Investing in International Real Estate For Dummies

Nicholas Wallwork is a successful entrepreneur, multimillionaire real estate investor, developer, and property and business mentor. He is known across all media channels as a highly respected authority in the real estate investment world and has an extensive and proven track record for delivering successful, high-return investments for his clients and students. Wallwork is dedicated to helping educate investors. Visit www.propertyforum.com/ real-estate-courses for upcoming companion courses to this book.

Introduction 1

About This Book 2

Foolish Assumptions 3

Icons Used in This Book 3

Beyond This Book 4

Where to Go from Here 4

Part 1: Building a Successful Real Estate Portfolio 5

Chapter 1: Introducing Real Estate Investment Strategies 7

Taking Your Real Estate Investments to the Next Level 8

Comparing property to other asset classes 8

Going beyond fixer-uppers and straightforward buy-to-rents 10

Focusing on Investment Strategies That You Can Use Internationally 11

Running Your Property Portfolio as a Business 12

Getting Your Financial Ducks in a Row 13

Understanding financing options and valuation 13

Getting the expert help you need 14

Blending Real Estate Strategies to Create a More Robust Portfolio 14

Keeping an open mind about different strategies 15

Incorporating shorter-term strategies into your portfolio 16

Exploring longer-term strategies for earning a regular income 17

Avoiding spreading yourself too thin 20

So Which Strategies Are Right for You? 20

Chapter 2: Investing at Home or Abroad: Which Is Right for You? 23

Deciding Whether to Invest Abroad: It’s Not All about the Numbers 24

Playing on your passion 24

Tapping into available knowledge 25

Considering Your Budget 26

Assessing Your Risk Profile 28

Identifying where you sit on the risk spectrum 28

Considering country-specific risk factors 29

Factoring your goals into the equation 31

Figuring Out How You’ll Manage Your Property 31

Drilling Down to the Right Market for You 33

Looking at the cold, hard facts and figures 33

Developing your knowledge of that country and region 34

Focusing Your Attention on One or Two Key Markets 35

Chapter 3: Treating Your Real Estate Portfolio as a Business 37

Aiming for Passive Income as the Ultimate Goal 38

Defining passive income 38

Looking at examples of passive income 40

Looking at the pros and cons of passive income 40

Drafting a Dream Team 42

Getting expert advice 42

Outsourcing other aspects of your workload 44

Finding and vetting experts, at home and overseas 46

Getting the most out of your dream team 48

Investing in Systems and Technology to Grow Your Business 49

Putting the right processes in place 50

Defining effective business processes 51

Saving time through software 51

Evaluating technology solutions 53

Promoting Your Real Estate Business 53

Managing Your Cash Flow Like a Boss 55

Preparing for the rise and fall of income and expenses 55

Maintaining a safety net with a cash buffer 57

Getting the Right Insurance 57

Insuring your properties correctly 57

Making sure your chosen partners have the right insurance 58

Chapter 4: Protecting Yourself against Market Fluctuations 61

Diversifying Your Portfolio with Multiple Revenue Streams 62

Investing for the long term and the short term 62

Incorporating multiple strategies into your portfolio 63

Seeking out other ways to diversify your portfolio 65

Finding Strategies That Work Well in a Boom Market 65

Working with the booming market 65

Looking at suitable boom strategies 66

Finding Strategies That Work Well in a Credit Crunch 68

Working with the challenging market 68

Looking at suitable crunch strategies 69

Doing the Opposite of What the Mass Market Is Doing 71

Tailoring Your Funding to Economic Fluctuations 72

Understanding the impact on traditional finance 72

Accessing nontraditional forms of finance 74

Considering Foreign Exchange Rate Risks 75

Chapter 5: Getting into the Mind-set of a Successful International Real Estate Investor 77

