The next time your traveling on a business trip or vacation, why not use that as an opportunity to scout and find yourself the international investment property you've always dreamed of owning. Here we will breakdown some key steps and tips to help you buy and start developing your first piece of global real estate...
For many of us, we've always been intrigued with the prospect of owning an amazing piece of real estate overseas. It can open us some extraordinary opportunities for passive income and capital returns, all the while helping us build a more International lifestyle.
Today we're going to walk through some steps and tips to help you make the leap and buy your first piece of global real estate.
1. Finding the right market
Clearly, the first aspect you want to figure out is the location. There’s an endless universe of markets out there and the initial step is narrowing that down to a country and city that suits you.
We recently invested in a property in beautiful Bogota, Colombia. How did we wind up there? What will often happen — as we are traveling abroad, whether for a business trip or vacation, we are constantly scouting the real estate. We will typically allocate an extra few hours a day just to explore and scope out properties. Research the market at a high level, and then use that opportunity on-the-ground to talk with people and see first-hand what that country and city is like.
That is actually how we found Bogota! Initially, we just enjoyed traveling there. The beautiful weather, the food, the people, cosmopolitan cities, diverse and abundant nature, lots of parks, shopping, biking, and the list goes on...
As a city, Bogota is just exceptionally well run and has a very strong, growing economy. As we started to dig into the real estate, we realized that there's actually a bit of a boom going on in the market. There are a lot of new condo buildings going up. Millions of new people are immigrating in the country coupled with an urban migration and people moving specifically to the cities. In recent years, over 2 million Venezuelans have immigrated to Colombia, with a project 2 million more in coming years
So with Bogota, you have a city that is locked between mountains, at 10 million people and growing. There is a scarcity of available places to build, yet an increasing demand for places to live.
2. Finding the right location
Here is our first Airbnb property that we built in Bogota:
[Listing and images coming soon...]
How we actually pick this location? We really tried to hone in on up and coming neighborhood with a few key characteristics…
If we look at this particular neighborhood, there's actually like a beautiful park right across the street, a massive military base right down the street, a shopping mall a few streets over. etc.
One of the key elements we’re looking for is a neighborhood that's consolidated where there can't be much or any new building. There's mountains to the North, a massive military base right down the street, a beautiful park right across the street… This means available land is more or less fixed, and there's no way to actually build outwards. So we know that this is going to be a good investment over time.
Some other things we look for is surrounding amenities. Whether it’s an Airbnb or long-term rentals, the amenities are always essential. So we’re looking for proximity to things like parks, transportation, supermarkets, shopping malls, restaurants, bars, cafes, etc.
So this place, for example, has a bus stop, like five minutes away, right next door to a shopping mall. So these are all the kinds of amenities you need to look for.
3. Growing the value of the property over time
The next thing we want to do — grow the value of the property after we purchase it. Not only do we want to have a prime location, but we want it to have reliable growth potential.
When first scouting neighborhoods, we are looking for something slightly more rundown, with room for improvement, and in relative proximity to more developed areas.
With our Airbnb property, the neighborhood fit this profile. Then as we rebuilt what was a two-story house into this beautiful 4 story complex (below), we saw the area start to improve. Two blocks over, somebody built a nine story condo building, the adjacent property underwent a major renovation, and so on… We wanted to be in early on that growth trajectory.
It’s just strictly pure value. It’s not about just the cheapest property. We're looking for a really, really amazing location that has potential for growth.
Another aspect we are looking at is, can we grow bigger? As mentioned, we bought a somewhat rundown two-story house and turned it into this five-story, 12 unit Airbnb. As you might expect, the rental yields on a five-story building are going to be far higher
Here in Bogota, sometimes if you buy multiple adjoining properties, you can build even taller. That potential for scaling up can open some incredibly compelling ROI opportunities. In this case, it’s critical to understand and factor in zoning laws, because we had come across other neighborhoods that appeared even better — lower prices, closer amenities, etc. — but the zoning laws were just not very advantageous to actually scaling up.
4. How do you actually do the deal? The team
Let’s say that you found a really good location and have found specific property is well priced and meets your criteria… at that point, how do you actually buy it and get the deal done?
First, you’re going to need to assemble a team of people that are going to help you on-the-ground, especially if you're in a new country.The very first person you're going to want is a lawyer. If we’re doing a deal in the US, then maybe we don't require a lawyer except for the title lookup or the very last stage of closing because we know the laws well. We can read and reasonably understand zoning restrictions, ordinances, etc.
However, here in Bogota, Colombia it’s a different story. Is your Spanish sharp enough to be able to wrap your head around local zoning laws or ordinances? So we have a good lawyer that sits down and helps us dig in and say, "Can we build seven stories here? Are we going to have an issue where if we want to put an elevator in the building, it's going to be against code?”
The next thing you need to be thinking about is an accountant. It seems really simple, and an accountant should be that difficult to find. However, if you're going to be doing huge deals, the taxes alone can make or break on your margins. Because if you're paying 30 or 40% taxes on a deal, that's an absolutely exorbitant chunk of your potential profit that is going right out of the window. So a tax accountant in the local country's incredibly important. Additionally, consider an international tax accountant to help you structure your businesses in multiple countries to be tax efficient with on another.
Once you have a tax accountant, the last step is an appraiser. An appraiser shouldn’t be too difficult to find, and you probably want to try out a couple if you're new in a market. They are basically going to go in, evaluate the property and initial price of the deal, and provide an objective 3rd-party assessment to help align you and the buyer to ultimately find a happy purchase price. At the very least, it provides a common reference point to base further negotiations off of.
As you grow, you’ll likely need to bring on others such as an architect, but we’ll cover more of that in future articles and videos…
Bringing all of the pieces together
Now you have some sense for how to pinpoint the market, a high-growth neighborhood, the right property, assemble the team to see a deal through, and set yourself up for future development and north.
Don’t forget! Every time we're on vacation, every time we're on a business trip, we're going to look at real estate. We're going to spend a couple of hours a day suss out it and see what kind of opportunities the city might have to offer.
Remote Ventures is an open investment platform for buying and selling fractionalized real estate all around the world. It gives everyday investors a simple way to access the global real estate market and build a truly diversified, cash flow generating portfolio.
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