How To Diversify Into Hard Assets Overseas - YouTube

Welcome to the Live And Invest  Overseas Podcast. Please visit us  

at liveandinvestoverseas.com/podcast for more  information on living better and retiring well  

overseas. Hello I’m Kathleen Peddicord. And I’m  Lief Simon. And we're back with a new episode  

of our Live And Invest Overseas Podcast. We're  talking real estate, our new book how to buy or, I  

guess I keep getting the title wrong, “Buying Real  Estate Overseas For Cash Flow And A Better Life”  

has just been published just released by Wiley  last week it's available in bookstores across the  

country and online through Amazon. We are taking a  look inside some of the pages at some of the most  

practical information kind of background  educational information we share in this new,  

and I think timely, book on diversifying into hard  assets overseas. It's a very big important agenda  

in the current global investing climate but if  you've never done this before it's intimidating  

how do you get started, how in the world does  the average person go to another country and buy  

a piece of property it's a big idea. Last week  we talked about a checklist for due diligence  

to help guide you to be able to buy safely if  you're looking to buy for investment, for profit.  

This week we'd like to consider the other reason  you might be looking to buy real estate overseas  

and that's because you'd like to live overseas  full-time or part-time. If you're buying for  

personal use for retirement or a second home then  your criteria are different than if you're buying  

for pure profit in return. Right and some of  the things we went over last week will apply  

if you're buying for yourself and some of the  things this week may apply if you're buying for  

investment but you want to change your perspective  when you're looking to buy for personal use even  

if you plan to rent the place out when you're not  there then you are if you're just looking for a  

pure investment. Pure investment, you want the  best property then the best location that's going  

to give you the best return, when the personal  side comes into it the type of property the  

location may change dramatically compared to pure  investment based off of what your desires are.  

Okay and some of the best purchases Lief and I  have made I would say probably the most profitable  

investments we've made big picture have been  where we've been able to marry the two agendas  

where we've bought something for personal use  that turned out to have a big investment upside  

as well. It gets complicated and I have different  ideas. It depends on where it is on the spectrum.

So, pure personal use over here, pure investment  over here. Yes, somewhere in the middle can be  

better. The main thing when we're buying even  if it is for pure investment is, is it a place  

that we would want to spend time in ourselves for  two reasons. One, usually that means other people  

will want to spend time there but also if  the place doesn't work out as an investment,  

you end up with a place that you can use yourself  and get some value out of it while you try to  

figure out what to do whether to change how it's  being used, rented or reselling. Right, okay so  

let's assume this week that you are thinking about  going overseas in retirement or earlier in life,  

full-time or part-time or maybe you are  just looking to buy a second home in the sun  

for regular escapes. How do you size up one  property property purchase opportunity versus  

another? Well, here is a checklist of nine  points that we think are most important to  

consider in the context of buying for personal  use. Number one, how much space do you need?  

This is a multi-part question, I’ll read through  it and then you can respond. How much space will  

you need? Do you want an apartment or a house? One  bedroom or two? You probably won't need more than  

two for personal use unless you want to have room  for many family members to come stay with you.  

Two levels or only one? An important  consideration if you're at retirement age?  

A guest room or a guest house? Will you have  guests often? Will you want them to be able  

to stay with you or would you prefer a little  space between you and them in a guest house or  

maybe you want more space so you want zero  guest rooms so they must stay in a hotel.  

We do have this conversation with  people at our retire overseas conference  

when they're talking about what they're looking  for and right a lot of people fall onto that last  

category of, yes I just want enough space for me,  I want people to visit me but they can stay in a  

hotel or they can rent an apartment next door so  you know again in retirement you don't need much  

space you can downsize to a one-bedroom apartment  or a small house but if you are expecting visitors  

if you want the grandkids to visit then you're  going to want to have room for them to stay so  

take that into account but because part of the  reason you want to figure this out in advance and  

we say this on the investment side as well is that  buying and reselling has a has a much higher cost  

overseas than it does in the U.S. because there's  transfer taxes and so you want to buy right the  

first time so that you don't have to eat those  costs again. That's a really important point which  

is why we say and it really can make sense to  rent at least at first if you're moving you know  

if your agenda is completely lifestyle and there's  no investment component and you're looking to move  

to another country rent first because then you  have a chance to first make sure that country  

is for you, that destination, specific location in  that country is for you, and then within that city  

or town where you've placed yourself that the  specific neighborhood is for you because there  

could be big differences. Panama City is such a  great example, it's not a big city geographically  

but it's very diverse and one neighborhood can be  very different from another and we have lived in  

five or six different neighborhoods and some  have been very uncomfortable or unpleasant  

and some have been very great and we've been so  happy. Right and by uncomfortable and unpleasant,  

