In real estate investing, the most secure and successful portfolio is a diverse one. But what exactly is diversity? Ways for real estate investors to diversify their real estate investment portfolio include owning different types of investment properties and investing in real estate properties in multiple states in addition to owning offshore investments.
What Are Offshore Investments?
Offshore investments are investment strategies that benefit from the advantages offered outside of a real estate investor’s home country. Offshore real estate investing has become more popular over the recent years, but it is not for everyone.
Expanding your real estate investment portfolio to offshore real estate markets can offer major investment opportunities and returns if you’re willing to take the risk. However, before deciding whether or not this is the best strategy for you and spending your money on owning offshore real estate investing, you should be aware of their advantages and disadvantages. Let’s take a look at the pros and cons of offshore investing.
Advantages of Owning Offshore Investments
Expanding Real Estate Networks and Expertise
Real estate investors owning offshore investments are not only creating a more diversified real estate investment portfolio that reaps greater returns; they’re also expanding their real estate networks and overall knowledge. They get a better grasp of both the local and offshore real estate markets and set no limitations to their investment opportunities.
Tax Reduction
One of the greatest benefits of owning offshore investing is that it offers lower real estate tax rates on the returns generated by the investment properties. Some countries offer tax incentives to offshore real estate investors. These countries are known as tax havens, and they do so in order to promote an investment environment that attracts outside wealth. These may also have less demanding financial regulations.
For countries with few resources and a small population, attracting offshore real estate investors can dramatically increase economic activity. Many offshore real estate investors enjoy tax-exempt status when they invest in the US real estate market. With less tax to pay, offshore real estate investors will reap a higher return on the investment.
Related: Calculating the Rate of Return on Investment Properties: Step by Step
Greater Diversification
In real estate investing, when you put all your eggs in one basket, there would be too much risk to bear, and you can easily lose all your money if economic conditions turn against you. The real estate market is never static, and is drastically affected by economic conditions (whether negative or positive). With offshore investments in real estate, real estate investors spread the investment risk around the world.
Real estate markets do not move in the same direction, which means that if your local real estate market was crashing, other offshore real estate markets may actually be doing great. This is why real estate investors should not limit themselves to one market, as offshore real estate investments may offer them greater financial returns.
Globalization
Owning offshore investments in real estate is possible for any real estate investor with the help of the internet. If real estate investors use technology to their advantage, they can search and find lucrative offshore real estate markets to invest in and reap financial rewards beyond their wildest dreams.
One way to search for and find real estate investment properties online is through Mashvisor’s Investment Property Finder, which allows real estate investors to search for the best investment properties throughout the United States in different states and neighborhoods and start analyzing the investment properties in that neighborhood immediately. This tool utilizes a map function to help you pinpoint the locations of properties and a heat map function that assesses the properties in the area based on your value choice.
In addition, Mashvisor’s Investment Property Calculator allows the real estate investor to acquire the values of each investment property with a single click of a button.
Related: Mashvisor’s Investment Property Calculator: Real Estate Investing Made Easier
Disadvantages of Owning Offshore Investments
Investment Property Management
Real estate investors who own offshore investments must find a way to effectively manage their investment properties. Hiring an investment property manager is the best option to guarantee happy tenants as well as maintenance and upkeep. It might be costly, but it is definitely worth the price for diversifying your real estate investment portfolio.
Currency Risk
Another big disadvantage of offshore investing in real estate is the currency exchange risk. Changes in the exchange rate between different currencies are unavoidable and sometimes unpredictable. It goes without saying that is is hard to mitigate this risk, and it poses a huge threat to real estate investors’ potential earnings.
Economic/Political Conditions
Understanding offshore real estate markets and keeping up with economic and political conditions is a key to profitable offshore real estate investing. As previously mentioned, the real estate market is very dynamic and ever changing. No real estate investor can be too certain about his/her real estate investment opportunities because they depend on economic and political in addition to social conditions. As a result, it is crucial for a real estate investor owning offshore investments to be familiar with the economic and political situation in the country in which he/she invests in order to make smart investing decisions.
Related: New Year New Investment: What Are the Best Real Estate Markets to Invest in 2018?
Different Real Estate Laws
It is crucial for any real estate investor considering offshore investing in real estate to understand the local real estate laws in that specific real estate market. States in the US real estate market have different real estate laws, and so do different countries around the world. One reason that real estate investors feel safer investing locally than offshore is because real estate laws can be very complex and different from what they are used to in their local real estate market. Thus, make sure you hire a real estate lawyer or a real estate agent to keep you informed , help you make smarter decisions, and protect your offshore investments.
Conclusion
Owning offshore investments in real estate is the best way for a real estate investor to reap greater wealth in addition to diversify his/her real estate investment portfolio. Nevertheless, real estate investors need to make sure that they do their homework and study the investment opportunities properly before closing any offshore investing deal.
Offshore investing opens doors of investment opportunities for real estate investors. If you are considering owning offshore investments, you should definitely speak to a professional and experienced real estate lawyers and real estate agents. Don’t forget to check Mashvisor’s Investment Property Finder and Mashvisor’s Investment Property Calculator when searching for the best investment opportunities in the US. For more advice on real estate investing (locally and offshore) and to guarantee a successful real estate investment portfolio, keep reading on Mashvisor.