Profitable Niches – Investing Internationally

Is investing offshore right for you?

International investing can be both exciting and daunting. In our fourth installment of the Profitable Niches series, we hope to demystify the process for investors looking to cross some borders.

Every investment has a risk … you just have to learn how to evaluate the risk and the reward so you can choose wisely.

In this episode of The Real Estate Guys™ show you’ll hear from:

  • Your world-traveling host, Robert Helms
  • His petrified-of-planes co-host, Russell Gray
  • CEO of Mahogany Bay Village and international investor, Beth Clifford

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Expand your horizons with international investing

Our guest has made a name for herself in international investing.

The CEO of Mahogany Bay Village and a pro at international resort investing, Beth Clifford started expanding her own real estate business by moving into different states.

It wasn’t long before she got an itch to start looking outside the United States.

She’s a great example of someone who’s become a success by opening up her geographic horizons.

“It’s always convenient to live and invest in the same place, but real estate is about location,” Beth says. Investors have to look beyond what is outside their bedroom windows.

International investment also provides an opportunity to diversify and put your assets into different baskets.

Whether you’re an investor looking to expand beyond your state of residency or your country, Beth says the methodology is the same.

To invest smartly, you have to understand the market, laws, and culture of the place you’d like to invest in.

And just because there might be a learning curve doesn’t mean you should shy away from good opportunities.

Take what you’ve learned and expand it into another arena, whether that’s a new asset class in the same location or the same asset class in a new location.

Either way, you expand your world—and get the chance to become an expert all over again.

When you’ve learned one new market, it’s easier to get to know a second one, Beth notes.

And … “It’s all about teams,” she says. As someone who owns, invests, and develops in multiple countries, Beth has learned the value of a talented team.

Let’s talk about taxes

As soon as you cross a country border, you have to understand an entirely new tax system. That’s why Beth has separate development companies for properties inside and outside the U.S. … and why she enlists professional help when it comes to accounting.

Although taxes can be tricky, owning property and businesses outside of the United States can reap great tax benefits.

Despite that, some tax professionals still make a habit of creating fear, uncertainty, and doubt for investors who would like to make some money across country lines.

Beth recommends shopping around for an informed professional … because although the attorneys make it seem hard, there are really only three documents you need to complete each year.

She recommends professional assistance for at least your first two years, until you have a solid understanding of the basics.

One thing to be aware of? Currency arbitrage and exchange. If you’re unaware of currency issues, they could bite you. Make sure you understand whether you can easily exchange currency and whether the jurisdiction you’re investing in is neutral.

A relationship business

Real estate is a relationship business. And especially when investing beyond your familiar boundaries, building local relationships is key.

We asked Beth how to she expands her network across borders.

“I ask for help when I go into a market,” she says. Investors should have “an attitude of humility, not hubris.”

The first thing Beth does is look for the Class A players in a given market. Who are the top three law firms, employers, development companies?

Beth seeks out the movers and shakers … then picks their brains for advice.

“A players fly with A players,” she says. “It’s the rule.”

Networking doesn’t cost you money … and it gets you into the contact database of the best and brightest.

Once you’ve sought out the best, go in with the intention to learn. Ask these bright business people how they’ve obtained their success and where they see YOU going wrong or right.

The goal is to find team members who provide value to you … and are excited to do so.

And one business relationship can net literally millions of potential customers.

It’s all about leveraging yourself.

Is making connections any different in a foreign country? “People are the same everywhere,” says Beth.

Basic human connection is the key, no matter where you go. People want the same things … so connect on a common level.

Thinking about making the leap?

Wondering whether you’re cut out to be an international investor?

Beth recommends starting by test driving the market. Do a due diligence tour outside of the U.S. … like one of our discovery trips.

It’s a great way to get to know the area in which you might be investing, educate yourself on the culture and special considerations, get to know local movers and shakers … and have some fun.

Seeing how others put together international investments can be eye-opening, says Beth. Discovery trip attendees get a year of education … in four days.

So get there … and see what awaits you beyond the horizon.


More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training and resources to help real estate investors succeed.

Amazon’s primed to ignite a real estate market …

You’ve probably heard Amazon has been shopping for a second home.

In typical corporate fashion, Amazon put out an RFP (Request for Proposal) and many North American cities have been falling all over themselves hoping to win the big prize.

And who can blame them?

After all, Amazon is projecting FIFTY-THOUSAND jobs … with an average annual salary of $100,000 … which is $5 BILLION per YEAR … PLUS another $5 BILLION in capital investment.

That’s a LOT of new economic activity to cram into one metro.

Think about it.  Fifty-thousand jobs is enough for every single man, woman, and child in the cities of Cerritos, CA; Harrisburg, PA; or Galveston TX.

Of course, none of those cities are in the running because they’re too tiny.  But the potential impact on whatever metro wins is substantial.

