Best International Real Estate Buys For 2017

|, Investing, Lifestyle, Personal Development, Top, Travel|Best International Real Estate Buys For 2017

Best International Real Estate Buys For 2017

 

International real estate is one of the best investments someone can make.

On the surface, owning property in a different country just seems like an exotic idea that you can brag to your friends about.

But, the advantages of owning foreign real estate go much further than your bragging rights.

Foreign real estate offers an investor a true way to diversify. Most investors believe that diversifying means that you just buy a bunch of different stocks and hope that you’ll make some money over the long term. If one of their stocks crash, then they’ll have other stock holdings that will make up for their loss.

While this diversification in a person’s stock portfolio may work, it’s hardly a diversification for an individual’s overall wealth.

Buying real estate in a country other than the one you reside in, is a perfect way to truly spread your wealth to ensure you have a real safety net.

When you own a property in a different country, you are truly moving your wealth away from any risk you have at home.

For some, this may seem ridiculous. If you’re living in the US, you may be thinking, “What risk do I have at home?”

I’ll stay away from any hypothetical situations where a bank crashes or the government confiscates your possessions. Instead, let’s look at a totally realistic example…

What if you are sued for something? What if you mistakenly get in a car crash and kill someone? What if someone gets seriously injured in your home?

Although unlikely, these are real scenarios that happen everyday, which often results in people losing big money in court cases. If you can’t payout the settlement, then your assets are seized.

Well, foreign real estate can never be confiscated by your home country - it’s foreign! That’s the whole idea of having wealth in a different nation.

And owning foreign real estate goes beyond diversification. There are opportunities out there to make real money in ways that are simply not available in your home country.

One example that I have written about many times is buying real estate where you have a currency arbitrage opportunity. This means that you buy real estate that is denominated in a currency other than the one you are holding. When you convert your currency into the foreign currency you can gain a huge amount of buying power. It’s just a matter of finding the right situation.

Another way you can make money from buying foreign real estate is simply by discovering a great place before the rest of the market. It seems simple, and it is. We’ve all heard the stories of those who bought property in Mexico, Costa Rica, or even Hong Kong. These early buyers found a great place selling for rock bottom prices. Then ten years later, when the rest of the world discovered these amazing places, real estate prices shot through the roof.

There are many, many different strategies to profit from foreign real estate, but one of the biggest profits is the personal experience.

This is something that is hard to quantify. How do you put a price tag on the happiness you get from owning a beautiful home?

Well… it’s easy. Just look at beach front property in any country. There are HUGE price tags on these properties. That’s because people value their experience.

The bottom line is that foreign real estate is not only a great investment, but it’s a great lifestyle enhancer.

Instead of dwelling on reasons why you should start looking outside your borders, I’m going to give you my top foreign real estate buys for 2017.

I’ve decided not to put them in order. Instead, I am just lumping all of my picks into one group that you can take a look at.

There is just too much subjectivity when it comes to ‘the perfect destination.’ Some people like cold weather, some people like hot weather. Some like Latin culture, while some like European. Some people prefer the beach, while others prefer the mountains. Some want to use the US dollar, while others want nothing to do with it.

I’ve used a variety of different metrics to narrow down my selections. I’ll briefly explain each of these, so you understand how I came to my decisions.

The first metric I used was the International Property Rights Index for 2016. This index ranks countries based on three different categories:

  1. Legal and political environment.
  2. Physical property rights.
  3. Intellectual property rights.

Within these three categories are a number of different components that the IPRI looks at. Things like rule of law, political stability, and registering property all go into the ranking system.

The IPRI is a great way to get a sense of how stable a country is in regards to long-term investment security. This is obviously important, as any property investment is normally a large sum of money.

However, the IPRI does not take into account any investment potential. This means that most of the top ranked countries in the index are expensive! And this is to be expected; you get what you pay for.
Expense, in terms of an investment, is the most important component to consider regardless of what you are buying. Whether it’s property, stocks, bonds, or a collectible, anything can be too expensive.

