This article offers practical steps on funding a foreign real estate purchase with equity funds.

Foreign real estate presents mouthwatering deals for investors with steep currency differences, especially in today's unstable financial markets; meaning you could have the upper negotiating edge in a neighboring country. The perk in currency strength is however not compensated for by the financial and legal aspects of sourcing funds for foreign real estate investing.

One financing approach which is gradually gaining traction is the use of equity funds. In this case, deploying liquidity of stocks and securities in foreign real estate capital.

There are four approaches you can take when planning to go this route:

1. Employ Equity REITs: Odds are you've heard about REITs and the huge tax rates at the individual investor level. A REIT is generally a stock that invests in real estate or real estate related securities, like mortgages. A mortgage REIT primarily lends cash to real estate buyers or acquires their existing mortgages. An equity REIT acquires, manages, builds, renovates and sells real estate, mostly commercial real estate.

If you don't want to be in the front line and would prefer to play it safe, REITs present a great way to achieve diversification via liquid investment in real estate. Many international REITs have sprung up over the years. So, investing in foreign real estate should be as simple as locating a good REIT that invests in your country of choice or simply using REIT ETFs. However, don't ignore the fact that REITs come with tax liabilities that can range from 15% to 35% of profit. This is compensated for in a way by tax exemption at the corporate level, as long as 90% of income is distributed to unitholders.

2. Self-directed IRA or Offshore IRA: As much as we wish to help you with country-specific information, you should know that real estate laws aren't invariably the same in any two countries. Hence the importance of having a local mortgage expert or real estate agent (read how to find the right local real estate agent) who can help you with local professional information.

For US residents, using funds from your retirement account or 401k is a great way to employ equity funds for foreign investing. The IRS doesn't restrict holding real estate with your IRA. However, according to an article on Supermoney.com, (https://www.supermoney.com/2017/04/finance-overseas-property/), you won't be able to live in the property until you reach retirement age. In any case, you will need to either set up a self-directed IRA, which allows you to invest in overseas real estate via a third party or broker. Alternatively, you can set up an offshore IRA as a way to gain more control, by taking your self-directed IRA offshore. In this case, you move your self-directed IRA into an offshore Limited Liability company. Setting up an offshore IRA can, however, be costly.

3. Stock Market Liquidity: You can employ liquidity on your stock market investment or securities, subject to tax, by selling your holdings. This presents you with cash to invest directly in foreign real estate.

4. HELOC (Home Equity Line of Credit): For home buyers in countries like the USA and Australia, a HELOC allows you to take a loan on an existing home by cashing on real estate equity.

Buying real estate with equity funds is completely legal and carries no extra charges or taxes. However, ensure you report financial proceedings to necessary financial authorities in your home country.

Also, if you're either buying overseas real estate for investment or personal use, reach out to a local real estate agent that can offer market-specific information about taxes for your destination country.

This article explores seven basic reasons why people nurture the dream of owning foreign property

The ebbs and flows of foreign property rules in many countries have caused an influx of foreign buyers into their real estate markets. The current trend is that many countries are more accepting of foreign property buyers, unlike before. In some countries, like Australia, it is becoming a malaise, where the overpowering of foreign currency is causing an affordability crisis for residents. Hopefully, this would balance out soon. But, the fact still remains that more people are drawn to global property. In many cases, when countries have modified their laws to be more accommodating to foreign buyers, there have been real estate boom. The historical constitutional change of Thailand's foreign property laws in 1979 brought an influx of foreign investors and few months later, Thailand began experiencing its first real estate boom.

Motivations For Buying Property Abroad

It's not just about wanting to fulfill the lust for adventure. Recently, there have been an increased number of British buying foreign properties. Many of them buy for many reasons, let's just examine three:

·         Cost. Will you buy a house in Britain if you can buy two houses for the same price in Brazil? The principal motivation is pricing. The appeal of buying property abroad lies in the fact that you can buy a home conveniently and still have enough money left to have a whale of a time in your chosen country. For most people, cost is the strong motivation for buying overseas.

·         Possibility of an investment. Some property investment hotspots abroad are experiencing influx of foreign buyers. While these areas may not be the first choice for people who want to slash price in half; it is a catch for those who are seeking investment opportunities.