Amazon says they aren’t going to announce until 2018, so we’ll have to wait and see where they end up … and what kind of incentives they get out of the deal.

A quick perusal of the RFP outlines what Amazon is looking for.

Here are some highlights about what Amazon wants in a market …

  • A metro with more than 1 million people
  • A stable and business-friendly environment
  • Urban or suburban locations attractive to technical talent
  • An international airport within 45 minutes with direct flights to key cities
  • Close to freeways
  • High capacity connectivity (fiber optic and cellular)
  • Access to large, educated labor force
  • Attractive community and quality of life for employees

Here’s what Amazon wants in a deal …

  • Access to mass transit to the site
  • “Scale and creativity” in real estate options (it’ll be interesting to see what this looks like)

There’s more, but these are the biggies.

Of course, a business doesn’t have to be Amazon to want these things.  They just have enough clout to make a public spectacle of it.

Meanwhile, there are some things to think about as you watch this unfold.

Primary jobs create secondary and tertiary jobs.

Amazon boasts it’s “been a catalyst for development in downtown Seattle with an abundance of restaurants, services, coffee shops …”.

So it’s not just 50,000 Amazon jobs at stake … it’s billions in local commerce as Amazon’s employees spend big chunks of their salaries in the local community and create lots of non-Amazon jobs.

Amazon claims every dollar they invested in Seattle generates an additional $1.40 for the city’s overall economy.

So on a $5 billion investment, that’s ANOTHER $2 billion in economic juice for the winning geography.

And while local landlords may not rent directly to many of Amazon’s $100,000-per-year workers … Amazon employees’ spending will create lots of lower paying jobs for potential tenants.

It’s a safe bet Amazon’s presence will be good for landlords.

Other employers may follow the leader.

Most companies aren’t big enough to do the kind of research Amazon is doing.

We’re guessing more than a few employers looking to expand or relocate may just decide, “If it’s good enough for Amazon, it’s good enough for us.”

Some businesses may move to the area specifically to be near Amazon.  That’s even more primary, secondary and tertiary jobs.

Again, all very good for landlords.

Don’t end up paying for the farm the city gives away.

Sometimes in their zeal to notch political points or a marquee win, government officials can blow their budgets landing a big fish.

But the big fish … in this case Amazon … doesn’t pay the price.  They’re usually exempted through “incentives.”  Instead, the bill ends up with the locals.

We’re not saying that’s happening here.  We don’t know the terms of any deal.  But it’s something we’ll look at closely when the final deal’s announced.

It’s been reported San Antonio dropped out of the running because of concerns they “would not be highly competitive from a ‘real estate and incentives perspective.’”

San Antonio’s mayor is quoted as saying, “Blindly giving away the farm isn’t our style.”  It probably shouldn’t be yours either.

So pay attention to what the winner pledges … and whether it’s likely to affect property owners or small businesses.

If you’re not careful, you may end up moving in just in time to pick up your share of the tab for the incentives.

The real estate opportunity will develop slowly.

Even though all this is in the news, there’s no easy way for Wall Street hot money to front-run investors into Main Street real estate.  It’s too cumbersome.

So even though you’re watching the opportunity develop on the front page of mainstream financial news, you have a good chance to get in while the getting’s good.

As plans are announced, the impact on local housing, land, retail, and commercial space will become more apparent.

Once the market is announced, the FIRST thing to do is get boots-on-the-ground and build a team.  They’ll help you find the pockets of opportunity.

Our bet is Amazon will pick the best LONG-TERM deal.  They’ve been playing the long game for their entire existence, and Wall Street seems fine with it.

We’d be shocked if the final criteria for Amazon’s decision are primarily financial incentives, which are most important early.

We think the front runners are probably those cities with great infrastructure in terms of airport, freeways, mass transit, education, population, and connectivity.

Cities who don’t already have all this in place probably can’t make investments big enough fast enough to win … no matter how much tax savings and real estate they give away.

Another reason to think the winner will be a bigger metro is the burden of any incentives must be borne by the people and businesses already there.

Many hands make a light load.  If each voter’s slice of the burden is too big, the politicians and Amazon might have a big PR problem.

Amazon’s smart.  If they want big perks without upsetting the locals, they know they’ll need a bigger population to share the load.

But since you’ve read this far, we’ll go out on a limb and say if we had to place a bet (and we don’t), our money would be on Atlanta.

It’s huge, has great everything, and gives the new HQ proximity to both Latin America and Europe.

Of course, we could be dead wrong (and often are), but it’s fun to speculate.

Is Amazon a prime opportunity for real estate investors?

Time will tell, but it’s certainly a story worth watching.  The odds are good.

Any time this much economic activity is pointed at a single market, there’s certainly going to be a lot of opportunity.

The big question is when and where.  Stay tuned!

Until next time … good investing!


 More From The Real Estate Guys™…

The Real Estate Guys™ radio show and podcast provides real estate investing news, education, training, and resources to help real estate investors succeed.