Companies like Coca Cola, General Electric, or Proctor and Gamble are considered some of the best in the world. But sometimes they are too expensive to buy. Same with property.

So, in order to determine which countries are selling at the best prices I looked at a couple of different metrics to determine the best values.

I looked at currencies to see what countries had the largest spread compared to major currencies like the euro or US dollar. What I mean by this, is that I looked for currencies that had changed the most over the past several years giving US dollar (or euro) holders the most buying power.

This strategy is basically currency arbitrage, which I have written about many times before. If we look at countries that have had major currency moves (and we are holding a stronger currency), then we are literally buying property ‘on sale.’

I also looked at valuation metrics like the CAPE ratio. The cyclically adjusted price-to-earnings ratio is calculated by determining the price divided by the average of ten years of earnings. Essentially, the CAPE ratio forecasts future earnings.

The higher the CAPE ratio, the lower the future earnings and vice versa. The ‘price’ for the CAPE ratio in foreign markets is usually determined by the largest stock exchange within that country.

So, for our needs, the CAPE ratio in relation to foreign real estate is not the best comparison. We are looking at property values, not stock values. But, if we can see which markets are the cheapest (with the most growth potential), then we can reasonably assume that that country’s property market may see growth as well.

Finally, the last metric I used was my own (and very subjective). I looked for countries that are disliked because of recent news events that have short term negative effects. One country that I picked is especially prone to this bad reputation, but on a historical level it’s one of the most important nations in the world because of it’s geographical location.

Again, I have not listed these countries in order. Instead they should be looked at as a group. Each individual investor will have specific needs and desires that make it impossible to say one country is better that the other. Additionally, because of citizenship and geographical location issues, some regions are simply inaccessible to some investors.

As a last note, you will notice that I have not added an extensive description for each of the countries I have listed. This is on purpose, as I will be going much more in depth about each country over the next year.

I’ll even be providing specific investment opportunities in these countries, both in real estate and in companies (stocks, equity, etc.). And perhaps, we’ll visit them too.

So, here are my Best International Real Estate Buys For 2017 :

Best International Real Estate Buys For 2017

New Zealand

New Zealand ranks number two in the world on the International Property Rights Index. Property prices are not especially low, but the overall population of this island nation is surprisingly low. This has made for a relatively uncrowded market with lots of room to grow.

Panama

Panama is a classic foreign real estate buy, and for good reason. Panama uses the US dollar and has the canal. This makes for relative stability in a region that is prone to corruption and political turmoil.

Colombia

Colombia should come as no surprise if you have been following my writing for any time. Colombia has a horrible reputation, but is poised to turn that around in the coming years. Not only do I love to visit this country for its high quality of living, but I actually just purchased real estate there this month.

Chile

Chile is another country that has a very high quality of life. Although it’s a bit difficult for most people to get there, the remoteness creates more value by weeding out the crowds. In addition to residential real estate, there are also great agricultural investment opportunities in the extremely fertile Chilean land.

Turkey

This surprises most people. What we hear on the news about Turkey is terrorist attacks and political turmoil. However, what many forget is that Turkey is literally the connection between Europe and Asia. This strategic location has made Turkey the hub for trades and commerce for centuries. With the current turmoil and currency issues affecting Turkey, I view it as a buying opportunity.

Portugal

Although Portugal does not have any specific currency advantages, much of Portuguese real estate is selling for less than the cost of construction. This means that it would cost more for a person to buy the supplies to build a home than it does to just buy an existing one - and that’s not including the land! This is a true value investment.

Best International Real Estate Buys For 2017 - South Africa

South Africa

South Africa has a variety of things going for it - most of them negative right now. Their currency has been wrecked and the commodity bear market has ravaged their economy. Just like most of the countries on this list, real estate is selling for significantly less than the cost of construction. South Africa is also located in a very strategic location and is extremely rich with resources.

