When it comes to investing in property it makes sense to start with properties at home so that you can have a hands-on approach and ensure the success of your investment.
However, in various parts of the world, the purchase price of property is fractional compared to in places like the US or UK. Plus, there are fewer regulations constricting your ability to turn a profit, as well as lower rental income taxes.
This makes that first sentence of ours less true than you might think.
We are not advising that you go off and begin investing in a dozen countries all over the world. But it can’t hurt to know the potential opportunities available, so that maybe, just maybe you can incorporate this knowledge into your long term goals.
GoBankingRatesdetermined the best countries to own investment property based on the following factors: (1) rental yield; (2) average monthly rent; and (3) rental income tax rate.
Rental Yield: 5.75 percent
Effective Rental Income Tax: 2.08 percent
Panama is a popular choice for international investors for a number of reasons. It has a high average rental yield along with low taxes. Investors also benefit from Panama’s retiree-incentive program and robust property ownership rights for foreigners.
Rental Yield: 5.19 percent
Effective Rental Income Tax: 5 percent
The UAE has a lot going for it. It is a wealthy country with some of the most relaxed taxes anywhere. What this means, is that whilst the rent may be comparatively high, the population has a large disposal income which means they can and are willing to pay a bit more for rent.
Rental Yield: 7.48 percent
Effective Rental Income Tax: 5.16 percent
Compared to the UAE, Costa Rica’s rent prices are low, less than ½ on average in fact. However, you get one of the highest rental yields out of anywhere according to GOBanks survey. Plus it has a rental income tax only a little higher than the UAE.
Rental Yield: 8.61 percent
Effective Rental Income Tax: 20 percent
Indonesia pairs high rent with the highest rental yield of any country surveyed which in itself should make any investor look twice.
It’s a big country with a booming population and remarkable economic growth - where prices are still way below what they should be, and it has a growing tourism industry that makes it a place to watch.
Rental Yield: 5.48 percent
Effective Rental Income Tax: 7.5 percent
Barbados has some of the highest rents which instantly begins to make it an interesting concept for investors. However, to buy property there you’ll need permission from the country’s Central Bank to purchase an investment property.
Rental Yield: 5.13 percent
Effective Rental Income Tax: 2.73 percent
On average Thailand’s rental yield doesn’t shout great investment. However, a cleverly located property can offer a rental yield of over 8% - for example, a high-quality property in the center of Bangkok.
Combine that with a low effective rental tax rate and relatively high rent, and Thailand looks like a promising opportunity for investors.
Rental Yield: 5.12 percent
Effective Rental Income Tax: 0 percent
Rents are low, as is the average rental yield. However, you don’t pay rental income taxes on any of the first $23,339.22 of income which makes Cyprus an enticing option for some.
Rental Yield: 5.43 percent
Effective Rental Income Tax: 8.4 percent
The average rental yield for investment properties according to GOBanks survey suggests that rental properties in Croatia perform well. However, Croatia is less tax-friendly than other options on this list, and the average rent is comparatively low.
Rental Yield: 6.24 percent
Effective Rental Income Tax: 10 percent
The rent in Bulgaria is low compared to others on this list. However, when you compare the rental yield with others you can see why it made it into the top 10. There is though a high effective rental income tax which is on the higher end at 10%.
Rental Yield: 5.24 percent
Effective Rental Income Tax: 13.5 percent
The strong industry in Hungary in recent years means there's plenty of opportunity in Hungary at the moment for real estate investors. However, it has some high taxes at 13.5% which puts it as the 10th most expensive place for rental income tax in GoBanks study.
There are plenty of ways to look at an investment property and its likely profitability viability. One thing to remember is to never over-stretch yourself. If you don't think you can manage the property - perhaps there's too much on your plate at the moment - don't rush in, be patient and do your due diligence. Go visit the city and the property and make sure you have someone you can rust locally to manage the day to day tasks for the property.
We hope you found this blog interesting! However, do note that it should not be used as a substitute for competent legal and/or other advice from a licensed professional.