Before You Invest in Foreign Real Estate, Answer These Three Questions

It was a project based in Honduras – a master-planned residential development, if memory serves.

I had already worked on a few local projects, but this was the first time I had ever worked on anything international.

At the time, I didn’t know much and had very little practical experience with such things. But I learned fast and really enjoyed it.

Then, when I was formally recruited into this industry in 2009, a lot of those efforts were put on hold.

Until relatively recently, that is. Because although I joined The Nestmann Group in 2013, it wasn’t until the last few years that foreign real estate became a major focus of our planning work.

Working on so many deals woke up my interest in international real estate. So earlier this year, I put out to my network the desire to invest in a property.

Since then, I’ve had quite a few deals sent my way. But one in particular looks very interesting… so much so that we’ve formally started due diligence.

What Makes a Deal Worth Pursuing?

But the larger question is – what made it interesting to me in the first place?

Well, just like we recommend to clients, I started this journey by answering these questions:

• Why am I investing? What’s the goal? Cashflow? Personal use? Something else?
• How do I plan to achieve those goals? A development project? Buy and improve a building? Invest in a fund?
• How do my beliefs, biases, and preferences fit in? Where should it be? What interests me most? How long am I willing to commit my funds for?

Different Goals Lead to Different Decisions

For example, if my “why” was strictly about making the most of my money, I would make different decisions than if I was investing for personal use.

If I preferred to make the most return for the least amount of hassle, I would probably avoid direct title and instead look to a limited partnership – I put up the money and leave the responsibility of managing it to someone else.

And if my preference is for a good “bug out” location far from global conflict, I’m likely to spend more time looking at a place like New Zealand than the Middle East.

Too few prospective foreign property investors seem to give this a lot of thought. But it’s important.

There are many, many opportunities out there. Being clear about what you want and what you’re willing to do about it helps you filter down the list to something designed to fit you perfectly.

P.S. If you’re interested in following along with my due diligence process, I’ve decided to make a case study out of it as part of our Nestmann Inner Circle membership. If you haven’t tried it before, or for a while, it’s really worth a look. You can learn more here.