Читать книгу Buying Real Estate Overseas For Cash Flow (And A Better Life) - Kathleen Peddicord - Страница 43

After Lief sold that three-flat in Chicago and we made our move to Ireland, we began analyzing Irish real estate markets looking for investment opportunities. At the time (1999), most rental properties in this country were generating net yields of 2% or less. Dismal. But the Irish didn't care. Property values across the country had been appreciating 10% a year or more for years, and the Irish expected that to continue indefinitely.

They were investing and reinvesting using OPM. Banks were lending easily (though not yet at 2005 levels, when 110% LTV mortgages—the extra 10% to cover the “stamp duty” required at closing—were being handed out like chocolate buttons to tykes at Christmas). Investors were subsidizing mortgage payments out of pocket because rents weren't doing the job. They saw it as a sensible ongoing investment in the windfall appreciation they were certain would come.

In 2008, Irish property values fell 50% and more, depending on the region of the country, almost overnight. Most of those 110% LTV-financed properties were returned to the bank. Didn't seem so clever any longer to top-up mortgage payments out of pocket.

Leverage isn't always a good idea and, when investing overseas, it isn't always—or at least not always easily—available. In Part II, we'll detail your realistic financing options, but you should understand as you set out to start and then grow your global cash flow portfolio that OPM isn't always an option. Sometimes that's for the best.