Friday, September 12, 2008

5 Fears Standing In The Way Of Expat Real Estate Investors and Success

Depending on where you make your home as an expat, you may be pleasantly oblivious to North American news. But, like a bad case of malaria the negative world of English news can come back and sucker punch you when you least expect it. Don’t let their fear paralyze you- use it to empower you.

What you’ve got to do is decipher what is ‘real’ and what is ‘imaginary’. Sober yourself by separating the truth from the fiction.
By doing this you’ll be able to free yourself from day-trader mass market psychology and its rollercoaster ride of gut wrenching twists and turns.

I’ve been living abroad for nearly a decade now and have successfully invested in more than 50 property purchases (yes, this is what I do for a living).

Here I’ll address a few common worries pertaining to property investment for expats and what you can do to solve them.

Problems and Fears facing Expat Investors:

1) I don’t know enough about the market to invest now

It’s fear of the unknown, fear of losing money, fear of feeling stupid if you make a wrong choice. This is one of the most important fears to overcome because if you don’t, you’ll never pull the trigger on an investment and end up lacking the security, freedom and lifestyle you desire. Potentially working a lot longer and harder than you planned to or heaven forbid, working until you die.

Educate yourself. This doesn’t mean spend 5 years going back to school and getting a degree. Time is of the essence. Start reading impartial books on investing, speak to successful investors and make a step-by-step plan to reach your goals.

2) What the heck do I do with my money?

After you get educated, get into action. Have you ever noticed how many ‘experts’ there are out there sitting on the sidelines and telling you the time to invest has come and gone? Analysis paralysis is a pathetic state to be in.

After certain milestones have been reached ex. 2 books have been read, 3 realtors contacted, etc. get into action. Start taking measurable steps towards investing in a property or growing your money somewhere. If doing it yourself is not an option, enlist the help of unbiased professionals that will help you reach your goals.

3) How can I invest for my retirement?

It really depends on where you are in your investment cycle.

If you’re just starting out and capital is an issue you can begin by placing money into REITs, town houses or joint venture partnerships that require lower entry points. As you acquire more knowledge and capital, look towards multi-family properties or owning several cash flowing individual units.

In some cases, paying down or paying off your investment property mortgage to generate a stream of cash flow may be wise for retirement. In certain growth markets investing for a 5 to 7 year term may be enough to generate sizable capital gains that you can deploy for retirement income and reinvestment by refinancing or using an equity take out plan.

4) How safe is real estate as an investment?

Real estate is an incredibly safe, long-term investment. Despite the Subprime mortgage debacle, there are still solid, fundamentally sound investments in the States (and abroad) to invest in. Real estate moves in cycles, with a bit of knowledge you can pin point an area of stable growth to own income-producing property.
You’ll look like a genius in 10 years. People get into trouble when they speculate and look for the quick buck. Like any business it takes time and knowledge to invest successfully.

5) Where can I grow my money without triggering a bunch of taxes?

This will depend on your nationality, tax plan, income and country that you are investing into.

The best step is to speak to a real estate savvy tax planner and ask him how it can be done. Also speak to expat investors who have done what you want to do and ask their advice. Sometimes you’ll be pleasantly surprised to find that there may even be tax breaks and tax treaties for your country (there are quite a few in Canada).

Living abroad gives you a unique perspective to be in two worlds at once. You can observe your compatriots lives back home without being a part of it. You can study the economy based on fundamentals and not emotion enabling you to seize opportunities when others are running away to hide. This is one of the many advantages the expat life offers you.

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