As I wrote in 2017.. Here’s another Attractive proposition — Suppose there’s a U$200k overseas property with high appreciation potential + 8% NGRY, much higher than mortgage rate. Would you invest that amount and delay your U.S. home purchase? You would remain a tenant in U.S. and rent out the overseas property – rent/rent-out, earning a positive “lease spread”.
Hi Susan,
I haven been thinking about buying a rental property in the U.S. Then it struck me that it’s harder to remotely manage a U.S. property than a SEA property. The U.S. rental market is more complicated with the law protecting the tenants. I will only consider it when I’m local.
There are other advantages investing in SEA rental properties:
- 🙂 quantum — If I have some modest amount of spare cash, I can more easily afford a rental property in SEA (except Singapore) … a fraction of a U.S. home price
- 🙂 exposure — is smaller in a pessimistic scenario
- 🙂 repairs — U.S. repair labor cost is a few times higher than Singapore … Let alone other SEA markets
- 🙂 wood — U.S. homes are usually wood structure .. higher maintenance.
- 🙂 appreciation — Most U.S. locations don’t have real appreciation, but the SEA prime locations appear to be emerging, with upside potential. I can’t afford any prime location in the U.S.
- 🙂 agent cost — I can rely on SEA (including Singapore) local agents to manage for me at a lower cost.
On the other hand, I am aware of the drawbacks in SEA:
- Not feasible to get 10 rooms to rent out in a good location.
- 🙁 currency risk
- 🙁 less developed, less proven, less known
- 🙁 political and legal risks. I think many Singaporeans burnt fingers in Malaysia.
- The BridgeRetail experience is by far my most successful property investment, so I’m probably over-optimistic due to that experience.