Pros & Cons Of Flipping Houses Overseas
How do you define success as a property developer?
The answer to this question is actually rather simple: success is defined in monetary terms. If you’re making a profit, then you’re doing well.
Of course, the process of actually making a profit can be a long and arduous one. Property is expensive, and prices keep rising on the back of an economy that is doing better than expected. If you want to flip houses in the USA, it’s becoming more and more expensive to manage it.
As a result of this, many developers find themselves turning elsewhere, and wondering about the potential in the overseas market. This seems like a good option on paper, but can it really be a way of securing the financial benefits you need to consider the venture a success?
Before you jump in and buy a property abroad, it’s important to cover the pros and cons. The below are presented without preference; just an overview that should then enable you to make the right decision for yourself. If you’re contemplating buying investment properties overseas, the below is a must-read.
Pro: The Initial Purchase Cost Is Cheaper
The biggest benefit, and the one that tends to convince people that buying overseas is a good idea. House prices outside of the US, and particularly in eastern Europe or Asia, are incredibly low when judged at US rates. The average cost of an apartment in Ukraine, for example, is around $30,000, while you can read through rumahdijual.com/malang/ to see just how inexpensive Indonesia can be.
The lower prices outside of the US means that your money will go further, and could potentially deliver a better return. This is especially true if the dollar is strong and you are buying in a local currency.
It is also worth noting that these prices are accessible. The Ukraine apartment mentioned above is in Kiev, the capital. The average cost of an apartment in Washington DC is around $400,000. If you have a small amount of capital and want to invest, then overseas is almost certainly the best option for you.
Con: You Don’t Know The Local Market
Buying overseas is about taking a risk, going on your gut instinct, and picking an area that you think looks like a good deal. As you’re not familiar with the area, there’s no guarantee that it is a good deal– you’re having to go on the numbers alone. You don’t live in the area, or speak the language of the newspapers, that can help you identify the up-and-coming neighborhoods or know what might be a bad deal.
The best way to counteract this is to take great steps to educate yourself about the area you are considering buying in; translate.google.com can help you navigate any language issues that you experience along the way.
Pro: You Can Rent Out To Holidaymakers
Conventionally, flipping houses has meant buying the house and then selling it on at a profit after development work. However, if you buy overseas, then the holiday rental market can become lucrative.
You will need to change the way you think about a property if you’re looking to buy for the purpose of renting, which you can learn more about here on flippinghouses101.net. Ideally, you want to find a property that requires a minimum of work, so you can start collecting your rental yield as quickly as possible.
Con: You Will Incur The Expense Of Traveling To The Country Frequently
In a world where the internet is capable of allowing us to do so many different things, it might be tempting to think that you can manage the purchase, renovating, and selling/renting of a house without having to travel too often. However, this is unlikely to be the case.
You will need to make several trips out to the country you have chosen to purchase property in. There are viewings to take care of, the legal signing (which often requires in-person signatures), renting to tenants, maintenance… the list goes on and on. While many of these things can be managed online, you will swiftly discover that you need to be there in person more than you might originally anticipate.
It’s vital that you plan your budget carefully to accommodate these trips overseas, or you could find yourself struggling to make ends meet when you were actually meant to be improving your financial situation.
Pro: You Diversify Your Assets
When you invest in the US, live in the US, ply your trade in the US, then your finances are very focused… in the US. If the US economy collapses for some reason, your entire portfolio and investments for the future are in jeopardy.
Investing overseas is one way to ensure that you have an asset, some part of your portfolio, that is separate from the rest of your financial dealings. This acts as a kind of surety; a protection against the volatility of being invested in a single country.
Con: The Country You Choose May Be Unstable
Of course, this is the other side of the coin– the country you choose to invest in may experience an economic shock too, one so severe it sinks your business. One of the reasons property is so inexpensive in certain parts of the world is due to a weak economy, which is great on one hand (as it saves you money) but contains an element of risk on the other.
The best way to counteract this is to do your research about the country you choose, looking beyond its housing market and focusing on its overall growth, productivity, and political peace and stability. If a country has struggled of late, then it may be better for your financial future to look elsewhere; you might be tempted to snap up a bargain, but you could see that crumble to nothing if you take a chance on a volatile country.
As you can see, there are pros and cons to the decision to invest overseas, but hopefully the above will help clarify the situation– and allow you to make the right choice for your future property dealings. Good luck.