First Rule in Investment: Don’t Fall in Love With an Asset
- May 07, 2018
International investment strategies are shifting around the concept of what makes a city an attractive global investment market. While emerging companies might be reluctant when it comes to expanding their portfolios outside the border, due to various political or economic events, experienced professionals in the business see no reason for hesitation. Jeff Holzmann, managing director of iintoo, highlighted what a real estate investor’s checklist should contain before going international.
Investors are usually loyal to the markets they started in, particularly if these are performing well, and are very cautious when it comes to foraying into a new one. When would be the right time for an investor to open up their portfolio?
Holzmann: Yesterday. If you live in the market you invest in, by definition, you are under diversified. You want to spread your investments in markets that behave in an inverse correlation, so if one market goes down, the other may go up. When it comes to investments, the number one rule is not to fall in love with an asset. You don’t need to live in that property, you need to maximize the potential.
How does the current economic environment encourage international real estate investment?
Holzmann: It is easy to forget that the U.S. is still the largest economy in the world, with a positive net immigration and a growing GDP. Most people still use the U.S. dollar and the consumer demand in this country as a barometer. The reality is, regardless of your political stand, this is still the greatest country in the world in comparison to other international markets.
Is the global market open for smaller U.S. investors or is this a big players game?
Holzmann: Of course, through the global stock markets, you can invest in stocks, bonds and funds that invest professionally in real estate throughout the world.
What do investors need to take into account when considering international real estate investment for the first time?
Holzmann: Many, many things. First, it’s easy to fall victim to scams investing with groups overseas that you know nothing about. Second, there are macro-economic trends you cannot predict, such as Brexit. Third, you have to consider hedging against a change in currency exchange rates that can eat into your entire profit.
Could you name a few hot international markets for real estate investors?
Holzmann: Israel has seen tremendous growth in real estate prices in the major metros and some areas in Mexico are being converted from industry to tourism and luxury residential. These are both very unique opportunities.
What can you tell us about online real estate investment?
Holzmann: This is the hottest trend right now. The combination of technology and new regulation makes it possible to invest in all kinds of real estate without making it your primary concern. People looking for passive income can buy a single-family home without ever visiting the state in which the property is located and accredited investors can invest in commercial grade real estate using sites like iintoo and Crowd Street, giving them access to deals that previously only multimillionaires could even consider.
How do you see online investment versus traditional strategies going forward? Will the first exceed the latter?
Holzmann: Everything is moving online. You don’t go to a Blockbuster to rent a video anymore. You don’t go to your bank to deposit a check anymore and very soon you won’t be going to Toys R Us for toys anymore because they are shutting down all the physical stores. You can research, compare notes, invest, monitor and collect income all through a website or mobile app. It’s easier, smarter and cheaper and no force in the universe can stop it from overtaking the traditional industries. Once this new generation become the bulk of the workforce, anything else but online will become a subject for the history books. It’s happening all around us.
Image courtesy of iintoo