Beginner Tips You NEED To Know Before Buying Property Abroad | The STRR Podcast #66 | Tim Hubbard

The idea of buying a property overseas is awesome, isn't it? It just sounds exotic, it sounds cool in our minds. It just seems awesome and I know it's something a lot of us want to do. That's what I'm going to talk about this week because I have done it before and I'm actually looking in a totally different country again. So I want to go over the process, the steps I take, and what you guys should look out for. Stay tuned. Welcome to Short Term Rental Riches. Quick, actionable ideas to help you along your real estate investment journey, but with a specific focus on short rentals. Happy you guys are here again. Hopefully you're doing well wherever you are in the world. Today we've got a really exciting topic. We're talking about investing internationally. And I know it's something that a lot of us want to do. It's different everywhere. But I want to give you my experiences. I have bought property in Colombia and I'm actually in Brazil right now and I'm looking again to buy property in a totally new country for me. So I want to break down the things that I look for, how I go about the whole process because it is different from the USA and it is different very likely from whatever country you're listening in from. So I want to give you my tips, the things I've learned and just what I'm doing. I'm here today in a city called Balniario Camboriu. Kind of a mouthful, right? This is in the southern part of Brazil in the state of Santa Catarina, and it's north of Florianopolis. A lot of you may have heard of Florianopolis. So a couple reasons why I like this city. For one, it's got a really good reputation for being really safe. There are no, like favelas that you hear about and a lot of other places, even like Rio, they have great medical here. But also I think the real estate market has a lot of room to grow. It's sort of just catching on and it's probably a place that a lot of you haven't heard about. And for those of you that have or those of you that have been here, you're probably blown away. It kind of looks like Miami. Huge tall buildings. It has some of the tallest apartment buildings in all of South America. They're calling it the Dubai of Brazil. So I think it's a really exciting place and I was actually able to do a lot of research before I came down here. So let's just break it down. So this week we're going to talk about buying property in a different country. And now this is sort of in a nutshell because of course every country is going to be totally different. But this is what I found and this is what I'm finding again here as I look in Brazil. We'll break it down into four steps. You know, what do we do in a brand new market? How do we find our property? So the property search and then the process so actually buying it. And then lastly, just some considerations, some things that you guys should be looking out for and some side benefits to buying property in a different country. So number one, the property search. Well, it depends on what you're searching for, right? Is this an investment or is this just a personal property that you want to live in, spend time in vacation too? So that's totally going to change the property search because if we're looking for returns, well, then we're going to do a lot of the same things that we do in the USA or whichever country you're listening in from. We want to have a good rent to value ratio. So whatever the purchase price is, we want to have a high percentage of rent to that purchase price. A lot of times we want to be in a market that's landlord friendly. So if you're buying an investment, can you even rent in that area where you are? My property in Columbia is in a condominium association like a lot of the properties in Medellin and they're very strict with short term rentals. So it's not exactly the easiest place to rent there. So that's something that you can find out before you know, if it's investment, we're basically looking at the numbers. We've talked about that in a number of episodes before. But we also want to be in a place that's landlord friendly or has easy regulations. Also in Colombia, if someone lives in your apartment for over two years, it could be very hard to get them out like it can be in California. We want to look for basically similar things that we would in the US Good returns, a place that has good population growth, that seems to be on the up. Right. So that's going to be harder to do in other countries, obviously, because a lot of the information is probably not going to be as readily available. So that's if you're looking for an investment, if you're looking for a personal property, well, then the whole thing changes, right? It doesn't matter if you have the easy ability to rent it out, because if you're not going to be renting it out. Well then that doesn't really matter. That happens to be the case for me right now. I'm not necessarily looking to rent this property out, although I can. They're very friendly towards renting here. They're really big on tourism. They're trying to build their name up and so they're open to things like that. I think you'll find that places that are doing a lot for tourism are probably going to be a little easier with your short term rental regulations. Now a lot of times you might need a permit, so of course you got to check into that. But the property search depends on your goals. Is it personal property is an investment property and you really need to decide that beforehand. Now actually finding the property, this can be really challenging. And I will tell you from my experience, it is not like looking for a property in the USA at all. There is no mls. There may be some listing brokerage sites that have lots of properties on them, but. But a lot of those properties might be from six months ago. I just wrote on one yesterday, for example, the agent wrote back and said, oh yeah, you know, we've got thousands of properties on that site, but a lot of them or most of them aren't active anymore. So they'll just put them up there, but then they don't take them down. And so there is no central MLS in my experience and anywhere that I've looked, not like the US you can get a general ballpark from looking at some of these websites. And some of them are current, of course, and you might not even find any listing sites if you're searching in English, but it's in a country that's in a different language. So just Google around, you can find some of them, I'm sure, and that can give you a ballpark. But just remember that those properties are likely not up to date. I've even seen where there's multiple brokers that put the same property up and they charge different prices. So the search is totally different. When I bought my property in Columbia, I was working really with as many realtors as I could because each realtor had only a handful of properties that they knew about where they had the ability to sell those for the owner. Keep that in mind when you're in a new market. Most of the time when you're in a new international market, there's not going to be some MLS or some listing site where you can just get a perfect picture everything going on. A lot of times, you know, I just walk around the area where I want to be and that's the other thing, and we've talked about that in investing, in our kind of newbie steps for investing is you need to know exactly what you want. You decided whether it's going to be a personal property, personal investment, or if you're looking for cash flow. But you need to know exactly where you're interested, what size, what price