Thinking of purchasing a second residential property as an investment as well as a vacation home? Property purchase outside of the U.S. may diversify risk and take advantage of the dollar’s relative strength against lesser currencies. But where? Live and Invest Overseas, a website dedicated to providing information on foreign real estate and the expat lifestyle, recently published a list of their top picks for investment potential. Lief Simon, editor-in-chief of the site’s affiliated newsletter, gave us his take on the 10 countries he and other Live and Invest Overseas editors singled out. Care to take a guess at them before you make the jump?
No. 1: Panama
Not long ago, we featured a single-family home for sale in Panama. Real estate expert Simon suggests current investors look at the country for apartment rental properties.
“Panama City, where resale transactions have slowed, is and will continue to be a buyer’s market through 2018. I see this year as a chance to buy on a dip, as it were, because, long term, I remain bullish on the Panama City rentals market, ” said Simon. “Yields continue strong though not as strong as they were a couple of years ago, primarily because rents have softened. Argentine, Colombian, and Venezuelan buyers have helped to keep the Panama City market stable and growing over the last 10 years, even while other markets in this region struggled or even collapsed. Today, North Americans and Europeans continue to invest, but it’s Panama’s new relationship with China that I predict will fuel this economy through its next stage of growth. If the Chinese come in volume, as they did in Vancouver in the 1990s, Panama City property prices will soar to new levels.”
No. 2: Brazil
Simon recommends the Fortaleza area of Brazil, noting the coastal region is a top destination for Brazilian tourists.
“Rentals targeting the local holiday market can earn better than 8 percent net yield reliably,” he said. “Good yields and a weak currency make this country a strong buy for 2018.”
N0. 3: Dominican Republic
The Dominican Republic is enjoying a business and tourism boom. Simon suggests investors focus on the capital, Santo Domingo, a fulcrum for travelers.
“One of the best opportunities, specifically, is to invest pre-construction in an apartment intended for the business traveler market,” said Simon. “Business people staying longer than a week prefer an apartment to a hotel. A furnished rental for either of these markets — the business traveler or the holiday-goer — can be an excellent source of cash flow and, if you buy right, should enjoy good capital appreciation.”
No. 4: Thailand
Live and Invest Overseas’ list touts Thailand for investment due to its strong economy and tourism industry. Due to government restrictions, Simon suggests condominiums as the best choice for foreign investors.
“Foreigners are only able to own land leasehold. A foreigner can hold freehold title to the construction on the land, but, unless your house is portable, you might not take comfort from that. Foreigners are also permitted to own condos freehold as long as foreigners don’t own more than 49% of the total area of the condo building. A condo is also cheaper and easier to manage as a rental than an individual property,” he noted.
No. 5: Portugal
Investment in Portugal has promise, as its economic resurgence has benefitted real estate values there, but Simon would steer investors away from some Lisbon neighborhoods, where increases may have priced property out of range to see much upside.
“Other areas of this city, however, continue to offer good value and opportunity, especially if you’re up for a renovation project,” he said. In the upcoming year, he suggests looking at the the Algarve coast and the Porto region of Lisbon, where potential for value hikes are likelier.
No. 7: Mexico
Mexico is a country we frequently cover on SecondShelters.com. Despite drug cartel concerns, Mexico’s popularity with Canadians and Americans for both vacations and retirement, plus a growing middle class, continue to fan tourism and the country’s rental property needs.
“All that combine to make Mexico a top choice for a property rental investment,” said Simon. He cites tourist meccas Puerta Vallarta and Playa del Carmen as offering particularly good yields and noted also the availability of financing options set up through U.S. banks in Mexico.
No. 8: Belize
Known for beaches, sailing, and scuba diving (off a barrier reef system that has been recognized as a UNESCO World Heritage Site), Belize is next on Live and Invest Overseas’ list. Simon expects continued growth of the burgeoning tourist and expat community on Belize’s largest island, Ambergris Caye, and considers it under-valued. He also sees a need for reasonably-priced quality rental accommodations in Cayo, and believes construction there could generate a good return.
No. 9: Turkey
“The attempted coup in this country in 2016 has kept many foreign investors away since. Meantime, values in Istanbul have surged,” said Simon, adding, “Istanbul was the world’s 11th-most-visited city in the world in 2017. In addition to tourism growth, Istanbul and Turkey in general are enjoying strong economic growth as the population increases and the middle class expands. I see both tourism rentals and student rentals as appealing rental investment options. One of the biggest selling points for such an investment in Istanbul is the low cost of entry. A rental unit in this market can be within most any investor’s budget.”
No. 10: Turks & Caicos
Last but far from least — the Live and Invest Overseas editors believe the pricey Turks and Caicos Caribbean islands offer opportunity.
“Ordinarily, a high-end property does not generate the level of net rental yield that can be possible from a lesser investment, ” said Simon. “Long-term rents for a luxury-standard house in the United States, for example, don’t generally reflect the premium price of the property. A luxury purchase in the Turks and Caicos can be an exception to this rule. It can be possible in this Caribbean market to earn a net rental yield of 8% even from a high-end investment.”