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Why Buying Property in These International Vacation Destinations Could Be a Great Investment

Rrrainbow / Getty Images/iStockphoto

Rrrainbow / Getty Images/iStockphoto

Real estate can be a great way to generate both long-term equity and short-term rental income. If you’re willing to extend your reach a bit on the risk/reward spectrum, buying a property in an international destination can potentially bring even greater rewards.

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You’ll have to contend with additional risk factors — from currency fluctuations and governmental regulations to the distance and unfamiliarity of investing in a foreign land — but there can be sizable benefits to doing so. For example, you can often purchase properties overseas with similar or even better amenities than you can find in the United States at a far lower price point. You may also find that you enjoy the thrill of owning rental properties in exotic destinations around the globe.

With home prices in America starting to fall as mortgage interest rates skyrocket, now may be the perfect time to start looking overseas rather than in your own backyard if you’re shopping for real estate. Here are a few culturally exciting destinations that offer beautiful vistas and resort crowds that may help push up your home value and/or rental income in years to come.

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Philippines

The Philippines has been popping up on the radar of international travelers more frequently as of late, as the country is blessed with beautiful beaches that consistently rank among the best in the world. Boracay has long been a favorite of jet-setters, but secluded Palawan is often touted as being even more beautiful, while Bohol offers some of the best diving in the world and Siargao is a mecca for the international surf community.

If you prefer city living, Cebu City hosts a number of important cultural sites and is the festive heart of the country, while up-and-coming Davao City sits beneath the path of the typhoons that plague the country and boasts its own range of beautiful beaches and culinary delights. Luxury homes on pristine beaches in these destinations can top $1 million, but others with international-quality builds in great locations — including the beach — can go for just $100,000 to $200,000, making for perfect rental options.

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Belize

Beautiful Belize is a great option for American investors looking to make an overseas purchase. The U.S. dollar is widely accepted in the country, and as it was a former British colony, its laws and customs are quite accessible to the average American.

Laws regarding foreign property investment are generous, as both locals and foreigners are treated the same. The country is well-known for its beaches, rainforests and jungles, but prices remain a bargain compared with most of the world, particularly the U.S. A brand-new, luxury 2-bedroom beachfront home in world-renowned Ambergris Caye, Belize’s largest island, runs just $600,000, while older but much larger homes can be had for hundreds of thousands less.

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Italy

Numerous small towns in Italy have made news recently for offering run-down properties to international buyers for as little as a single euro. The catch is that you must promise to rehabilitate the properties — often at a cost of 20,000 to 40,000 euros — and restore it to its former glory.

This type of property requires a special type of investor but for the right one, it can turn into a long-term gold mine. The towns where these properties are available may not be as glamorous as Florence or Rome, but they have a quiet-country charm that could make for both a great family getaway pad or a nice long-term rental for Italian locals. 

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Panama

If you’re looking for a property investment that’s only a few short hours’ plane flight from America, Panama should be on your radar. Panama uses the U.S. dollar, making it an easy place for American expats and tourists to get their arms around, and it’s hemmed in on all sides by oceans and protected land, meaning there’s no room to build endless developments.

Coupled with the government’s favorable policies toward foreigners and businesses, Panama has a lot to offer from the investment side of things — and that’s not even taking into account its beautiful beaches, idyllic views and sizable expat community.

Panama is a safe and stable country in Central America that actually ranks as a “high-income nation” according to the World Bank, something most Americans are unlikely to know. Rentals near the beach can generate $1,000 to $2,000 per month in income and potentially even more, while the cost of large homes near the beach can run $200,000 to $800,000 and up.

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Portugal

Portugal has been the up-and-coming star of international travel magazines for years now, and with good reason. Between the pleasant climate, excellent food and wine, and breathtaking scenery and beaches, the country seems to have it all. Yet, it often flies under the radar of tourists heading straight for Paris, London and Rome.

This can work to the advantage of the international real estate investor, as prices in Portugal remain low. Prices in Portimao, in the Algarve region of Portugal, can run as little as $2,500 per square meter, for example. This translates to about $232 per square foot, compared with about $1,500 per square foot for a home in Malibu.

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Mexico

Mexico often makes the news for its rising violent crime, but there are plenty of locations that are safe, beautiful and potentially great real estate investments. Even with all of the recent negative press, Mexico remains the #1 destination in the world for American expats, and with good reason.

From friendly people, gorgeous beaches, amazing food and a low cost of living, for some, Mexico has it all. This may be particularly true if you’re looking to invest in a rental unit, as Mexico is quite popular with travelers from the entire world as well.

To avoid any of the headline-making violence, consider the Yucatan Peninsula in eastern Mexico. The stretch from Cancun to Tulum is known as the Riviera Maya and is filled with the glorious beaches and weather that helps make Mexico so popular. A 1,940-square-foot, three-bedroom penthouse condo with an ocean view in Playa del Carmen can be had for $639,000, offering both rental and capital appreciation potential.

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