range, all of those things, because that's going to help you narrow it down and that's going to make it easier for anyone you find to help you in your search. Once you've decided on a market and on a city and on a neighborhood or on several neighborhoods where you want to be and exactly what you want, then you really got to just start looking at properties to compare, to get an idea of what the prices are going to be like. This is much harder to do in a foreign country, for sure, especially if you don't speak the language right. And now a lot of times what happens is occasionally these brokers will pop up that only work with foreigners. And I've got to say, just from my personal experience, you're probably going to get a foreigner price. They're probably going to jack it up. Now, that may be worth it to you, just for peace of mind and comfort. Working with someone that's worked with other foreigners, speaks a language, but they do mark those things up. They're offering an additional service. And I've seen some of those properties go much higher than what they would have if you were working with a local or if you spoke the language. That definitely, definitely helps. So keep that in mind. A lot of these agencies that are geared towards international investment, their prices are marked up quite a bit, but it might, it might be worth it to you. You know, it totally depends. So when you've decided what you, you've decided where you want to be, you can use local listing sites by googling in that country's language to find those local sites. And that's going to give you a better idea of realistic prices. Now, the process for actually buying a property, when you find one, this can be totally different. But in general, most places have sort of a deposit that you're going to put down. So you need to open a bank account or you need to have a way to transfer funds into this country, and it's going to be in a foreign currency. You have to keep that in mind. These banks will charge you to convert your currency into a new one. And it's not always super easy to open an account in a new country that you really got to got to look into as well. And that's going to change country by country. One thing you'll probably encounter is that it's very unlikely that you're going to be able to get financing for this property if you're investing outside of your home country in a place where you don't have residency or citizenship. The banks, just like in the us they want to see that you have income. And so if you open a bank account in a foreign country but you have no income coming in, well, then it's very likely they're not going to give you a loan. And an option I'm exploring here, and this is the first time that I've seen it, is if I were to transfer enough money here, the bank would loan against the money that I hold in their account. So that gives me a little more leverage. But it's still not the same as taking out a loan like in the US with amazing rates. So keep that in mind. It's very unlikely that you're going to get financing in this foreign country where you don't have residency or citizenship. And that's really going to affect your returns. Right? If we're borrowing 80% of the money to buy a property in the USA and we borrow zero in a foreign country, we've got to make up for those returns. We have 5 to 1 leverage in the USA. We've got no leverage outside of the USA. So keep that in mind that that'll really affect your returns if you're looking for an investment. So once you found a property, highly, highly, highly. Suggest working with a lawyer, right? A real estate lawyer, someone that does transactions. We do it in our home countries. Why wouldn't we do it in a foreign country? It's even more important to do it in a foreign country. So please, please make sure that you're working with a lawyer pre one that's already done foreign transactions. Because there's some different steps you got to take. You know, it might be worth it for you to hire a translator too. You know, if you're in a foreign country and let's say there, there are no brokers or agencies geared towards foreign investment where you're looking and you don't speak the language well, you might be forced to hire a translator, right? And that could be very helpful, could help you save on costs. You know, you just have them do the upfront calling on the properties before you're even involved in the picture and then you can get a real idea of pricing. Keep that in mind. And if you're in A foreign country. A lot of times, you know, labor's much cheaper than it is in the usa. You could hire someone very inexpensively. I would imagine that's another option. So we found a property, we found a lawyer that can help us with all this. Hopefully the lawyer can help us set up a bank account. If they can't, then you have to deal directly with banks. And there's usually you can find information about that online as well. With all of that said, buying a property in another country is super exciting. It's fun, it's a new market. But a lot of the things are pretty similar to what we do back home. It's just that it's not as easy. But there are some really good side benefits to this. And this, the main one for me has been a hedge against the US dollar at this moment. If I buy a property today in Brazil, I'm getting almost a 25% discount, which is fantastic. And that's just because the strength of our dollar. So that could be a whole series of episodes on currency. It's a difficult topic, but that is a side benefit to buying a different country. You get to diversify a little bit more. Another side benefit is that a lot of times, if you invest a certain amount of money in another country, you can get residency. This is also a whole other side topic because it depends on which country you're in. Check on that as well, because you don't want to buy a property that you plan on l living in and you don't have the ability to live in the country for over a certain length of time. So keep that in mind. Lastly, is this place where you're looking to buy a foreign investment? Does it fit you? I mean, cultures are different everywhere. Have you been there before? Have you spent a lot of time there? Hopefully you have if you're planning on investing money there. Because some cultures are much harder to fit into than others. Now, that might not be important for a lot of people, but for me, I kind of want to feel like I can fit in and I can actually live in a place. And here in Brazil and in Colombia and a lot of Latin American countries, I feel that way. I love their cultures and the energy they have. So buying a foreign investment, buying a property internationally is super exciting. I think it offers great diversification for your portfolio. If you already have a lot of properties in the US there can be really good returns. But keep in mind that you're probably not going to be able to finance. There's obviously a lot that goes into this and it's different every country, but hopefully this gave you just kind of an overall picture. And if you're looking for a property, jump in. Go. Stay there. The more you research and the more you look into it, the better the chances are of it actually happening. So until next time, I hope you guys have a wonderful day. Want to get on the fast track to financial freedom through short term rentals? Well, it all starts with the properties you acquire, but you want to make sure that you acquire the right properties. I want to give you my ebook that will show you how to do just that. There is no charge. It's my gift to you for being one of our subscribers. Just go to restmethods.com that's R E S T methods dot com.