How to Get Paid to Buy Property in Paradise
Contents
- The Most Common Myths (That Carry a High Price)
- “You’ll start making large profits from Day 1.”
- “Buying in your own name is the simplest way to go.”
- “Online ROI calculators give you the full picture.”
- “A short‑term rental is the same as buying foreign property for personal use or for long‑term tenants.”
- “Buying foreign property is broadly the same as buying in the US, just in a different language.”
- “You can enjoy a better yield if you buy pre‑construction.”
- The Case for Buying Foreign Real Estate
- #1. Diversification Beyond the US
- #2. Cash Flow Potential
- #3. Lifestyle + “Plan B”
- #4. Cost Advantage
- #5. Long‑Term Appreciation
- So, is it right for you?
- Balancing Investment, Lifestyle, and Plan B
- How We Can Help
- New Service: We’ll Help You Find Your Best Foreign Real Estate
- Sources
If you’ve spent any time looking at foreign real estate, you’ve probably come across headlines like:
“Own a vacation home in paradise and let it pay for itself!”
“Turn your beach house dreams into a cash‑flowing short‑term rental!”
And yes – it’s a lovely idea. Who wouldn’t want a tropical getaway that doubles as a money‑making asset?
But those glossy pitches often leave out the realities of buying and managing foreign property.
Short‑term rentals (STRs) can be profitable, but they’re also complex — even more so when the property is in another country with its own tax rules, property laws, and rental regulations.
At the Nestmann Group, we’ve spent more than 40 years helping Americans invest and sometimes move offshore. We know from experience that foreign real estate can be a smart move — but only when it’s approached with eyes wide open and a solid plan in place.
(In fact, we’re in the process of launching a new service designed to help US investors find, purchase, and manage foreign properties. If you’re interested in learning more, you can have a free look at our current selection of pre-vetted, short-term opportunities here.)
If you’re actively considering buying foreign investment property outside the US – just like many of our clients right now – this article will give you a balanced case… the pros and the cons…
The Most Common Myths (That Carry a High Price)
It might seem strange to start an article about foreign real estate with the downsides. But there’s a method to my madness… So much of what you see on the internet about the subject is written so relentlessly upbeat it would make Pollyanna seem jaded.
So let’s first look at the claims made out there, and then the reality of what we see daily in our work with clients.
Read more: 8 Pitfalls of International Real Estate
“You’ll start making large profits from Day 1.”
Many foreign property ads — and even some agents — claim that short-term rental (STR) income will not only cover your mortgage, maintenance, and taxes, but give you the impression you can start earning a nice side-income from day one.
Although it’s possible if you buy an existing property with an active STR business, it’s not the norm.
Seasonality in tourist markets, unexpected repairs, and local regulations can slash occupancy rates. Even if you make a profit, you’ll need to factor in cleaning, management, booking platform fees, and insurance costs — which can easily eat up 20–40% of gross income.
What we see in practice is that the main difference between a profitable short-term rental and an unprofitable one is a mortgage. If you don’t need one, you might eke out a decent profit. But if you do, most of those early profits go to the bank that floated you the cash to buy it.
“Buying in your own name is the simplest way to go.”
You’ll often hear this from professional real estate agents and pre-construction salespeople eager to close the deal.
It might be simple at closing, but it can create expensive problems later. In some countries, inheritance laws follow something called “forced heirship,” which limits your rights to leave your property to who you want.
The probate process can also take a long time. In some cases in some places, up to a decade. Not the mention thousands (or even tens of thousands) of dollars in legal and administrative costs in the meantime.
And if you do want to fix it later with proper planning, you may run into high transfer taxes of up to 6% (or even more) of the purchase price.
“Online ROI calculators give you the full picture.”
They don’t. They rarely account for often-overlooked costs, like currency risk issues, withholding taxes, compliance and accounting fees, and licensing for STRs.
Without a professional analysis, what looks like a “10% return” on paper may actually net much less.
A developer in Costa Rica recently approached us about promoting their new project. As with any opportunity, we ran it through our due diligence — including using trusted (and expensive) third‑party data to verify their numbers.
They promoted a gross return of 10% a year for owners who rented on Airbnb and limited their personal use to the off‑season. That sounded optimistic, so we dug in. Using the last three years of market data, we compared their projections against reality:
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Their occupancy estimates vs. actual occupancy rates in the market.
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Their nightly rental rates vs. what travelers are actually paying.
Then we matched these figures against the prices they were asking. The result? The most likely scenario wasn’t 10% — it wasn’t even close. Our analysis showed a gross yield closer to 3%. And that’s before factoring in management, maintenance, insurance, or taxes.
Once you include those expenses (not to mention any financing costs), the net yield likely drops into negative territory — meaning buyers would lose money on a strict cash‑return basis.
It’s worth noting that the vast majority of foreign property sellers don’t have any knowledge of US tax and compliance considerations. This matters because, if you’re a US taxpayer, that’s where the planning should be done first; not as an afterthought.
