Owning real estate in another country can generate significant income. Depending on what you buy, your overseas property can help you increase your savings or provide a steady income. Learn about the basic rules and strategies for making money from overseas real estate

Buying real estate abroad is not only an opportunity to diversify your assets, but also a good way to provide yourself with a stable income.

However, when investing in international real estate, remember that you make money not when you sell the property, but when you buy it. Therefore, you can get the maximum profit only if you choose the right type of housing.

How to make money on foreign real estate? Useful strategies for maximum profit further.

Basic rules for earning money on foreign real estate

Before buying real estate in any country, make sure that your investment meets the following rules:

1. You buy a profitable option at a favorable price.

2. The selected real estate is sold in the market where you expect an increase in housing prices.

3. You have a clear idea of your exit strategy even before purchasing the property.

In addition, in order to get the maximum profit, the following important points must be taken into account:

1. Balance location and price

Undoubtedly, the location of the object is of key importance when buying real estate. However, it is also important to balance location and cost. Buying the most expensive property in a great area can put an investor at a disadvantage when it comes time to sell, having to compete with lower-priced properties that are further away from key attractions.

Therefore, look for real estate whose price is lower than the average for the region where you are investing. This move will help increase value and provide an opportunity to enter a wider market at a time when you have to resell.

2. Style of the real estate object

The style of the property is as important as its location. However, unfortunately, style is a matter of taste, and it is unfortunately impossible to predict the preferences of your future buyer. This is why investing in a custom custom home is a bad idea, especially if your exit strategy is to resell.

3. Quality of construction and decoration

It is also important to take into account the quality of real estate. If you plan to rent out housing and later resell it on the local market, then the quality of construction and interior decoration should not exceed the expectations of local residents. However, if you're buying with a view to renting or reselling to a foreign buyer, then it's worth buying something built to expat standards.

4. Size of the object

To get the maximum benefit, it is also important to consider the size of the home before buying. You may find a good deal on a five-bedroom apartment on the property market, but the rental or resale demand for this type of property may be minimal.

Depending on the market and the profile of the potential client for rent or sale, it is better to choose more standard sizes of real estate with one or more bedrooms. For example, in vacation or resort areas, two-bedroom apartments are most common.

5. Analysis of supply and demand

When making a decision to buy real estate for rent, the existing demand in the selected region should play the most important role.

6. Portrait of the future buyer

When investing money in real estate for the purpose of further resale, it is important to understand the portrait of your future buyer. It is best to buy real estate that can find its owner among one of these groups:

- The investor will pay attention to the potential for growth in the value of the real estate object and possible earnings. This rule applies to any type of property (real estate for rent or resale, agricultural investment or land for future development, etc.).

- Buyers of a second home - the main priority of this category of customers - location, ease of access, style and size of real estate. They usually do not pay attention to the investment potential, but it can help the client make a decision.

- Expats are emigrants who move to a new country for permanent residence (for work, retirement, etc.). This category of buyers may have a limited budget, so for these customers it is worth choosing housing at a price below the average on the market.

- Local residents - usually do not buy housing in resort areas or closed villages. So if local residents are part of your future buyers, consider access to public transportation, parking, and nearby amenities like restaurants and grocery stores when choosing a home.

Few markets attract all four types of buyers at once, but if you find one, it will be much easier for you to resell your home even when the market is down. All four categories of customers can potentially be accessed in large cities that are economic and tourist centers: Istanbul, Paris, Buenos Aires, etc.

Useful expert advice

Anton Taranenko is the founder and CEO of Visit Ukraine and Visit World online platforms and the owner of the international development company AntaGroup:

Before investing your capital in foreign real estate, it is important to conduct thorough market research, assess risks and consult with experts.  To minimize risks, trust only trusted developers who already have several commissioned properties without any problems or delays. Also pay attention to checking the documents and reputation of the developer.

There are two main ways to generate a return on investment in foreign real estate: 

1. Renting

A fairly popular way to make money on foreign real estate is to buy a property under construction or a finished home and rent it out on a short- or long-term basis. A long-term lease does not require your constant involvement and carries virtually no risks. A lease of 1 year or more is considered long-term. Anything less is short-term. Apartments, rooms, or your own hotel room can be rented by the day or even by the hour. Compared to a long-term lease, the income often increases by an average of 2-5 times. For short-term rentals, apartments in the city center and in tourist locations are especially popular. If you don't have enough time to personally control the process of renting out real estate, you can manage it remotely - with the help of an agency, management company or hotel chain.

