Unfortunately, there is no one answer to that question. Much depends on two things: the type of “investment” that you’re looking for; and how that investment fits into your overall plan.

Start by deciding why you’re buying the real estate. Think of all real estate falling into a continuum with one end being your personal residence and the other end being pure investment. For your personal residence, many factors influence what you buy, but the most important one is whether you enjoy spending time in the property. On the pure investment end, again there are many factors, including the projected return, your overall diversification strategy, and how the investment fits into your portfolio.

Most real estate purchases outside of your home country are likely to fall somewhere in between. Perhaps you’re looking for a second home somewhere you can avoid winter… and if the property can be rented out when you aren’t there, the extra income is a bonus. You may be looking for an income property where you can vacation a couple of weeks each year. Perhaps you’re shopping for your retirement home, but retirement isn’t for another five to 10 years.

Another criterion is the amount of cash you have to put down. Whether financing is available in the country…and whether you can qualify for financing will play a role. If you have but $50,000 to buy something, then the answer to “where is the best place to buy” is likely to be different than if you have, say, $500,000.

Before chasing after potential returns ask yourself where you fall in the continuum. Decide what type of property you are looking for, and how much you can spend. Once you have that information it will help you focus your search.

Even on the pure investment side of things, you have to determine how much, if any, time you want to spend in the country to manage the investment. You may find a great opportunity somewhere you don’t enjoy. If that is the case, the second best place to buy might suit you better.

For example, in May 2005 Berlin was the “next” hot spot. Property prices were low, big funds from the U.S. were buying up thousands of apartments, and the German economy was turning around. Great…but I have no desire to return to Germany. It’s a fine place, but it isn’t that interesting to me. Did I miss out on an opportunity? Perhaps. However, another opportunity took its place. I went to Thailand instead in June 2005 and found something that fit my criteria on the continuum.