Because of that, they make no provision for US compliance costs. As a result, the promoted net yield is almost always lower than the numbers they provide.
“A short‑term rental is the same as buying foreign property for personal use or for long‑term tenants.”
Many people have been “tricked” into buying a property that wasn’t suited to how they wanted to use it. Buying foreign property for one purpose and then trying to change over later can be complicated.
This is especially true of investment property designed for short-term rental. Most foreign governments see them as businesses, and treat them as such. That can mean special licensing, zoning issues, and sometimes strata issues (strata refers to shared ownership in a building, like a condo HOA).
They also require active management and ongoing marketing, meaning property management costs can be higher.
Properties designed for STR income may also not make great personal vacation homes: they tend to be optimized for turnover, not comfort.
Conversely, long‑term rental properties or vacation‑focused homes may underperform financially as STRs.
Before buying, you need to clarify your primary goal — cash flow, personal enjoyment, or a hybrid — because trying to do all three usually leads to disappointing results.
One of the most important questions you need to ask yourself before buying a foreign property is, “How will I use it?” Until you’re clear about that, it’s best not to invest. Because if you do buy and want to change how you plan to use it later, you might find yourself unable to do so.
“Buying foreign property is broadly the same as buying in the US, just in a different language.”
The process of buying foreign property is rarely comparable. Let’s look at a few key considerations:
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Some countries restrict foreign ownership outright or impose higher taxes on non‑residents.
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Many of the most popular places right now (Mexico, Costa Rica, Panama, Portugal, Italy, Greece, Spain) have something called “forced heirship” that imposes inheritance rules that supersede your will. There are planning options, but you need to be proactive about it.
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Many of the most popular places use a completely different legal system called civil law, which traces its roots to old Roman law. (By comparison, the dominant legal system in the US is common law, which is based on a centuries-old English system.) This legal system is full of concepts unfamiliar to most American investors – like the idea of forced heirship as noted above.
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Title insurance, which is standard in the US, is nonexistent in some jurisdictions, making due diligence far more critical.
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Transparency in general is often far less than in the US. Listing agents often represent the seller exclusively, even going so far as to misrepresent the property they’re selling to potential buyers. (This is, thankfully, rarely the case. But it happens.)
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As far as Uncle Sam is concerned, different rules apply for foreign real estate than for domestic real estate. They aren’t terribly onerous, but they exist and have to be planned around.
This is not just the US in another language — it’s a different playing field with different rules.
Yes, the opportunity is there. But it requires a different sort of planning.
“You can enjoy a better yield if you buy pre‑construction.”
Sometimes. And there are a few real estate firms out there that engineer a so-called “lift” to ensure their investors do enjoy better yields than the broader market.
But most of the time, that’s not true.
The truth is, buying pre‑construction is riskier than most glossy brochures suggest. Developers in many markets overpromise on delivery dates, amenities, and projected rental returns.
Some projects stall indefinitely or are delivered with significant quality compromises.
Swallowed Up by a Sinkhole
Twice in the past year, clients have brought us deals in Mexico delayed by soil stability problems. In one case, a well‑established developer handled the remediation at their own expense — resulting in a six‑month delay, but eventually delivering the project.
In another case, the outcome was a catastrophe: the entire development collapsed into a sinkhole. Two years later, the site is still a wasteland. That client asked if we could help recover their deposit — half of the unit’s purchase price. After reviewing the contract, the unfortunate answer was no.
The lesson? The developer matters. A lot.
Even when completed, pre‑construction properties often enter saturated markets where too many investors had the same idea — driving down rental rates. We’re now starting to see this in certain areas of Mexico that have been quite popular in recent years.
Yes, there are cases where early buyers profit. But those wins usually come from careful vetting of the developer, the local market, and the legal protections available — not from blindly trusting sales pitches.
Common Scams
Unfortunately, the “paradise property” market attracts its share of opportunists. Here are a few of the most common traps we see:
#1. Fake or Misleading Listings
Some “properties” don’t exist at all, or are marketed by someone with no legal authority to sell. Others look great in (sometimes AI-generated) photos, but hide structural problems or title defects.
#2. Bait‑and‑Switch from Real Estate Agents
We’ve seen cases where the “perfect property” that drew buyers in is suddenly “off the market,” replaced by a less desirable (but still overpriced) substitute.
#3. “Massaged” Financials
Projected rental income and ROI numbers are often wildly optimistic. Some agents include peak‑season occupancy as if it were year‑round, or fail to disclose certain expenses like local taxes or special licenses. In the case of owner-operated rentals, it’s not uncommon for the numbers to have no allowances for property management at all.
#4. Hidden Encumbrances
Liens, unpaid taxes, or pending legal disputes may not be obvious to an untrained eye — but they can turn your “deal” into a disaster.
How to Protect Yourself
I don’t list these common problems to scare you off. Rather, to make the point that – just like any investment – independent due diligence is key.
Never rely solely on numbers or documents provided by the seller or their agent. Have an independent professional review title, verify property registration, and check for encumbrances. And always validate rental projections with conservative, third‑party data.