2. Resale

Investing in real estate abroad can be profitable through resale. It is better to choose the option of buying an object at an early stage of construction - the income from resale after the object is put into operation is much higher. But it is imperative to invest in markets that are growing or have good tourism potential. Be careful when choosing an object - location, quality of construction, availability of infrastructure. The value of the property will depend on these factors in the future.

Strategies for earning money on real estate abroad

Most investors choose one of the following strategies to make money on real estate abroad:

1. Investing in real estate for short-term or long-term rental

The investor buys housing for further renting it out, you do not plan to live in the selected property permanently, only from time to time you can use this place for vacation. However, if you are looking for a short-term rental, you should avoid staying in the high season, as this is when you will earn the highest amount of money per night.

You can perform the duties of a landlord yourself, but for this you need to live close to the property, or you can refuse unnecessary trouble and use the services of a management company. Even if you take into account the management fee of 20% to 30%, you can still get the maximum profit, especially if you choose an experienced company.

Examples of profitable turnkey investment offers:

- Premium class apartments in a modern 5-star hotel complex with unique infrastructure - ANTA Residence Canggu, Canggu, Bali Island, Indonesia. The price starts from $135,000 for a studio apartment with an area of 38 m². There are also deluxe-class housing (from $227,000 and an area of 68 m²) and suites (from $265,000 and an area of 80 m²). It is possible to return the investment when renting real estate in 5-6 years.

- HASAN BEY RESIDENCE business class complex, Antalya, Turkey. The price of apartments with an area of 53 m² or more (1 bedroom, 1 living room with kitchen, 1 bathroom) is €160,000. Duplex layout 4+1 (4 bedrooms, 1 living room with kitchen, 2 bathrooms) - area from 126 m², price from €307,000. The estimated return on daily rental is 9.8% per annum.

- HMG GOLD RESIDENCE, comfort-class complex, Antalya, Turkey. A complex of 20 apartments with high-quality business class decoration, in the historical center of Antalya and 3 minutes from the Mediterranean Sea. Planning 2+1 (2 bedrooms, 1 living room with kitchen, 1 bathroom, 2 balconies) - area 70 m², price from €169,000. The estimated return on daily rental is 9.8% per annum.

2. Investing in real estate at the construction stage for further resale

Investing in an unfinished project can help you make more money in the long run. Objects of new construction are purchased directly from the developer. Most often, they are built in the most popular locations, which will facilitate faster resale. Also, the complexes have a convenient infrastructure that the secondary market cannot boast of. Another advantage is low maintenance and repair costs.

Examples of profitable investment offers:

- Premium class apartments in a modern 5-star hotel complex with unique infrastructure - ANTA Residence Canggu, Canggu, Bali Island, Indonesia. The price starts from $135,000 for a studio apartment with an area of 38 m². The projected increase in real estate value after construction is completed is 25%.

- HASAN BEY RESIDENCE business class complex, Antalya, Turkey. The price of apartments with an area of 53 m² or more (1 bedroom, 1 living room with kitchen, 1 bathroom) is €160,000. Duplex layout 4+1 (4 bedrooms, 1 living room with kitchen, 2 bathrooms) - area from 126 m², price from €307,000. Profitability from resale - 20%.

- HMG GOLD RESIDENCE, comfort-class complex, Antalya, Turkey. A complex of 20 apartments with high-quality business class decoration, in the historical center of Antalya and 3 minutes from the Mediterranean Sea, for living and profitable investments. Planning 2+1 (2 bedrooms, 1 living room with kitchen, 1 bathroom, 2 balconies) - area 70 m², price from €169,000. Profitability from resale - 20%.

3. Purchase of real estate with a guest room

An investor can buy a ready-made bed and breakfast hotel, a boarding house or a house that has a separate guest house on its territory. The advantage of this type of real estate is that the entrepreneur can live on the territory and rent available rooms on a daily basis. A guest villa creates additional income and is an ideal place, for example, for early retirement. The main thing is to choose tourist attractive locations and familiarize yourself with the laws of doing business in the chosen area.

4. Investment in a turnkey microfarm

Agricultural investments are excellent options for investors looking for above-average returns. You buy a ready-made agricultural enterprise - you become the owner of a plot of land, planting, processing and selling crops are also carried out on your behalf. This investment will provide you with a projected annual profit of €2,000 to €15,000.

Investing in real estate abroad is a profitable investment that can provide you with a stable income. The main thing is to choose the right place for investments. For example, Turkey and Bali are the most popular tourist destinations in the world. The annual influx of tourists provides stable demand for real estate and hotel services, which creates prospects for successful business operations. The states have good seasonality, a constant tourist flow and an attractive investment climate. These factors provide investors with the most favorable conditions for obtaining income from investments.

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Daria Rogova, Head of Insurance at Visit World

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