Offshore real estate investment
The real estate investment industry, within a region or offshore, is very lucrative as it is unpredictable. The industry is known to have made people rich overnight and at the same time reduce the careless investors to paupers. The benefits of offshore real estate investments include tax benefits, regular and profitable cash flow and the opportunity to expand. The total returns produced from real estate investments are a hybrid of income and capital growth. It has a coupon-paying bond-like characteristic as well as a stock-like component. However, the industry is also one that involves intricate aspects to every deal, which any investor cannot afford to ignore.
You need to pre-plan essentials like the cash flow, both during the 'ups' and 'downs'- calculating on the differences experienced in the recent past, capital appreciation and tax benefits and most importantly the equity implications which could be major. Capital appreciation of the property is determined by having it appraised, an appraiser uses actual transactions that have occurred and other pieces of the market date to estimate what your property would be worth if it were to be sold. If the appraiser considers your property would sell for more than you bought it, then you´ve achieved capital return. The capital return is directly linked to the performance of the investment sales market because the appraisal is based on past transactions in judging values. Although the investment is well worth, it is important to consider some potential difficulties like possible eviction, re-investment and even dealing with inefficiency in time management. Avoid properties that simply eat into the business capital. You cannot rely wholly on traditional trends within a region. As an offshore real estate investor you need to assimilate all the information you can on the current market trends, professionals who can give you sound advice and the legalities involved.
Other characteristics of Offshore Real Estate Investment:
- No fixed maturity, allowing the investor to own the property, execute a business plan, and then dispose of the property whenever it is appropriate.
- Tangible: investing on real estate allows you to touch, and see your investment. Even show it off. If it needs to be fixed, it can be done unlike stocks or bonds.
- Management: it requires attention, assisting tenants complaints, maintenance and renovations when it begins to age.
- High Transaction Costs: private market real estate has high purchase costs and sale costs. Real estate agent´s commission, lawyer´s fees, engineer´s fees, etc. On sales, a brokerage fee for marketing it, so it gets enough advertising to get it sold.
- Lower Liquidity: no public exchange exists for the trading of real estate, except for real estate securities. Making real estate more difficult to sell, because the deal has to be brokered in private.
- Location: it is one of the most important aspects of real estate investments, properties perform very differently depending of the country, regions even within the same city. These regional differences have to be considered when thinking of offshore real estate investment. This decision will have a large impact on the returns of the property.
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