While most of these countries are extremely cheap from an investment perspective, there is no guarantee that they won’t get cheaper.

The saying “don’t catch a falling knife” certainly applies here. You don’t want to charge into any of these markets thinking that you’re getting the deal of the century.

Conversely, if you are looking to invest in a foreign market, you don’t want to wait until you think everything is perfect. The whole point of investing in a distressed foreign market is because you see future upside. If you wait until that upside is there, then you will be priced out of the market, or at least won’t realize large future gains.

There are obviously many places throughout the world to invest in. And even countries like the United States still have real bargains. But these countries I’ve listed as a whole offer some of the best bargains with future profits in store.

Again, I'll have much more coming over the next year about these places, with some opportunities that will be very exciting.

By | 2017-11-21T19:08:22+00:00 January 10th, 2017|Economy, Investing, Lifestyle, Personal Development, Top, Travel|33 Comments

33 Comments

  1. Jacob January 14, 2017 at 5:34 am - Reply

    Cody, I'm an American who lives and invests heavily in South Korea. The unique culture and market here offers me the opportunity to invest in an incredibly unique way. I essentially borrow gigantic sums of money interest-free from my tenants to fund my real estate purchases. We're talking hundreds of thousands of dollars. It's called a Jeonse deposit. The catch is they give me that money as a refundable deposit that must be paid back at the end of the rental contract, and it is paid to me in lieu of monthly rent. So they get to live for 'free' and I get legal use of their money to invest. It's a complete capital appreciation play so needs to be done wisely, but we're getting 30-60% annual returns on our cash. No joke.
    Real estate is the single best investment people can make in their life, I firmly believe.

  2. Nathan January 20, 2017 at 4:00 am - Reply

    Do you have any contacts in Columbia, Turkey or Portugal? My main thing is I don't want to get fleeced just because I don't know the market.

    • Cody Shirk January 20, 2017 at 1:34 pm - Reply

      Yes.
      Yeah, you can get fleeced in any market (stocks, RE, or whatever) if you don't know it.

  3. Ediz January 22, 2017 at 12:40 am - Reply

    Hello we are a construction company in Istanbul doing Residential apartments since 1930.. And yes what i think is Turkey will be the smartest choice for foreigners to invest as the property prices still keep same in Turkish lira but the Lira lost %16 value against Usd just in last 2 months. If i were an investor i would definetely buy a property in Istanbul to triple my money in a short time period .

  4. Kavs January 22, 2017 at 9:41 am - Reply

    So, do you actually own physical property in some of the countries? Do you let them or just let an agency manage them or... ?
    I have been looking to invest in property but it seems very confusing on how to manage it.
    What are your thought in other Asian countries or is your personal focus on latam and EU only ?

    • Cody Shirk January 22, 2017 at 5:01 pm - Reply

      Yes, I do.
      I've written about it many times. (HERE IS ONE THEM)
      Yes, it can be confusing, that's why you need the right contacts.
      I'll be sharing some opportunities in Asia in the future. However, in general, property rights are much more favorable for foreigners in LatAm and Europe (compared to Asia).

  5. Tom Naden January 24, 2017 at 7:19 pm - Reply

    Hey Cody, I've been to Portugal and fell in love with it and would love to invest in real estate over there, however I don't have the capital and don't know how to find it

  6. Joseph January 25, 2017 at 4:50 am - Reply

    Hi Cody,
    I'm interested in Colombia. I have a friend who has extensive family there. He is a U.S. Citizen and Colombian citizen as well. He is someone I've grown to trust since I've worked with him. I told him about investing in his country and his eyes lit up. He said he can get listings for me,...
    I'm really new in this and I'm being careful. I want to vet the information that he provides me, and if possible bounce them off you.
    He states that Medellin is the most cosmopolitan of all cities, and that tourism is amazing there. he told me that you can live off a dollar a day there...literally....
    I looked up the currency rate of the dollar against the COP. Is that really the conversion factor? http://www.xe.com/currencyconverter/convert/?Amount=1000000&From=COP&To=USD
    Please contact me at your convenience. I'm very interested in your opinions.

