The Property Battle—Old Country House Vs. Return On Investment
On the surface, buying an investment property overseas may seem like a straight-up business transaction. But things are rarely that clear-cut…
I’ve hosted conferences on living, retiring, and investing in real estate overseas for more than 30 years. And, in my welcome address on the opening day, I’ll usually ask the crowd a series of questions…
First: “How many of you are thinking about buying property overseas for investment? A few hands shoot up.
Then: “How many of you are considering purchasing a retirement residence in another country?” A flurry of hands in the air.
Finally: “How many of you would like what I’d term a ‘second home overseas,’ a place you intend to occupy, full- or part-time, in retirement or sooner, if possible, but that you hope could earn some income when you’re not using it yourself?” At the suggestion of this, practically every person in the room raises his hand.
These folks seem to understand something that it’s taken Lief and me more than three-dozen property purchases in 21 countries to figure out. Buying real estate overseas makes so much more sense when you do it as part of a bigger-picture plan.
How I Accidentally Became An Overseas Property Investor
I didn’t set out to become an overseas property investor. It happened by accident and organically. When my husband of but three months, my 8-year-old daughter, and I arrived in Waterford, Ireland, 23 years ago, we needed a place to live. I like old houses the way some women like new shoes and was drawn to the idea of owning an Irish Georgian-style house in the country—a place surrounded by rolling green fields dotted with roaming sheep and spotted cows and bordered by low stone walls and tidy hedgerows. My new husband didn’t object, and, after a search that extended nearly a year, we purchased Lahardan House, a 200-year-old stone house on 6 acres that became our first home as a new family.
Lahardan House was where my daughter Kaitlin, born and raised to this point in Baltimore, Maryland, struggled with the transition to our new life overseas and where we welcomed our son, Jackson, born in Waterford just two months after we’d moved in. It was where Kaitlin learned to ride a pony, in the front pasture, and where Jackson learned to walk, in the forever muddy back garden. Lahardan House was our first overseas renovation adventure. The old stone house was dripping with damp, its timbers riddled with rot, when we bought it. In time, we transformed it into a comfortable and cozy home kept warm and dry by the big Stanley stove in the kitchen.
Lahardan House was also our first overseas property success story… and, not just from a financial perspective. More important, our experience with Lahardan House taught us the fundamentals related to buying and selling real estate overseas that we’ve learned to respect most, key among which is this: The best purchases are made with your calculator, yes, but also with your heart.
Georgian Country Manor Vs. ROI
When Lief and I went looking for a house to buy in Ireland years ago, I was shopping for rolling green hills, centuries-old stone walls, tumble-down outbuildings, and classic Georgian symmetry. He was shopping for cost per square meter, rate of appreciation, and projected ROI. Today, dozens of often conflicted purchases later, we finally understand that the secret to success in buying and selling real estate overseas is recognizing that each of these seemingly competing perspectives is important and that each deserves equal weight in any buy decision.
After we sold Lahardan House, we took those proceeds, added about 20% to them, and reinvested in an apartment in Paris. For our money, we got less than one-quarter the space we’d enjoyed in Ireland. Not a sensible exchange of values, you might say, at least not if you’re evaluating the transaction using your calculator alone.
We were moving to Paris so that our daughter could attend her final three years of high school in France and so that our little family could, meantime, sample life in the City of Light, a dream of mine since I was a young girl. Certainly, under those circumstances, we could have rented a place to live. We didn’t need to buy an apartment for our time in Paris, and, as I said, on the face of it, going by the numbers alone, buying an apartment in Paris didn’t add up. Yet that’s what we did.
Now, in retrospect, I can say that the apartment we purchased in Paris’ 7th arrondissement has proven, like Lahardan House in Ireland, to be one of the most successful investment decisions of our careers, again, we understand now, because it wasn’t made for investment reasons alone.
The Cornerstone Of Our Retirement
When we made our third international move to Panama, we were able to rent out our Paris apartment—and return to use it ourselves whenever we roamed through Europe. It has evolved into one of our most valued assets, in part because it’s worth at least twice what we paid for it, but also, more important to us, because it has become the cornerstone of our retirement.
We didn’t purchase this apartment as an eventual retirement residence. However, the more time we spent living in Paris, the more we liked living in Paris. Finally, Lief and I agreed that we’d always like living in Paris, that this is a place we’ll always want a chance and an excuse to return to. The apartment we bought to live in while our daughter finished her high school education and that we’ve held on to for part-time living and cash flow from rental income ever since, thereby, was transformed, organically, into a piece of our long-term retirement plan.
My point is, in most cases, as you explore your real estate options overseas it’s impossible to separate your personal and your business agenda completely.
Nobody I know understands this better than Latin American Correspondent Lee Harrison. Lee—who’s been living and investing overseas for nearly two decades—looks first for a place where he would enjoy spending time… then he researches the practicalities of investing in the local market.
Certainly, for a first-time investor, Lee’s is a good model to follow. This way, if the local market goes against you, you’re still invested in a place where you’re happy to spend time. You’re in it for the long term… and are willing to wait for things to climb back up. You’ve minimized your risk.
Where Do You Start?
Of course, I’m just scratching the surface here. There is so much more you need to think about as you consider your options for buying property overseas… from where to find the best value (in a market that makes sense for you) to how to protect yourself from falling into the traps that have caught out many a foreign buyer (including Lief and me back in the early days).
This is why we host our Global Property Summit every year… not only to educate you on the best markets to consider in the world right now… but to help you understand everything you need to be aware of in each market for a safe, legal, and straightforward purchase.
Having the right help at hand is key to your success. And, over the three days of this year’s Global Property Summit, you’ll have a chance to network with trusted professionals who can provide you with all the local knowledge you need… and who can help guide you through your property purchase.
This year’s event takes place in Cancún, Mexico, May 13–15. And, as we open registration this week, we have a limited number of complimentary VIP packages… available only to the first 40 readers to register.
Kathleen Peddicord