in the first neighborhood we were in, although it  was an older built up neighborhood there was still  

new construction so we had construction,  they were literally tearing out a boulder  

and would start with jackhammers at six o'clock  in the morning or seven o'clock in the morning  

every day including Saturday. So that wasn't fun  now that's over now but by renting there first we  

thought okay great we tried it, we tried it, the  next neighborhood., and the next neighborhood and  

it allows you some flexibility by renting first.  And the place where we have bought in Panama City  

is turns out to be ideal for us, it's on Avenida  Balboa right in the in the heart of things where  

we have shops and restaurants nearby that we can  walk to if we want, we have the Cinta Costera  

right there we can go. But it started out as pure  investment, as a rental right and turned out long  

term now that we don't have the kids, they're off  you know off on their own our son's in college  

we just need the one bedroom apartment and so it  worked we've moved in and that worked out well. So  

sometimes you know a personal property can turn  into a rental and rental property can turn into  

where you're staying personally. Yeah, all right  point number two: would you like to have a front  

yard, a back garden, a swimming pool. All of these  points of amenities and space are very important  

to consider directly each one comes with a cost  of care and maintenance and so if it's a place  

where you're not going to live full time, having  a swimming pool can become a big complication,  

it requires daily maintenance which means you're  going to have to have someone there either on site  

as a caretaker or visiting every day to take care  of those kinds of things. Right so if you're an  

apartment building the pool is going to be taken  care of by the building but if you're in a house,  

again if it's not going to be rented then if  you really want a pool you have to take into the  

consideration of the long-term expenses and  maybe take into consideration what is around you,  

make friends with someone who has a pool. It's  always better to have friends with the toys than  

on the toys yourself. Okay, location of course  is always important for any purchase but when  

you're thinking for personal use do you want to  be in the heart of things or out in the country,  

do you want to be in a local neighborhood or a  neighborhood of expats. So the location question  

again that is relevant no matter why you're  buying but there are different nuances to it  

if you're buying for personal use just what do  you want your lifestyle day-to-day to look like.  

Yeah exactly and so when buying for personal  use we recommend visiting the neighborhood  

at different times of day and different times  of the week and so that you can see what  

what's happening about. A friend who was looking  at properties in I want to say it was in Cordoba,  

Argentina which is where he was from but he was  living in Ireland at the time after the crisis in  

2002 so this was maybe 2004-2005. He thought  maybe he'd buy a place in Cordoba to be able  

to visit his family and then rent it out. He went  and stood on every street corner and eventually he  

didn't buy because he realized every street in the  area that he wanted to be in had buses running 24  

hours a day and you could hear the buses. I think  that's a bit extreme but that that's one way to  

consider a neighborhood is to be where are the bus  routes you know in Chicago where I lived for years  

and we're now, in Illinois at the moment and just  visit Chicago. You don't want to be you know the  

building right next to the train, so you those  things are pretty obvious when you're looking  

at the listings in the U.S. but overseas you may  not recognize what the issues might be. All right  

what type of property do you like the idea of  a gated community or would you prefer a more  

integrated setting, a neighborhood where you can  become part of the local community. Going local  

means you have to learn the local language if you  don't speak it already or perhaps you prefer to be  

off on your own with undeveloped acres between  you and your nearest neighbor in this kind of  

rural setting though you'll need to build in your  own in case of emergency infrastructure. Right  

and so yeah if you're in a city that's one thing,  if you're outside of a city and looking either at  

say a gated community at the beach or versus your  own house on just land at the beach you've got to  

take into consideration what you're giving up  from the gated community. A lot of people don't  

want to have the rules of an HOA but you do want  some of the services that they provide. One is  

gated security, not that any place that we  talk about is dangerous, but you know if you're  

in an isolated property anywhere including  the U.S. you can become a target for someone  

to break in and take your computers your TVs and  things like that, so if you're out on your own  

you're going to want to have some security  devices, cameras, maybe dogs that kind of  

thing. If you're in a gated community they'll  usually have security that patrols. All right  

the convenience factor how far is the property  to shopping, restaurants, nightlife, parking, a  

favorite point of Lief’s, and nearest medical care  that's a very important point depending on your  

age and your level of health as you're starting  this adventure for moving. For retirement the  

nearest medical care becomes probably one of the  top topics to consider and the nearest hospital,  

not only nearest hospital but what services  can they provide and more importantly if  

you've got a pre-existing condition that  requires regular visits to a hospital  

can that hospital is near the property  looking at provide those services, so  

you've got to do some background  due diligence on what's available  

if you fall into that category before you can  start looking at properties just to make sure  

that the area you're looking makes sense. Exactly  so that's a good starting point. Furnished versus  

unfurnished? You may have no choice but to buy  unfurnished unless you buy from say another expat  