  7. Drew January 26, 2017 at 4:32 am - Reply

    Hi Cody,
    Great article. Thanks for the thoughts and ideas in general. I couldn’t agree more. I am however very interested in Asia. Philippines only allows Condo purchases (less than 40% of total price too), but has some spectacular buildings. They are however at not too big of a discount to western prices (i.e. US$200,000 for what is probably no more than $300,000 in the US). Do you have any good suggestions - either Manila or Cebu (I’m only familiar with Manila but understand Cebu is better).

    Thailand is the other option I’d consider personally, and they have about the same rules. Any ideas there?

    Thanks and have a great day!

    • Cody Shirk January 26, 2017 at 11:32 pm - Reply

      Hey Drew,

      No, I don't have any specific recommendations, although I'll have some stuff later this year.
      I think you said it best "They are however at not too big of a discount to western prices."
      Obviously, there are always good finds... I'll be searching that area soon...

    • p bizzle February 12, 2017 at 2:49 am - Reply

      Drew, I don't know what you mean that the Philippines isn't too much of a discount in comparison to the US. There are brand new condo developments in Makati, Manila (the Central Business District) for as low as $50k US. They are studios, of course, but the market is growing really well here, as you know, and anyone with just a little amount of capital can afford a starter unit here. I just bought one and will look for more units to park my money into.

      I'm also looking at other Asian cities and perhaps Colombia or Panama. Thanks for the article! I'd love to see your 'Top 10' Asian cities to invest in for the future. Just a suggestion 🙂

    • Bob March 1, 2017 at 2:01 pm - Reply

      Forget Thailand.

      You cannot own land and setting up a company to do it requires 51% Thai shareholders. Barge pole stuff.

      There is a huge oversupply of condos and they are still building at an incredible rate. The rental return on a property is generally a loss to maximum of 5% once you have taken all the costs into account. Subtract tax if you end up in that bracket. Selling a property is the next huge issue. The Thais do not like to buy second hand unless the price is very low. And maintenance of the condo building is the next hurdle, the building can rapidly fall into disrepair.

      An example of how illiquid the market is, a condo near me went up for sale at 4,5m THB, it is now on "give me an offer" at 2m THB. It is still not a bargain as the promised pool did not appear, the management does not manage.

      The advice of all longterm expats in Thailand is to rent and avoid the issues.

      I suspect that the Philippines is the same.

    • Ben Chng March 29, 2017 at 5:04 am - Reply

      Hi Drew,

      Why not consider Malaysia as a real estate investment destination? The currency is at an all-time low and its fairly easy for a foreigner to own a property there. Since you are interested in Asia, it could be worth a shot. The property market prices are the cheapest in South East Asia. I'll be more than happy to assist you with the process.

      Bests,

      Ben

      • Salman April 14, 2017 at 8:11 pm - Reply

        Hi Ben,
        I'm looking at investing in Malaysian real estate; however, have drawn a bit of blank.
        Any advice or suggestion would be much appreciated.

        You can email me at identity.sal@gmail.com.

        Thanks,

  8. Julian Schmierer February 7, 2017 at 11:43 pm - Reply

    Hey Cody,

    Great content that you put up here. Love your fire that you bring to the table here

    I agree with the picks that you published except for Portugal since the laws there really seem to suck for real estate investors.

    I've been there last summer and in Lisbon or Porto you'll see a lot of run down buildings and the locals told me that they still have rent controls in place that make sure renovations make no sense whatsoever.

    Do you have a good strategy in place for Portugal or are you more focused on the South American Markets?

    I loved the story about your trip to South America btw.

    I was in Argentina 2 years ago and, fell in love with the place. The whole region is seriously misrepresented and still undervalued in my opinion.

    It has it's downside (political risk, corruption) but if one has boots on the ground and great contacts I amam sure that one can make serious money in Columbia or Panama.

