Immersing yourself in a new culture and retiring abroad in the tropics is a shared dream of many North Americans. Investing in international real estate whether for retirement, lifestyle, income or a second home is not only a dream but a viable option for many that need to strategize outliving their retirement savings.
International real estate investments can provide great risk-adjusted returns and diversification and the potential for higher rates of growth. Investment exposure to emerging markets in developing countries experiencing rapid growth and industrialization can boost return potential as lower incomes and lower debt levels give them the ability to grow faster. The International Monetary Fund (IMF) sees emerging-market economies as having high growth rates and estimates it can be two to three times faster than developed market economies.
Let’s look at some key points to consider when you are looking to invest in real estate abroad.
Avoid unnecessary risk when buying international real estate
International real estate fraud is a common problem for many buying retirement properties primarily due to their lack of knowledge. The international real estate industry can be complicated, compared to the United States marketplace. The best way to protect yourself from fraud and in mistakes in understanding is by securing a locally licensed real estate broker and lawyer to provide advice and assistance throughout the buying process.
You can mitigate risk by looking at Latin American country profiles. A case in point is Costa Rica, while still considered a developing country, they began simplifying processes and instituting foreign investment and property rights laws in the late 1970’s. The results are evident in the fact that is considered one of the safest and most secure countries for real estate investment in all of Latin America.
Changing governments, laws & currency valuations
Developing countries have high growth capacity but also tend to see governmental transition that can have negative impact on economies. Real estate markets tend to represent a significant portion of a country’s economy, which makes the laws governing the industry susceptible to change.
There are many examples of how government and law changes make some international investments a risky venture such as sudden changes in property tax rates. These changes can also affect policies regarding ownership titles which make it important to consider securing a title insurance policy.
Currency valuations can also change and cause problems for investors. Changes in foreign currency can appreciate or depreciate against the dollar, and make payments significantly more expensive, or less. In Central America, Panama and Costa Rica stand out as nations with stable governments, economies, laws and currency.
In general Latin America is a very attractive real estate investment destination. Each country has its own legal, property rights and tax benefits. A key factor in long term investment is a countries democratic, governmental stability. While Latin American markets often are associated with more risk they are also can potentially reward much higher returns and growth.
The Costa Rica News
San Jose Costa Rica
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