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

16Where You Can Leverage

Leverage is a key tool in every U.S. property investor's kit. As late-night TV real estate investment gurus with courses and programs to sell assure us, other people's money (OPM) is the secret to success building a real estate investment portfolio. In fact, OPM allowed Lief to take his first step onto the property ladder in Chicago, and we've been able to leverage investments (through bank financing, preconstruction terms, and seller carrybacks) in Ireland, France, Portugal, Spain, the UK, and Panama.

Leverage can make possible a purchase that wouldn't be otherwise, and it can improve your return on investment. It can also cost you everything if you're not able to keep up with required payments, as has happened to us. We recommend against borrowing to buy when you don't have a backup plan.

In much of the world, you're spared the risk. Bank financing isn't easily available for foreign investors in many overseas markets, “foreign” investors being the key point. If you're a resident in a country where you'd like to borrow for the purchase of real estate, as we were when we applied for bank financing in Ireland, your chances are the same as your local neighbors'. You qualify or not based on your financial circumstances. A bank looks on a foreigner as a much greater risk. It doesn't have the infrastructure to chase down loan repayments in another jurisdiction. A foreign buyer can simply walk away from his mortgaged property. That means losing the down payment ...