rates to Olympic tourists.

Meantime, the Copa America 2020 is being held in Colombia and Argentina this summer, with at least four games taking place in Medellín. I’m watching hotel and rental rates to decide whether to try to rent my apartment in that city for some windfall rental income in that market.

Many dove into the Rio de Janeiro and Barcelona real estate markets in advance of the Olympic Games in those cities. They bought with expectations of high rental yields during the weeks of the Games and hope that all the promotion for the respective cities would push up property values. However, neither city saw particularly high appreciation rates or rental yields outside of the weeks of the Games themselves.

In other words, if you’re lucky to own a property in a city where an Olympics or World Cup is planned, like the guy in Tokyo who wrote to me in January, you can try to take advantage of the event to make some extra cash, but I don’t recommend chasing this kind of opportunity.

Where and what should you be buying?

I’ve just finalized the program for my 2020 Global Property Summit. I’ll lay it all out for you there.

Lief Simon