    Keep up the class A informations. I'll start a spanish course next week and I am sure to be in Columbia in 2 years max.

    Best regards and all the best from Germany

    Julian

  9. Tarun February 25, 2017 at 7:51 pm - Reply

    Hey Cody,

    I live I Dubai and am in the real estate sector since 2006. I've seen the up - down and now some stability.

    Perhaps, I could give you some more info based on your 3 criteria to get Dubai on your preferred list of places for real estate investment.

    Thanks

  10. Marsha Bygrave February 27, 2017 at 9:14 pm - Reply

    Hi Cody,

    Another great article. I owned an apartment in Antalya Turkey for the past five (5) years. I am currently living in Jamaica (Yes, Jamaica) that has been rocked by poverty and political feud since the last three decades so it is a peace of mind to own a home in a different country. And the good side when I am not there it is fully rent and the deposit are made directly to my Akbank account.

    • Cody Shirk February 28, 2017 at 5:50 pm - Reply

      Awesome! Would love to hear more about that. email me here: contact@codyshirk.com

    • Djamal September 17, 2017 at 5:01 am - Reply

      Hi Marsha,

      Appreciate if you could share some of your pros & cons for Turkey property investment!

      Thanks ahead!
      DJ

  11. Ashok March 21, 2017 at 5:13 am - Reply

    Hi Cody,

    Thanks for the great article! I can't stop reading all your articles there is so much to learn here!

    Question: I have a few trips coming up and I want to do some research myself as well and was wondering how you go about understanding if a property is undervalued or even better, "selling for less than the cost to build it"? What resources do you use? I'm sure they're not putting up these numbers online somewhere are they?

    • Cody Shirk March 22, 2017 at 4:49 pm - Reply

      Hey!
      Great question... unfortunately I don't have a perfect answer. Really, it comes down to doing extensive research online and on the ground. You can start by stopping in local real estate offices (where ever you're traveling) to get a feel for prices. Then check out local websites or Craigslist to get a better idea of what is available. Then, when you determine the price range, you can do some more digging to find out construction costs versus what's available on the market. Honestly, it's a lot of work. It's easier to just read what I put out... haha. But, if you're willing to put in the work, you'll find some great stuff!

      • Ashok March 23, 2017 at 12:03 am - Reply

        Haha awesome. That gives me an idea. I agree that it's a lot of work, which is why I'm reading what you put out. But I wanted to get an idea as well. Greatly appreciated, thanks!

  12. George March 22, 2017 at 2:02 pm - Reply

    Howzit Cody,

    Glad to hear that South Africa got onto the list, it is important to note that the whole of SA is not necessarily a good investment. There is also a local phenomenon of semigration* (local migration from outer parts of S.A to the Western Cape / Cape Town). . Other areas of special mention are Sandton in JHB and Some parts of the Durban Coast in KZN that are growing rapidly in value.

    Cape town CBD Property prices are at record highs (from my perspective as a local) but again a bargan when compared with other world class cities. Note that Cape Town is run by the DA (Opposition party to the main political party) and are renowned for effective governance. Prices will almost double in 5 years time,location dependent.

    Drop me a mail if you would like more info.

    George

    *http://www.fin24.com/Economy/strong-semigration-push-to-w-cape-gauteng-20170202

    • Cody Shirk March 22, 2017 at 4:53 pm - Reply

      Hey George,

      Thanks for all that great info and insight!

  13. Brendon April 27, 2017 at 5:53 am - Reply

    Cody I live in Cape Breton Nova Scotia Canada.The Canadian dollar is -25% the US Dollar as you prob know.There are properties in some locations that can be picked up cheap.Also the rents charged are well over the cost of mortgages.Check it out.Try the Cabot Trail.Let me know if you ever need information on the area I'd be glad to help.

