Chances are, growing up you never heard your parents or grandparents talk about investing internationally\u2026and if they did, congratulations. You\u2019re in the minority.\u00a0 Growing up I heard all about stocks, bonds, the money market, and my grandfather\u2019s (nightmare) apartment buildings in upstate New York and Queens.\u00a0 When I mentioned to my family and friends that I was moving to Nicaragua right out of college, they pleaded for me to reconsider.\u00a0 After realizing it was not going to happen, they began to support my wishes but still didn\u2019t understand why on earth people would go to Nicaragua, since it was still \u201cdrug-ridden and dangerous.\u201d\u00a0 The reason I\u2019m telling you this is because people\u2019s perceptions tend to cloud the reality.\u00a0 What was actually happening in Nicaragua was an increase in tourism, new foreign investment thanks to Law 306, and growth in the real estate sector.\u00a0 By exploring new opportunities and thinking across the border, your world expands exponentially.<\/p>\n
I often chat with people in my age range about what their investment portfolio looks like, and many are telling me they are still trying to save for the down payment on a home.\u00a0 When you\u2019re not making 6-figures and still paying off student loans, it\u2019s easy to think in the short-term. Thinking 20, 30, 40 years down the line just seems soooo far away.\u00a0 We hear the importance of contributing to an IRA, but the reality is many of us young people are impatient, and thinking for the long-term is a challenge – especially when there are bills to pay today.\u00a0 But, by cutting back on a few drinks at the bar on Friday night, or not buying that brand new trendy purse, and putting that money towards an investment fund, you\u2019re setting yourself and your family up for a tremendous future.\u00a0 Add on the international component, even if you\u2019re just getting started in \u201cadulthood,\u201d and you\u2019ll thank yourself later.\u00a0 Imagine a hardwood investment that reaches harvest just in time to pay your kid\u2019s college tuition payment.\u00a0 Or a Caribbean beach condo when you need a getaway.\u00a0 By thinking and acting international now, you\u2019ll be well-rewarded.<\/p>\n
One question I am commonly asked, by anyone from Gen X-ers to baby boomers, is about financing options offshore. Let\u2019s say you identify the property of your dreams, only to find out the developer doesn\u2019t offer any financing and you don\u2019t qualify for a loan from your hometown bank.\u00a0 That would be a bummer, wouldn\u2019t it?\u00a0 You can avoid that frustration now by understanding how international financing options work.<\/p>\n
Let\u2019s look at an example.\u00a0 You\u2019re down in Belize looking at wintertime retreats and you identify a beautiful beach condo.\u00a0 You look at the price tag ($300,000 USD for a 2BR), do some calculations, and are excited because you can afford to put 20% down.<\/p>\n
Although the developer doesn\u2019t offer financing and has no relationships with international banks, you plan to finance the rest with your hometown bank\u2026only to go home and have your banker laugh, \u201cOh no no, we cannot finance on property we are not familiar with, especially not in another country.\u201d\u00a0 This is a very typical scenario.\u00a0 Domestic banks will not finance on international property because they have no leverage outside of their jurisdiction.\u00a0 So this leaves you scrambling, not sure if you can make the numbers work.\u00a0 Now what?<\/p>\n
If you don\u2019t have enough liquid cash to put 100% down on a piece of international real estate, there are some options for you.\u00a0 Let\u2019s take a look:<\/p>\n
1)\u00a0\u00a0\u00a0 Typically, domestic banks in the country you are looking to own in won\u2019t finance to you if you are not a resident or citizen of the country.\u00a0\u00a0 Identify an international bank that will loan to foreigners.\u00a0 Do note that interest rates tend to be higher than in Canada or the U.S.\u00a0 It is not uncommon to see 10-13% interest.\u00a0 My suggestion would be to put down as much as you can, finance the remaining (typically up to 50% loan-to-value, NOT 20% down), and pay down the interest as your real estate earns $$.\u00a0 If you\u2019re looking at Latin America to own real estate, Caye Bank on Ambergris Caye in Belize is a great option to secure a loan.<\/p>\n
2)\u00a0\u00a0\u00a0 Do you have property in your home country that you can take a mortgage or second mortgage against? If the answer is yes, consider doing that and put that money towards your real estate.\u00a0 Chances are the interest in the States or Canada will be less than the international banking option.<\/p>\n
3)\u00a0\u00a0\u00a0 Get a line of credit from your bank or a private financing group.<\/p>\n
4)\u00a0\u00a0\u00a0 Look for developer financing.\u00a0 If you\u2019re doing this, make sure you do your due diligence on the company to make sure they are stable enough to offer financing.\u00a0 I have seen many developments go under, even after a great amount of sales, because their 0% down, 0% interest, 0% everything backfires and they don\u2019t have enough to sustain their development.<\/p>\n
When you understand and acknowledge that there are options for you, it makes your dream to own international real estate, whether for cash-flow or lifestyle, a lot more attainable.<\/p>\n
Today, owning beachfront real estate is not just for the top 1%.\u00a0 And having an international bank account doesn\u2019t mean you\u2019re trying to evade taxes.\u00a0 Being international means having opportunities at your fingertips, no matter where in the world you end up. Plus, wouldn\u2019t it be fun to invite your hometown friends to your out-of-country pied-\u00e0<\/em>-terre?<\/p>\n Any questions pop into mind? Feel free to reach out.\u00a0 I\u2019d love to hear what you\u2019re up to.<\/p>\n And if there are any international real estate financing tips you\u2019d like to share for new international property owners, send your suggestions over and we\u2019ll post them next week!<\/p>\n <\/p>\n\n\n\n\n\n\n","protected":false},"excerpt":{"rendered":" Chances are, growing up you never heard your parents or grandparents talk about investing internationally\u2026and if they did, congratulations. You\u2019re in the minority.\u00a0 Growing up I heard all about stocks, bonds, the money market, and my grandfather\u2019s (nightmare) apartment buildings in upstate New York and Queens.\u00a0 When I mentioned to my family and friends that […]<\/p>\n","protected":false},"author":425,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"footnotes":"","_jetpack_memberships_contains_paid_content":false},"categories":[3],"tags":[],"yst_prominent_words":[2274,22186,1716,22188,1882,9619,16540,15146,3891,1764,2577,18279,5506,2544,2336,22187,2100,1878,22189],"acf":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/12518"}],"collection":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/users\/425"}],"replies":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/comments?post=12518"}],"version-history":[{"count":1,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/12518\/revisions"}],"predecessor-version":[{"id":12519,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/12518\/revisions\/12519"}],"wp:attachment":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media?parent=12518"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/categories?post=12518"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/tags?post=12518"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/yst_prominent_words?post=12518"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}