Diversify your investments

The key to making money in international real estate is diversification and not putting all your eggs in one basket, according to a global federation.

There are 193 countries where it is possible to invest and if you spread the risk you can optimise your potential for return, says Tyler Clay, president of the US Chapter of the International Real Estate Federation.

'Real estate markets are cyclic. We may have a down-cycle in the US at present but there are excellent opportunities in Argentina or Europe which are at the beginning of an up-cycle,' he said.

As well as keeping an eye on global markets another key make or break issue is currency, he points out. Exchange rates can enhance or impede profit margins.

'If I buy now at €1.54 on the dollar but I think the dollar will be a little bit stronger five years from now, that's going to eat into my returns,' Clay said.

He also advises that legal technicalities may increase risk. 'Navigating the legal landscape of a foreign real estate market can be daunting, especially in developing countries that have only recently opened their property markets to limited foreign investment. For markets in China and Southeast Asia, for instance, foreign investment and real estate ownership laws are changed or added to rapidly, as their respective governments try to stabilize their growth,' he points out.

Some countries, such as Vietnam, limit the amount of currency that can leave their borders.

Another consideration is popularity of location. He reckons countries such as Mexico and Panama are becoming popular among American expatriates, especially retirees, largely for their lower cost of living.

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