Owning investment properties abroad is a popular investment strategy for those that like to invest in real estate. There are distinct advantages to this type of investment because your money can be diversified, be a passive source of income and allows you to have a few vacation perks as well.
One of the big advantages of this strategy is that you can diversify your holdings. When you put money into domestic real estate, your investment might go well. However, there is a chance that the entire domestic real estate market could suffer. When this happens, all of the real estate that you own will decline in value and it can be very difficult to sell your property. When you spread your money around into different real estate markets, you can avoid this problem. Many times, when the United States economy is doing poorly and the real estate market is down, other countries will still have a booming real estate market. The other properties will continue to increase in value and will bring up the value of your total portfolio even if the domestic market is not looking good.
2. Passive Income
This investment strategy also can provide you with passive income. When you set up an investment property abroad, you can bring in consistent money from rent. The best part is, you do not have to manage the investment yourself. You can hire a property management company to do everything for you. They will take care of the house and hire people to mow the lawn, take care of maintenance and repairs and collect rent for you. They will send you the rent check every month and you will not necessarily have to do much of the work. This is a type of investment that is ideal for individuals who are close to retirement and only need a passive source of income.
3. Free Vacation Accommodations
Another bonus that comes with owning investment properties abroad is that you can have free accommodations when you want to go on vacation. When you own property in desirable locations around the world, you can simply stay at one of your properties. You do not have to rent or get a hotel room. In some cases, when you stay at a property long enough, it can help out with the tax situation as well.
The residence might qualify as a second home which could shift the tax burden in your favor. Some countries allow you to deduct mortgage interest on your taxes on properties that are considered second homes. This means that you can still bring in rental income and you could potentially lower your tax bill at the same time just by taking a vacation. Many people like having a house waiting on them when they travel instead of going through the process of checking into a hotel.