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

29Be Sure of Your Exit Market

When investing in a residential rental property in the United States, you have a good idea who your future buyer will be. You'll sell, when the time comes, to someone looking to live in that neighborhood or to another investor shopping for a rental property in that area. Either way, the buyer likely will be someone living within a couple dozen miles.

When buying for cash flow in another country, especially a short-term rental unit, the location and the type of property play big roles in determining who your potential future buyer will be. Typically, your potential future buyer pool will include other foreign investors. However, the more you can expand that pool, the greater your chances for maximum return.

The Spanish costas are a good example of a market that has relied on foreign buyers and investors entirely. In 2008, when real estate markets across the globe collapsed, those along Spain's Mediterranean coast fell faster and harder than any others. There were three reasons for this—the amount of leverage in play, overbuilding, and the fact that the majority of buyers on this coast were foreign.

Prices fell, too, at the time, in Barcelona, but not nearly as far nor for as long as they did along the costas. The three factors that spelled disaster on the coast helped to insulate values in Barcelona. The percentage of leveraged investment properties was lower, the volume of overconstruction was less, and the market didn't rely on foreign money. ...