The Case for Buying Foreign Real Estate
For all the complexities, there are good reasons why our clients keep buying property abroad — and why many are glad they did.
#1. Diversification Beyond the US
Real estate in another country can hedge against US market volatility and long-term dollar decline.
In some cases, it can provide exposure to growing tourism or emerging‑market economies that outperform traditional US assets.
Your next read: Investing in Overseas Property for Americans Afraid of US Market Chaos
#2. Cash Flow Potential
In the right market, a well‑managed short‑term rental can generate good cashflow — sometimes better than similar opportunities in the US.
Even with conservative assumptions, the right property can offset ownership costs and produce reliable income.
#3. Lifestyle + “Plan B”
Many of our clients aren’t just buying investments. They’re buying footholds — places they can use for vacations now and possibly as a fallback residency later.
In a world where having options is ever more important, property ownership can often be used to qualify for second residency.
#4. Cost Advantage
In some markets, you can buy a property with beach or historic‑city access for a fraction of what it would cost in the US.
Even factoring in management and travel costs, many buyers find that their “paradise property” provides more value than a comparable domestic option.
I will say that this is harder to find in the most desirable places than even a few years ago. But there are still plenty of opportunities out there.
#5. Long‑Term Appreciation
Well‑chosen properties in growing regions can appreciate significantly, especially where infrastructure and tourism are expanding.
This isn’t guaranteed — no real estate appreciation ever is — but with proper due diligence, the upside potential is real.
So, is it right for you?
Maybe. Here are some key questions to ask yourself:
Checklist: Is Foreign Real Estate (and an STR) Right for You?
Use this quick self‑assessment to decide if buying a short‑term rental (STR) abroad makes sense for you:
- How will I use it?
- Primarily for short‑term rental income (maximize ROI).
- As a personal vacation home with some rental to offset costs.
- As a residency or “Plan B” foothold (immigration/citizenship value).
- A blend of these goals — but I’ve ranked my priorities.
- Am I comfortable with the extra complexity?
- Yes — I’ve invested internationally before and know the challenges.
- Somewhat — I’m willing to learn and work with qualified advisors.
- No — I prefer investments with fewer moving parts.
- Can I manage (or outsource) the operational demands?
- I’ll hire a professional management team to handle everything.
- I’ll self‑manage (either fully or with partial support).
- Unsure — I need to explore costs and options before deciding.
- How does this fit into my broader plan?
- It’s a diversification play — adding international assets to my portfolio.
- It’s part of a lifestyle plan (retirement, travel, or future relocation).
- It’s mainly speculative — I expect appreciation but no immediate use.
- I haven’t aligned it yet with my long‑term goals (needs work).
- Who will help me navigate the unknowns?
- I already have a team of advisors (legal, tax, real estate).
- I’m planning to engage professionals who understand both US and foreign markets.
- I’ll try to handle it myself (and understand the risks involved).
If you aren’t sure about any of these answers and you’d like to get the perspective of one of our Associates, feel free to book in a no-obligation consultation at a preferred introductory rate. You can do that here.
Balancing Investment, Lifestyle, and Plan B
For many buyers, a foreign property isn’t just about ROI. It’s also a vacation home — or even a “Plan B” residency option if they want a foothold overseas. But these goals often conflict.
Properties that deliver the highest rental income may not be in areas you actually want to spend time in. And if you’re buying with an eye toward residency, you’ll need to understand how your purchase fits into the country’s immigration rules — something most real estate agents won’t tell you.
This is where a holistic approach pays off: one that balances income potential with your personal use and long‑term planning goals.
How We Can Help
We don’t sell property. And we have no vested interest in convincing you to buy one. Rather, we help Americans buy foreign property the right way.
That means:
- Identifying markets where STRs are legal, profitable, and sustainable.
- Structuring ownership to minimize taxes, protect your estate, and simplify future sales or inheritance.
- Integrating the property into your broader financial, tax, and internationalization plans.
We’ve spent more than four decades helping Americans move assets — and sometimes themselves — across borders. Today, that experience allows us to help clients buy properties that don’t just look good on Instagram but actually work for their financial and lifestyle goals.
New Service: We’ll Help You Find Your Best Foreign Real Estate
Over the years, our private clients have often turned to us for help in identifying international properties that align with their goals—whether it’s to:
Maximize returns from a short-term rental business.
Qualify for a Golden Visa or other Residency-by-Investment (RBI) programs.
Find a place to enjoy for extended stays or retirement.
We’re now rolling it out to the general public on a limited basis.
Whatever sort of property you’re looking for, we can help you find one that best meets your needs.
Interested in learning more? Feel free to enter your email address below, and we’ll send you a sample of pre-vetted properties.
The Nestmann Group does not sell, rent or otherwise share your private details with third parties. Learn more about our privacy policy here.
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About The Author
We have 40+ years experience helping Americans move, live and invest internationally…
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We have 40+ years experience helping Americans move, live and invest internationally…
