Buying Real Estate Overseas For Cash Flow (And A Better Life)

7Short-term Rentals—Airbnb Is a Double-edged Sword

What's specifically important when considering a potential rental property purchase overseas? One driving consideration should be the pleasure potential for you and your family. Buy what and where you want. Balance that objective, though, against what matters most for rentals in your chosen market. This is key to maximizing cash flow. Property type and size are universally important rental factors. In most markets, a one- or two-bedroom property is more rentable than a three- or four-bedroom place. The incrementally higher rental rates you should be able to charge for a three-bedroom usually don't compensate for the higher cost of purchasing the larger apartment. While a super-high-end property might suit your personal preferences, a higher-end (read: more expensive) property probably means a lower rental return. To keep your occupancy up, you'll likely have to compete on price with the general (not high-end) market.

Here are questions to answer when considering any potential purchase of a vacation rental overseas:

• Where in your target location do people most want to stay? In Paris, for example, perhaps the world's most recession-proof rentals market, the traditionally best arrondissements for rental are the 5th and 6th. These are also among the priciest arrondissements. More affordable and also good for rental are the 4th and the 9th arrondissements, meaning an investment in these areas could generate better cash flow.