Continually Improving through Education 78

Tapping into a wide variety of sources 78

Taking time for education before you put your money on the line 80

Networking in the Right Places 80

Networking offline and online 80

Getting the most out of networking meetings and events 81

Maintaining and nurturing your network 82

Setting Your Goals 82

Figuring out what you want 83

Committing to and working toward your goals 83

Cultivating a Positive Mental Attitude 85

Using positive affirmations 85

Embracing gratitude 87

Visualizing for Success 88

Identifying the benefits of visualization 88

Putting visualizing into practice 89

Getting the most out of visualization 90

Harnessing the Law of Attraction 91

Understanding how the law of attraction works 92

Focusing on your thoughts and feelings 93

Putting the law of attraction into practice 94

Meditating to Manage Stress and Risk 95

Looking at the benefits of meditation 96

Making meditation work for you 97

Part 2: Money, Money, Money 99

Chapter 6: Weighing Traditional Finance Options 101

Finance as a Key Element of Success and Growth 102

Seeing the link between leverage and growth 102

Understanding the full range of finance options 103

Considering the Main Financing Factors 104

Looking at the property itself 105

Deciding between fixed-rate and adjustable-rate loans 105

Looking at the length of the loan 107

Finding the right loan-to-value balance 108

Weighing up repayment versus interest-only loans 109

Taking fees into account 110

Assessing a Range of Traditional Finance Products 112

Getting a standard residential investment mortgage 112

Seeking a commercial mortgage 113

Using a bridge loan 113

Taking out a second-charge loan 115

Getting land and development loans 115

Finding the Right Product for You 117

Dipping into International Finance versus Domestic Finance 118

Chapter 7: Understanding Property Valuation 119

Defining Value and Real Estate Valuation 120

Comparing price to value in more detail 120

Understanding the purpose of appraisals 121

Looking at factors that influence value 121

Knowing who values real estate 122

Seeing Why Valuation Is Fundamental to Property Success 123

Understanding enough to maximize your investments 124

Knowing the difference between yield and return on investment 124

Considering how valuation methods may affect your financing 125

Recognizing that appraisers are risk averse 126

Making your own valuation case 127

Looking at the Three Main Valuation Methods 128

Market comparison approach 129

Income or investment approach 130

Cost approach 132

Knowing Which Method Is Best for You and How Much an Investment Is Worth 132

Evaluating on a case-by-case basis 132

Doing your own appraisal research 133

Special Considerations for Valuing Property Abroad 134

Chapter 8: Looking at More Creative Financing Options 135

You Down with OPM? Investing with Other People’s Money 136

Introducing the concept of OPM 136

Looking at OPM as a route to real estate success and wealth 137

Joining Up with a Joint Venture 138

Knowing what’s involved in a joint venture 138

Looking at examples of joint ventures 139

Understanding why people would invest in you 139

Finding the right joint venture partner 140

Creating a compelling business proposal for potential joint venture partners 142

Dotting the I’s and crossing the T’s with a joint venture agreement 145

Securing Private Lending 146

Finding and approaching private lenders 147

Putting it all in writing 148

Crowdfunding Your Way to Real Estate Success 149

Getting Control of a Property Instead of Owning It 149

Applying Creative Financing Strategies Overseas 150

Part 3: One-off and Shorter-term Income Strategies 153

Chapter 9: Developing Properties 155

Knowing What Property Development Means 156

Deciding Which Development Strategy Is Best for You 157

Understanding why you need to think about the end before you start 157

Looking at the main exit options 158

Weighing which option is right for you 158

Keeping your target audience in mind 159

Giving yourself multiple exit options 160

Sourcing Development Opportunities 161

Assessing the property itself 161

Deciding on the right location 162

Finding the best properties (before anyone else) 162

Financing Your Development Projects 165

Understanding how development financing works 165

Knowing whether you need a development loan 166

Looking at other ways to fund your development projects 167

Working out how much it’s going to cost 167

Figuring out what improvements are needed 168

Managing the Development 169

Knowing where you need professional help 169

Creating a detailed budget 171

Creating a realistic schedule 174

Communicating to keep the project on track 175

Preparing the property for sale or rent 175

Five International Locations Where This Strategy Would Work 176

Chapter 10: Dealing in Property Information 179

Dealing in Investment Property Leads: The Five-Minute Lowdown 180

How does it work? 180

How can you progress from an investment property sourcer to a retained buyer’s agent? 181

