There are many ways to invest in real estate. Two of the most obvious are purchasing a rental property or investing in fix-and-flip projects. Investing in global real estate is also a possibility. If you’re expanding your horizons, here’s what you should know about real estate beyond your backyard.
Why Invest In Global Real Estate
Before looking at the various ways you can add international properties to your portfolio, it’s helpful to consider the benefits first. There are three main reasons to consider global real estate as part of your investment strategy:
First, real estate is a way to diversify your investment portfolio beyond the typical mix of stocks and bonds you might already own. Diversification is a good thing, since it helps you to manage and balance risk in your portfolio.
Investing in global real estate adds a new diversification dimension, since you’re adding exposure to international real estate markets. The way the real estate market operates in another country may be very different than the way it operates in the United States. Global real estate investments can capitalize on those differences when a particular international market is performing well.
Adding real estate to your portfolio can hedge against stock market volatility. Real estate typically doesn’t correlate as strongly to stock market movements as other investments. As a result, it handles ups and downs better than most. Global real estate investments correlate even less strongly if those investments are not directly affected by trends in the U.S. stock market.
Finally, real estate can generate stable income in your portfolio through dividends or returns when you sell investments at a profit. That can be beneficial when the U.S. economy begins to slow down or inflation is rising.
If you own real estate investments associated with a country that has a strong economy, the gains and income generated by those investments could help to offset any inflationary impacts on the rest of your portfolio.