who's interested in selling his place including  all the furnishings but buying unfurnished means  

you'll need to purchase furniture locally or ship  your household goods from home. So you see every  

decision has consequences and you just want  to think them through are you up for shipping  

everything from your current home. There are many  pros and cons, we have shipped many times from  

many different countries to many other countries  and every time said that's the last time but we've  

done it at least six or seven. I say it's the last  time she says we'll see. We'll see. And we've done  

it six or seven times and every time there have  been good reasons to do it and sometimes we've  

ended up regretting it in the end and it is a big  expense so rather than doing that, your option if  

you're buying an unfurnished place, which is  mostly what you're going to be buying. Yeah if  

you're buying an investment property you can find  you know short-term rentals, people are selling  

all-inclusive including the furniture, that's how  we bought our apartment in Lagos our most recent  

turnkey sale and it's how we sold the apartment  you know the furniture came with it we replaced  

a couple of things but all the furniture went  with the sale and when you're buying for personal  

use typically you're probably not buying from an  investor who was renting short term and so it's  

not even going to be an option for furniture  but it could be. We sold our house in Ireland,  

it had way more furniture than we could take to  Paris with us and the buyer there wanted to buy  

a lot of the furniture and we were happy to  because otherwise we're gonna have to sell  

it through auction or whatever. Yeah so it can be  possible but likely you'll be buying unfurnished  

and if you aren't going to ship a container load  of household goods with you then you're going  

to be furnishing locally which I think is a big  opportunity. It's an opportunity to get to know  

your area because you'll have to find the stores  for lighting fixtures or dining room tables for  

patio furniture and for making new contacts  and connections and becoming integrated into  

to your community it can be a first step to  becoming a real member of your new neighborhood a  

member of the new community and also it will help  with language because if you don't speak any of  

it before you set out on that kind of adventure  you're going to learn some of it even if it's  

very painful, you're going to speak some of the  language by the time your house is furnished.  

All right your budget. This is the  most practical guideline, of course,  

be clear on your finances before you start  shopping and if your budget is strict don't be  

tempted to consider properties outside your price  point, you'll only be disappointing yourself,  

setting yourself up for disappointment. Right what  I find more often in fact is that people set too  

low of a budget, they think I’m going to go find  a bargain property overseas which you can find  

and then they find what they can buy for say a  hundred thousand dollars in a particular market  

and are like “Oh well that's too small” or “That's  not close enough to the beach” and then they can  

afford more and so they increase their budget as  they go to buy what they want rather than thinking  

that they're just going to buy an inexpensive  second home or whatever so it can go both ways.  

If you if you really only have 100 000 dollars  to spend then that's your budget, if you've  

got 250 000 that you want to spend but you're  thinking you want to spend a hundred thousand,  

look at what's available in both markets before  you. Right and we made this point last week  

when we were discussing checklist for buying  for investment but remember that if you have  

a hundred thousand dollars to spend you can't  buy a property for a hundred thousand dollars,  

you have closing costs and they vary by country  and they can vary dramatically so you want to be  

sure you understand the total cost of buying so  that if the total cost of buying is eight percent  

if you've got a hundred thousand dollars you've  actually got ninety two thousand dollars to spend  

on the property. All right one more point finally  ask yourself and for me this is the most important  

point of all what kind of view would you like from  your bedroom window each morning. This can be an  

effective way to focus on something that, I think  the most important thing of all if you're buying  

for personal use but that you might otherwise  overlook. So all of the factors to do with budget,  

and location, and where's the nearest parking, and  public transportation and you have two bedrooms or  

one and do you have a swimming pool or no, all  of that is important of course but bottom line  

when you're looking at a piece of property  to buy in another country for personal use,  

I really recommend take a step back after you've  done your spreadsheeting, after you've looked at  

all the data you've gone through your checklist  take a step back and say, okay if I’m living here,  

this will be my bedroom and that will be my view,  will I be happy with that? If I’m living here,  

here's my back deck and that's the view from my  back deck, this is what I’ll hear on my back deck,  

will I be happy with that long term? Yeah all  right and that's more Kathie’s perspective, I’m  

happy to have the view I look more at the numbers,  you've got to do both even when you're just buying  

for personal use and retirement or investment.  So take all those tips into consideration and  

good luck with your buying overseas. And we'll  encourage you, go have a look in your nearest  

books… well maybe you can't do that right now but  go look online and then Amazon has the book and  

if you've got time they should be able to get it  to you the next day so you can get started quick.  

Okay thank you all, we'll be in touch  again soon. Thank you for listening.  

Bye everyone. Thank you for listening, we  hope you enjoyed this episode of our Live  

And Invest Overseas Podcast for more please  visit liveandinvestoverseas.com/podcast  

where you'll find lots more information and  resources to help you live better and retire well.