  14. Hugo May 25, 2017 at 9:51 pm - Reply

    Hi Cody,

    Great article, agree with you all the way except for Turkey, excellent geographically speaking but way too unstable and there's no sign of change in coming years in my opinion.

    Malaysia, Philippines and Indonesia (even with land ownership issues) are all good bets as well. Lived in the region 5 years..

    But one I couldn't agree more is Portugal!
    Living and investing there since 3 years.
    There's excellent investment opportunities, tax privileges for foreigners, etc.
    Quite easy to invest if you know the right people.

  15. Melvin May 29, 2017 at 1:20 pm - Reply

    South Africa is a mixed bag on property, city apartments 1-2 bedroom go for premium because you can rent them out to young people for 4000-8000 rand a month. Thats in most of Joburg and Capetown. If you look at houses though there sold at less than market, because they are harder to rent out. It's also gotten so much harder to get a bargain in the last few years and you needs to move further out of the city to find anything worth buying. Bank auction are the way to go, you get a good price but you have the risk of being liable the outstanding taxes on the property. I really don't know how you would get good information if you weren't from the county you were buying in. Cape town apartments are hilarious though, if you AirBnB them out in December alone you could get 30-20K a month because of tourists.

    • Cody Shirk June 1, 2017 at 6:40 pm - Reply

      Yeah, most markets are very dependent on the area (literally what block the real estate is located on). Lots of due diligence and on-the-ground work must be done. Wow... those are insane returns for the CT apartments!

  16. Marco July 30, 2017 at 11:38 am - Reply

    Hi Cody, thanks for taking the time to share your great articles. I very much agree on your points, and find very interesting what you write.

    I moved from Italy to Portugal 4 years ago for the surf and for the opportunities. Pity i couldn't buy in 2013 as prices were incredibly low (you could buy a two bedrooms apartment with sea view for the price of a garage in Italy!).

    Now as of 2017, i guess there's much less margin left. Real estate has skyrocketed by 30-50% in the last 2 years, but maybe there's still room to grow as Portugal is definitely a great place to live and costs/prices are still low compared to other European countries.

    All the best for your blog. Cheers!

    • Cody Shirk August 5, 2017 at 3:44 am - Reply

      Thanks for the info, Marco!

      Sounds like you moved at a great time.

      Where do you surf most of the time?

  17. Dany October 5, 2017 at 7:42 am - Reply

    Consider Romania, Cluj as an international student city, Bucharest for the influx of Romanians from other parts of the country. Robust economic growth, low prices, bigger investment companies moving in, low round trip cost, uprising EU country, companies from China(Huawei) set headquarters, Oracle, Microsoft, etc. Rising wages, low unemployment rate. As India is expensive, software companies relocate there creating higher demand. New real estate projects have been launched. International companies have come back after the economic downturn, so did real estate developpers. The market is gaining momentum. Growth started 1.5 years ago. I am invested in Spain and Romania right now. The population is well educated and many speak fluent English. Spain is overrated, has poor construction quality and prices have been speculated too high again, Spanish style but as there are not many safe tourist destinations left, it's back en vogue for Scandinavians, Belgians and Dutch. Germans may not follow as prices are like in Germany and Germans are quality aware. Malaysia is another one I would recommend, a bargain at great quality and very depreciated currency that will recover. Chinas laws limiting money transfer to foreign countries has affected the real estate market in Malaysia but overall the country is robust, quality is great, prices are low and it's on growth. Healthier than the growth in Thailand which is overpriced and has not the same infrastructure or quality. Malaysia is not growing yet, so it may be question of a year or 2 but it's at a bargain now! Chinese move in for the quality of living. Very international and the language is bahasa(Malay) and English! Top pick Romania for this and next year, for economic growth reasons, US military bases makes it an important ally, growing wages, momentum in the market, and being an EU country that needs to pick up (as the Czechs did and the Polish)with a well educated population that speaks well English. Will prospect Portugal in November but from my research the last 2 years prices went up steeply and the great picks have already gone up too much. Maybe Algarve for bargains.

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