It’s easy to find an overseas property that you’ll love spending time in. But it’s much more difficult to find one that will either cover its running costs or make a handsome profit.
We’ve pinpointed three locations with strong rental potential. Two of them would make fantastic second home destinations. The third would suit investors looking for a mix of good potential rental yield and appreciation.
Location #1. It’s a tropical paradise where powder beaches fringe clear turquoise seas. You can get here from many destinations in North America in just half a day (including flight time). You’ll find culture, history, entertainment and shopping on your doorstep.
It’s a tourist hot spot; occupancy rates for this summer season should average 90%. And the government plans to bring in even more tourists to this location—increasing the number of visitors three-fold or more.
Yet a lack of suitable land and strict planning laws limit future development. You can buy luxury condos in this location from $182,000. Your home here should rent easily. But you might just want to keep it all to yourself…
Location #2. This Caribbean island offers sun-drenched beaches, chic eateries and a laid-back lifestyle. It’s very close to North America—only a two-hour flight from Miami. Better yet, it’s very affordable…if you know where to look.
You won’t find big chain-hotels in this location. It’s popular with foreign tourists and locals as a vacation spot. And it’s about to become even more popular, thanks to a new road that opened two months ago.
Condo pricing in this hot spot starts at $71,000. And homes here can earn double-digit rental yields. One three-bedroom house on the market for $285,000 earned $25,580 net rental income in 2010 (that’s the total rental income minus all the running costs). That works out to a very healthy 9% net based on the current asking price.
Location #3. This is more of an investment play. It’s a city with three million residents—and it’s on a roll. It’s the country’s top domestic tourist destination, with its finest beaches and a buzzing nightlife. It’s a top spot for foreign investment. And it packs a punch when it comes to business and industry. A new free-trade zone, an expanding port and new power plants are all bringing businesses and even more jobs to the area.
It’s very difficult to find a quality rental here. The rental market, both short- and long-term, is strong. This opportunity (with condos from $120,000) targets local middle-class professionals who want to rent a furnished condo long-term. It could generate 10% a year. The area is undervalued right now, so you should also get good appreciation. Best of all, although the condos are completed, you can still take advantage of developer financing.
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