No investment is without risk, the question successful investors ask is: “How much risk can I tolerate?”
Investing at home comes with a degree of certainty but taking the plunge to invest offshore can bring big risk and big return, so you need to understand the fundamentals to ensure you know what you are getting into.
Before deciding on a particular country, you need to get to grips with its economy and the inherent risks that come with it. Essentially a country with a poor economy will immediately mean more risk. The national currency (its strength against the dollar, for example, and its volatility), economic growth (this is a sore point for most countries at present as they battle the effects of the Covid-19 pandemic) and wealth devaluation (you need to know that you will see a return on the money you invest in your property and it will not all be eroded).
There are many online tools that allow you to compare housing prices in different markets over time so you can get a thorough understanding of what a particular country offers investors.
But to keep on a successful path of investment remember that nothing is static – today’s ideal market can be tomorrow’s nightmare. Flocks of birds migrate each year to ensure they stay in summer all year round; investors need to be aware of changes in their market to ensure they move to ensure they get the safest and most sustainable returns. But, as with any investment decision, make sure it is facts, not emotions, that guide your choices.
You can reduce risk and increase your chances of success if you buy property at a discount, relative to its value. Some countries, like the US, offer more discounts, which helps to increase the price-to-earnings ratio, or yield, while reducing your exposure to shocks. Any market where demand outstrips supply will have an in-built resilience that works for you.
There are a range of calculations you can do to get a fuller picture of the market. Online portal Wealth Migrate, for example, has a patented formula that takes the fundamentals into account and provides a clear risk profile.
Everything may point to the perfect deal, but if your country of choice does not protect property ownership rights, you need to keep a wide berth. If you will battle to move out tenants who have stopped paying rent, then nothing else about the property matters. The legal processes involved in removing unpaying tenants in some countries will eat into your returns, while also dealing with the consequences of no rent being paid on the property.
The road to successful property investment is not smooth but asking some crucial questions and doing thorough research can help to remove some of the potholes you might meet along the way.