International Property The Wave Is Here by Luke Chadwick

Beachfront retreats in the Caribbean call like modern sirens, charming Tuscan villas lure with views of lush olive groves and ancient towns. While traveling abroad, who among us hasn't been tempted to splurge on an exotic vacation home or investment opportunity?

But international real estate is more than an impulse buy, or it should be if you're smart. Certainly, savvy investors are and have started to invest off shore as growth rates in some countries hit triple digits. Mostly those investors have found these opportunities not merely by luck, but through research, planning, and moreover through relationships.

Along with the appeal of owning a second (or third, or fourth) home, there are pragmatic reasons for buying abroad. It can be a way to diversify an investment portfolio or provide rental income. Buy in Dubai, and you automatically receive a visa that permits you to do business there. Some international purchases made a decade ago would be considered very wise today.

Buying property abroad does come with some potential pitfalls however, depending on the risks investors are willing to take. Whilst many of the most popular investment markets are considered safe bets, other regions are on slightly shakier ground. In this article we’ll take a look at property investment abroad and some factors to consider that property investors might want to take into account before choosing a destination within which to purchase.

Whilst property virtually anywhere is almost always a sound investment, some areas simply offer more stability and chances for return than others. Some of the factors to really consider closely before purchasing property abroad include:

Government stability and foreign relations. This factor should be carefully considered before investments are made. Purchasing in countries where major political issues exist can prove counterproductive. This is especially so if regime changes threaten to negate foreign buyers’ property rights. Closely examine the governmental climate and foreign relations prior to selecting a destination.

Purchasing restrictions. Not all foreign countries welcome investment from outsiders. Carefully look at the buying restrictions and the regulations that govern their property market. Not all countries allow the same buying privileges afforded to locals, for example in Australia where a foreign investor can only purchase new property in developments of 2 or more units, and then, is only allowed to purchase a maximum of 50% of the development. A good indicator of a welcoming market is the presence of foreign financing from an international lender such as HSBC.

Market stability, growth potential. If a relatively safe foreign investment is desired, stability of the real estate market will be of high concern. Growth potential or rental yields should also likely come into play. The potential in newly established markets can be very high, but there is no track record to lean on for comfort. This doesn’t mean these are bad investment locations, but certainly some forethought must go into its long term viability through careful market analysis and in some cases inside information.

Tourism industry. This is a very strong factor that can make or break the income potential for some markets. Look for markets that are strong and continue to retain growth in their tourism figures if lower risks are desired.

Atmosphere. The overall attitude of the people toward holidaymakers, ex-pats and investors should likely come into play if a safer investment is desired. Since atmosphere can greatly impact tourism, many investors seriously consider the culture and its nature when selecting locations to buy property abroad.

Buying property abroad is becoming a very popular trend that has the brave of heart earning a ton of money. Taking the time to carefully research markets and the potential risks can help buyers match risk levels to their own desired styles of buying. Not every market is going to show incredible returns and some show better potential and security than others.

Another consideration is currencies. Currencies can slide, taking with them the value of overseas investments; political changes can affect ownership laws; and the buying process can be complex and confusing. So while it may seem like a lark, international buyers should put even more care and thought into purchasing internationally than at home.

You should make no assumptions whatsoever that the system is like your own. Everything from how it's marketed, to the tax system can be different. There are some principles that should be followed when buying real estate anywhere. It is common sense to make sure that the person selling you your dream home--whether it's in Miami or Mexico--has full title to the property. Check that the company behind that new development in Thailand or Toronto has a rock-solid reputation.

Every country has different rules and conventions. This means prospective buyers need to take a number of issues into consideration, including ownership restrictions, tax ramifications, development regulations, currency issues and political climate…before they fall in love with a home.

There are no statistics available on the number of people who buy real estate abroad however it is clear to see that international markets are burgeoning. Overseas home ownership by British households rose by 95% between 1993 and 2003, according to a recent report and the trend for US buyers is definitely on the rise. Buyers have been encouraged by increasing affluence, as well as by a travel industry that has made the world easier than ever to explore.

But before you jump into a deal, it's smart to get to know a place in more than a passing fashion. Prospective buyers should take a trip to an area and rent a house instead of staying in a resort. Real estate is very local, you require enormous local information about the investment--it is not like simply buying into a mutual fund of overseas companies.

Speaking of real estate being local, this is where it is important to note that you should always use a licensed professional. Did I mention using a licensed professional? I cannot over state this enough as you’ll need the expertise of your professional while you are an absentee owner and furthermore you’ll need a team of professionals in your market of choice. Tax professionals, legal representation, mortgage brokers etc. etc. will need to be found in order to have you navigate the international investing waters safely.

Check whether you are legally able to own property as a foreign national. Until a few years ago, foreigners could not own in Dubai, Mexico's constitution bans foreigners from owning within 30 miles of the coastline or 60 miles of the U.S. border. So, until a dozen years ago, ownership was only permitted through a 28-year trust. The regulations have been relaxed; though foreigners must still own through trusts, they now last for 50 years and can be extended indefinitely.

The great news is that it is not all doom and gloom and in fact many countries ownership rights are every bit as favorable as the US and in some instances they are even better. The fact of the matter remains that real estate is a cyclical business and no matter where you reside or where you may be looking to invest there will be ups and downs in the market. Currently we are experiencing a very noticeable softening of the market in the US, which has come on the back of one of the best real estate markets in its history and one that with time will bounce back accordingly. Likewise we are seeing a great opportunity for growth in the Central American market with Belize for example that for many years has seen next to no growth at all.

Timing is everything in a market and it is important to look at where a market is in terms of its cycle. You certainly don’t want to be getting in right at the top of the curve if for investment reasons, but you’ll always want to make sure that the timing makes sense for you as an investor.

Foreign property ownership not only is an increasing trend it is emerging into a tidal wave. The smart money has already caught that wave and is cashing in already. Do yourself a favor and take a good hard look at what international property ownership could do for your portfolio. I’m sure you’ll be amazed at its potential and when executed correctly, its rewards.