Is this strategy right for you? 182

Generating and Selling Property Leads 183

Finding your niche 184

Creating value for your clients by facilitating off-market deals 185

Understanding the financial model 186

Sourcing valuable properties 186

Marketing the property to bring buyers and sellers together 190

Acting as a Retained Buyer’s Agent 192

Knowing what it means to be a retained buyer’s agent 192

Understanding the financial model and agreeing terms with buyers 193

Attracting buyers to your service 194

Sourcing properties effectively for your buyers 196

Five International Locations Where This Strategy Would Work 196

Part 4: Ongoing and Passive Income Strategies 199

Chapter 11: Making Rent-to-Rent Work for You 201

Defining Rent-to-Rent: The One-Minute Rundown 202

Addressing Rent-to-Rent’s Image Problem 203

Applying Rent-to-Rent across a Range of Properties and Strategies 205

What types of property are suitable for rent-to-rent? 205

What approaches can you take to sublet the property? 205

Which approach is right for you? 206

Exploring change of use in more detail 208

Margin in the Middle: Understanding the Rent-to-Rent Financial Model 209

Looking at the startup costs 209

Getting started on a shoestring budget 210

Covering ongoing costs and earning an income from the property 211

Sourcing the Ideal Rent-to-Rent Property (and Landlord) 213

Evaluating potential properties 213

Finding a landlord who’s open to rent-to-rent 216

Positioning yourself as a professional rent-to-rent operator 217

Sorting Out Your Rental Agreement 218

Agreeing the length of the lease and other terms with your landlord 218

Having a tenancy agreement in place with each of your tenants 219

Finding Tenants and Managing the Property 220

Finding good tenants 220

Managing the property after your tenants are in place 221

Identifying Five International Markets Where This Strategy Would Work 222

Chapter 12: Leveraging Lease Options 223

Understanding Lease Options and How They Work 224

Breaking down a lease option into its component parts 224

Looking at the pros of lease options 225

Weighing the cons 226

Deciding whether lease options are right for you 227

Understanding the Financial Model for Lease Options 228

Earning rental income from the property 229

Earning capital growth on the property 229

Selling the option instead of buying the property 230

Understanding the “consideration” payment 230

Considering ongoing costs 231

Knowing What’s in It for the Property Owner 232

Sourcing Lease-Option Opportunities 233

Deciding what type of property you want and how you’ll operate it 233

Looking for motivated sellers who would be open to a lease option 234

Getting the owner onboard with a lease option 235

Negotiating the Deal and Contract 236

Your monthly rent 236

The length of the agreement 237

The purchase price 238

The consideration 238

Other safeguards 239

Identifying Five International Locations Where This Strategy Would Work 240

Chapter 13: Delving into Houses in Multiple Occupation 243

Introducing HMOs 244

Breaking Down the HMO Financial Model 245

Sourcing HMO Properties 246

Converting your existing home into an HMO 247

Buying a property to turn into an HMO 248

Deciding Who You Want to Rent To 249

Finding the Best Location for Your HMO 249

Staying on the Right Side of the Law 250

Complying with HMO management regulations 250

Sorting out planning requirements 251

Dealing with mandatory HMO licensing 252

Looking at the key health and safety considerations for HMOs 253

Managing Your HMO 255

Sorting tenancy agreements 256

Finding and vetting tenants 258

Managing your tenants and the property 260

Scaling Up Your HMO Portfolio 262

Identifying Five International Locations Where This Strategy Would Work 263

Chapter 14: Renting to Students and Low-Income-Housing Tenants 265

Knowing What’s Involved in Renting to Students and Low-Income-Housing Tenants 266

Understanding why you may want to rent to multiple tenants in one property 266

Identifying your tenants’ needs 266

Looking at the Pros and Cons of Renting to These Tenant Groups 268

Addressing the negative connotations and downsides 268

Looking at the positives 269

Sourcing the Right Kinds of Property for Students and Low-Income-Housing Tenants 270

