Is This a Good Time for International Real Estate Investments?
We bade farewell to 2020 just one month ago with high hopes that life is going to be better in 2021. So far, sadly, things are not returning to normal as quickly as we had expected. Lockdowns are still a part of our lives, as are travel restrictions. Though mass vaccination is underway, the death toll of the pandemic is still on the rise worldwide, and the end isn’t really in sight.
While the real estate market has generally been stable over the course of this disease, the amount of international real estate investments did drop significantly. That can be understood. When you can’t physically check out an asset, can you (or, rather, should you) wholeheartedly invest in it? This question has been bothering real estate investors for years now, and is not a result of the virus, but the past year has certainly amplified these concerns.
I am Ofir Bar, and I have over two decades of experience in the field, around the world: in North America, Western Europe, South Africa, the Middle East and other regions. My answer to the question above is that you should definitely not rule out foreign real estate investments during these confusing times. You should, however, take some measures in order to gain extra security. Here are three simple steps you can take.
1. Ask a friend for help
Even if you can’t personally inspect the property you want to invest in, there may be alternatives. If there’s someone you know living in the area, don’t be ashamed to take advantage of it. However, you must make sure that they do a thorough check of everything relevant: the asset, the neighborhood, the contractor, the infrastructure, etc.
Also, this is not instead of the usual process of remote real estate investing, but rather a supplement to it. Even after a buddy of yours or a family member has performed an investigation, you still need to carefully examine the paperwork, hold online meetings with the broker, get to know the other investors in the group (should they exist), have a lawyer assess the deal, and so on. Sending someone to be your pair of eyes on the ground is just an extra assurance, albeit a very important one.
2. Ask for securities
The real estate investment market has had to make changes, in order to adapt to this new reality. That means that contractors, real estate agents, property marketers, and the rest of the people making money off of projects, are aware of the fact that they must take some steps in order to make up for people’s inability to physically see the asset they’re trying to sell.
Don’t assume that these securities will be thrown your way automatically. You need to ask for, or even demand, different types of guarantees and assurances, in lieu of your ability to personally inspect the property. If the answer is that there are no means to make up for that, you should probably take your money somewhere else. If there are creative solutions to the problem, it means that there’s a potential to bridge this gap. For example, a legal third party whose job is to act in case what you see isn’t what you get, might just be a good compromise.
3. Wisdom of the masses
Normally, real estate investors are people who think outside the box. That’s why it is hard for me, Ofir Bar, as an investor to recommend swimming with the current. However, these are strange times, and the circumstances require you be on the safer side. That’s why in these conditions a foreign real estate investment which has already attracted plenty of interest seems more plausible than unfamiliar terrain.
Bottom line
Ultimately, my message to you is that investing in international real estate during the pandemic is problematic and risky, but still possible. There are creative ways to overcome the inability to physically check out a property before signing a check. Sure, it takes determination and a whole lot of good will on both sides of the deal, and that may be hard to find. Don’t forget that putting it off for now and waiting out for sunnier days is also an option.