·         Second home. A personal reason for buying property abroad is to own a vacation property. For many affluent individuals, having a place, maybe a seaside location in Turkey to retire from the hustle and bustle, is important. With lower cost of living and interesting destinations, expats can live the good life abroad. These vacation properties also offer sound return on investment.

Benefits Of Buying Property Abroad

Broadly speaking, let's take a quick look at the 7 benefits of buying property abroad:

1.      Diversify your portfolio.

Buying property abroad is a great way to diversify your portfolio. Having all your investments, stocks and all, in your country of Birth, is like putting your eggs in one basket. Also, you can invest in a hard asset, real estate, which is proven to be more reliable than stocks.

2.      Diversify currency. Having all your investments denominated, in your local currency, is also 'putting your eggs in one basket'. You don't want to be at the mercy of the local economy.

3.      Reinvent your life. Apart from building your net worth, owning a home abroad is a way to gain a rich cultural diversity and more momentum, especially during retirement.

4.      Own a second home.  Instead of spending your life savings on a second home, buying a second home abroad can be 5 times cheaper. There could also be a chance to make good vacation rental income as your vacation home increases in value.

5.      Retire overseas. You can take advantage of the low cost of living abroad to enjoy your retirement.

6.      Tax deductible travel. In the US, the cost of traveling to manage your overseas property is tax-deductible.

7.      Earn income. A rental income overseas will generate an income that is not determined by your citizenship country's economy. For instance, rental returns in Medellin, Colombia can be up to 10% and the cost of property ownership there is low.

Buying property abroad is a smart move. But, anybody who wants to take the plunge must be ready to put in work. Don't just expect to sit and wait for your property to grow in value. An investment in real estate requires active and ongoing management.

This article explores the advantages of buying preconstruction homes overseas, the risks involved and some precautions to take.

The Advantages of Buying Preconstruction Homes

Buying preconstruction homes definitely offer great advantages. First you get to CHOOSE! You don't just settle for any kind of property; you can select design features and specifications. You can actually be involved in the design of your new investment. If you're a property specialist, you will be able to tweak some features and make the home desirable to prospective tenants.

Also, these kinds of properties offer the best deals. You get the lowest deals on pre-construction homes within the first two weeks of the project's launching. Buying a preconstruction home also means that you don't have to worry about repairs and maintenance. You may not have to perform renovation on a new home for the next five years.

Buying Preconstruction Homes Overseas Is Risky

Just as they offer great rewards, buying pre-construction real estate overseas can quickly turn out to be a sour deal. Hence these investments require foresight, research and an ability to think and make deductions like an investor rather than the average buyer. You should be able to determine where the neighborhood is heading in the near future and also make a comparison of project options within your budget constraints.

The biggest risk behind pre-construction houses is that it's a non-liquid investment. For the period in which the property is being built, which can be two to four years, in the case of condo units, you freeze up a large chunk of capital. Although you might have access to visual representations or projections, you're practically buying an invisible property. You've not seen the finishes or the outward finishes.

These properties also require more down-payment requirements than their resale counterparts and you can't touch your cash or pull out should you need your money. So, it is a risky proposition. How do you protect your investment in this case?

Rules To Follow When Buying Preconstruction Homes Overseas

1. Never pay the full price upfront on a pre-construction property. It's standard to pay 30% of the cost during construction and the rest on completion. You should pay the balance when the property is move-in ready and when you can transfer the title to your name.

2. Check the specification. Do not leave this to the developer. The more detail you add to your contract, the more likely you are to get what you expect. Detail all. Start with the exact size of the home, broken down by rooms and hallways, patios, balconies and storage space.

3. Time. Get a clear deadline for the completion and delivery of the property. Most developers do not finish as scheduled. But do not allow the developer to add a 12-month overload period and go scot-free. He should have to pay a fine if he’s unreasonably late.

4. Make sure you are covered if something goes wrong. The contract should give you a decent time frame for snag-checking, and outline what type of builder's warranty you get. Be sure to include a clause that covers what kind of steps you will take if you cannot resolve a problem with the developer, be it mediation with a trade body, arbitration or a lawsuit. In some countries, if the developer doesn’t complete the property, you will get some of your money. That is not the norm, though.

Buying pre-construction property can be very profitable when you’re in the right market. These rules will help put you on the right track for a successful purchase.