Finding the right location for students 270

Identifying the right location for low-income-housing tenants 271

Looking at the property itself 271

Marketing Your Property and Finding Tenants 272

Making sure the rent is competitive 273

Enticing students to your property 273

Attracting low-income-housing tenants 274

Vetting tenants 275

Drafting the Tenancy Agreement 275

Choosing the right agreement 276

Adding in additional clauses for these tenant groups 277

Sorting out the security deposit 277

Physically Preparing Your Property for Use 278

Kitting out the property for your target audience 278

Preparing for plenty of wear and tear on the property 279

Making sure the property is safe for your tenants 280

Managing Your Property Effectively 281

Checking in on the property more regularly 282

Managing tenants’ behavior 282

Looking at Five International Locations Where This Strategy Would Work 283

Chapter 15: Providing Serviced Accommodation 285

Defining Serviced Accommodation 286

What type of accommodation does it cover? 286

What about the “serviced” part? 287

Who stays in serviced accommodation? 289

Looking at the Pros and Cons of Serviced Accommodation 289

Taking a glimpse at the positives 289

Assessing the downsides 292

Deciding What Level of Service to Offer 294

Covering the basics 294

Wowing guests with personal touches 295

Tailoring your offering to your target audience 296

Sourcing Serviced Accommodation Properties 296

Looking at the quality and size of the property 297

Choosing the right location for your guests 297

Preparing Your Property for Serviced Accommodation Use 299

Planning for the practicalities of welcoming guests 299

Getting the decor and overall look of the property right 299

Equipping the property with everything your guests need 300

Navigating Planning and Regulatory Restrictions 301

Getting the Right Business Processes and Systems in Place 302

Managing reservations 303

Optimizing your pricing 304

Marketing your property 304

Managing Your Serviced Accommodation Business on an Ongoing Basis 306

Identifying Five International Locations Where This Strategy Would Work 307

Chapter 16: Providing Vacation Rentals, at Home and Abroad 309

Knowing the Difference Between Vacation Rentals and Serviced Accommodation 310

Choosing the Right Location for You 312

Deciding which country is best 312

Drilling down to the right location 313

Doing your due diligence on the vacation market in your target area 313

Planning for Costs, Cash Flow, and Variations in Occupancy 314

Thinking of cash flow and costs from an annual perspective 315

Understanding seasonality and void periods 316

Overcoming seasonality challenges 317

Sourcing the Ideal Property for Vacation Rentals 318

Preparing Your Property for Use 320

Providing the “wow factor” through service 320

Including all the practical things your guests need 320

Making sure your property is bursting with personality 321

Making the property as season-proof as possible 322

Paying attention to the exterior 322

Making sure the property is safe and complies with local laws 323

Marketing Your Vacation Rental 324

Advertising your property on the right online platforms 324

Having your own website 325

Investing in professional pictures and awesome descriptions 325

Cultivating great reviews 327

Managing Your Vacation Rental 327

Working with a managing agent 327

Pricing dynamically throughout the year 328

Identifying Five International Locations Where This Strategy Would Work 329

Part 5: the Part of Tens 331

Chapter 17: Ten (Or So) Practical Ways to Get into the Mind-Set for Success 333

Tapping Into Education Resources 333

Using Productivity Apps and Tools 334

Learning to Be in the Here and Now 335

Cementing Your Goals Using a Vision Board or Goal List 337

Trying Out a Visualization Exercise, Real Estate Style 338

Incorporating Positive Affirmations into Your Day 339

Recognizing and Giving Thanks for Your Successes 340

Downloading Helpful Apps 341

Chapter 18: Ten (Or So) Other Real Estate Strategies to Consider 343

Delving into Buy-to-Rent (Single-Tenant) Properties 344

Flipping Houses 344

Running a Bed-and-Breakfast, Guesthouse, or Hotel 345

Owning or Running a Care Home 346

Becoming a Real Estate Agent, Rental Agent, or Property Manager 347

Investing in Real Estate Investment Trusts 348

Offering Emergency Housing Accommodation 349

Getting into Commercial Property 350

Trading in Freeholds 351

Index 353