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

31Remember the Fundamentals

When we arrived in Ireland in 1998, the standard net return from a rental property was 2% or less. The country was a decade into its Celtic Tiger economic boom, which had been fueled by two things. The first was American businesses setting up shop in Ireland to take advantage of low corporate tax rates and hiring incentives being offered by the government. The second was real estate.

Indeed, we were in Ireland for the first reason. We'd made the move to open an office for a U.S. publishing company wanting in on the Irish Investment and Development Agency's 10% tax.

All the foreign business activity created an employment boom. For the first time in the country's history, young Irish were able to leave their parents' houses before they got married. They could afford to live on their own or with roommates. This phenomenon created an unprecedented housing demand. Developers bought land from farmers to build housing estates, and the farmers gave some of those windfall land profits to their kids so they could buy houses. A lending industry emerged. Mortgage broker offices popped up on the street corners of every town and village across the country.

All of Ireland were buying and selling property either for their own uses or, eventually, as investments. The whole of the country watched prices rise dramatically year after year after year and felt compelled to get in on the game. No one imagined an end to the cycle.

It was a house of cards that eventually ...