Overseas Property

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Overseas property.

When you’re looking at property markets overseas, it can actually be a huge inspiration. And why that’s so important is your market in the way it’s set now, or where you’re looking in Australia isn’t going to be the same for the next 10 years, and it hasn’t been the same for the last 10. 

When you look at that, you can go back to the last 20-30 years of the property market in Australia and there’s things that you constantly see changing. Interest rates, credit policies, where jobs are going, where infrastructure is going, where cities are developing, where population is growing, and where largely just activities is happening. It’s changing.

Governments, what they considered important yesterday, and what they consider important today. So already in Australia, you’ve seen a wave of growth, but what you can learn from looking overseas is massive. I’ll give you a few examples. Markets like New Zealand. If you’re looking at New Zealand, the things that are quite attractive over there is that there isn’t any stamp duty on purchases. Now, the con of that might be the deposits are higher, where some people have 20, 30, and sometimes even up to 40% minimums for certain types of property.

If you think of that in comparison to Australia, you might go well we’re getting a lot of lending over here, even in such tight markets, up to 90%, for home buyers up to 95%, and sometimes I’ve even seen 97-98% yields. So, if you’re considering that, that just shows you from what overseas markets are doing and the opportunities that are out there.

Now, let’s look at Japan for example. Japan has actually rates that are extremely low, interest rates that are having a two beside it, a one beside it, and not too long ago, there were rates below 1%. So, if you can imagine that with even longer terms of loans that go beyond 30 years, that can just show you what can happen from data and insights across the world.

Another one you could throw in there is USA, where rental yields in some locations are between 12-20% gross, and even 10-14% net. There are properties over there that you can settle in one to two weeks on cash that cost you less than a car. So, when you’re thinking of that, that just shows you the variance of different markets. There are places like Australia that have negative gearing, then there are other places in the world that don’t have negative gearing. How has that fared for the two?

So, why I say you should consider looking at markets overseas for inspiration is not only well you get to see the success investors are having in that area, but you’ll also get to see how the markets are positioned, what’s happened to them in different environments and why. How they got there. So you can almost understand that if Australia’s heading in different directions, what are some comparables? What are some things you need to consider? And what are some things that are just so different, and why?

Because when you look at overseas property, at some stage as you grow your portfolio and if your goal is really building a portfolio to scale, then what will happen is you’ll start to go from your backyard to across the country. Then you’ll start to go from residential to commercial. And then you’ll even try and consider renovation, development, or things like that. Eventually you’ll be so broad in the space of property you might even consider unique strategies like boarding homes and things like that.

Now, if you go one step more, you start to look into overseas property, where you might consider USA, New Zealand, or parts of Asia, other countries that are there. And what that will give you is it will give you more of a broader property understanding from an economic front, global front, and also help you understand and forecast and really predict markets not from the percentage of growth necessarily, but also predict the outcomes that can happen if certain policies and certain changes come into play, because you had an idea and understanding of what other markets and other places have gone through at that point in time.

It’s as simple as comparing it to concept stores, or pop-up stores in the restaurant business. Recently, for those who might be familiar with Sydney, there’s been a concept McDonald’s store open up. And that’s actually open up in Bella Vista. Now, what that concept McDonald’s store shows is just a testing grounds for them to try places where there’s no counters. You just order from a machine. There are charging stations everywhere, and you can start to imagine if McDonald’s was to do more of that, where could it go?

The same thing is done with property and investing overseas. We can see markets trying different things, or having different things available to them. N you can really predict and understand where things go. But also you can change your investment strategies, diversify, and grow even beyond property in Australia.

Now, personally I’ve made it a goal of investing in property overseas over the next one to two months, and I’ll be keeping people up to date on what I’m doing there. But that’s just what I wanted to share with you. That’s from us here at Investor Kit, the experts in wealth creation, helping you take action.