Exploring the World While Building Freedom Through International Investing

0:00Question number one, what is your objective? Why do you want to buy real estate overseas? Are you looking for just pure returns or pure cash flow? Are you looking for pure cash flow? Are you looking for capital appreciation? Are you looking for lifestyle? Are you looking for fringe benefits that come with a residency? Such as at times local banking. You know, you buy real estate, you get access to local banking, boom, you have some overseas banking. You want a residency out of it.

0:33Some countries will grant you and your family residency just for owning real estate there, which means that if anything were to happen, you can move there, live there legally, everything's good. Some of these residencies are quite flexible. You don't need to like Panama, for example, $200,000 in real estate or in a term deposit. So, either or gets you residency. And you just need to set foot there once every 2 years to keep it active once you've achieved permanent residency. So, that's like a really good plan B.

1:05But is Panama going to give you a lot of yield? No. Is it going to give you a lot of capital appreciation? It hasn't over the last 15 years. It could start with everything that's happening in the Middle East and capital needs to flow somewhere else potentially. Or do you want citizenship? Some countries will literally give you citizenship, will hand you over a passport to you, your spouse, your children, and then all your future descendants as long as they get registered at a Turkish embassy. So Turkey's like that, $400,000 invested in any real estate in the country just for 3 to 5 years.

1:423 years actually. 5 years if you don't want to pay local capital gains. So, you can you know, there is there's a reality out there where you just shift money to other jurisdictions. 200k to Panama for 3 years. Boom, get your permanent residency. You can take the money out after, but if you keep the permanent residency. Send 400k to Turkey, buy two, three apartments, collect 5% net a year in rental income, roughly. After 3 years, you can sell or after 5 years, sell and not pay local capital gains taxes.

2:15Boom. Redeploy that cash elsewhere, but you've collected citizenship valid for life. Your future dependents will will have access to it. They'll have another passport. That's that's a generational move. And there are other countries that have that have such such opportunities. So, it really depends what is your objective. A lot of people say all of them. All right, but that's not quite how life works. And that's that's what we help people do is prioritize. — that's that's super interesting.

2:49And those are great examples, too. I didn't realize that that even was an option. I think Canadians in general think more internationally than American I think Americans get Sure. You know, lulled to sleep in the US cuz they have so many options in the US. So, it's like, you know, easier to just stay focused on the US. But what I guess what's the biggest benefit of having multiple citizenships? Is it just like kind of worst case scenario if, you know, everything goes crazy, you can get out of the US or what I mean what what in your mind why are most people focused on this?

3:27— So, I'll give you a few examples as like from some of our clients. So, some clients, they you know, they're Ukrainian. They managed to flee. And now their passport has expired or is about to expire or ran out of spaces in their, you know, out of spaces due to stamps. Or they lost it. And the Ukrainian government in cases will say, "Well, if you want to renew your passport, then you know, you can't do this is at an embassy.

4:00You're of military age, you need to get military clearance first back home." — Mhm. — So, if they don't have a second passport, they're stuck where they are as refugees. They can't move around anymore. So, that's one clear case for it. War. Two, we're seeing it also people from political reasons. We've had clients from places like Belarus that were political opponents. And their passport is not getting renewed. We've had some Western clients with similar issues that were politically active in some Western countries I won't name and that would not get their passports renewed.

4:43— Mhm. — Their applications would get lost all the time. So, political aspects, military draft, business opportunities is really a big one. Look, when you, for example, Sierra Leone, it's a country in West Africa that we help people obtain citizenship in. We have the the you know, government license for this. And by being a citizen of Sierra Leone, you get access to all of West Africa for visa-free travel.

5:16So, countries where you and I would need a visa, Nigeria, Ghana, places like that. Nigeria's big, over 200 250 million people. Nigeria just by itself has more children per year, new new more new newborns than Europe altogether. — Wow. — It's insane. Right? So, with a passport like this, then you have full access to countries like this. And you can even move there very easily. You just need to sign to show up with your passport, fill a single document, you know, and give like 20 30 dollars and you're good.

5:49If you're not from, you know, West Africa, it's a lot more complicated. So, what we have now is a part of our clientele is family offices. And increasingly we're invited onto family office road shows where we represent this. Essentially there three pillars now to generational planning. The usual one is assets. We're all aware of that. The second one is something that family offices have been working on in the past, you know, 10, 20 years, but less before, but now it's really a thing, is values.

6:25And now the third one, which is still very niche, but which people are starting to think about, is a portfolio of citizenships. — Mhm. — Because later in life that gives you access to many more markets and opportunities. — Yeah. Interesting. And so from a return standpoint, if we're like just looking at the first one, those assets, like where where do you see the biggest opportunity right now if somebody wants to start diversifying? — Purely from a returns point of view, right now, I'm I would say and I know I sell real estate, but I'd say cash until it becomes clear in what sort of world, you know, there it's just like just as there was a pre-COVID and there was a post-COVID.

7:13— Yeah. — There's a pre-Hormuz and there's going to be a post-Hormuz. You'll probably publish this. I asked you, you know, before we had the interview, you said you'll publish this in about 4 weeks. You know, maybe there will be peace in the Middle East in 4 weeks. — Yeah. — I doubt it. And if there's peace, I doubt it'll last. It's really about the severity of the energy crisis. If it's really bad, I would probably not want to invest in countries that are net importers of energy.

7:46I would probably prefer to invest in places that are net exporters and that are in energy and food independent. So, depending on the severity of the crisis, and crisis there will be depending on the severity severity of it, then I'll be a bit more comfortable working on a more solid thesis. For now, my thesis is change is coming. A lot of change. I don't know how much. I hope not too much. But, yeah, just sit in cash and see what happens.

8:18— I see. Okay. Interesting. And so, if things stabilize a little bit and we start to, you know, start to see — Unless you know, unless you want to do the citizenship and the residency cuz it's never become more relevant than now. — Yeah. Yeah. — I mean, you're literally at war. You're American. You're at war. — Yeah. Right. And and so, you're like so, you would focus — country. Not like — Right. — like clowns like before. Like serious.

8:49Iran is serious. — Right. Yeah, from someone who's actually been in the country. Yeah. Yeah. And so, you're if if you're focused on just the citizenship part of it, you'd be focused on countries where like Turkey where you can invest in a property and and start that that process. — Look, I'd say Turkey has never been more interesting from a citizenship point of view because it sits between East and West. You know, when doing business in Muslim countries a Turkish passport comes in handy.

9:22It's often better than showing up with a the passport of a country that bombs, you know, Muslim countries out of habit. So, you know, also to do business in, you know, Russia, etc., blah blah, you know, easier. So, there's there's a real use case for a Turkish passport now more than ever. Having said this, it's also a bit riskier, you know, it's in a volatile region. So, I would say if you're a bit tight on money and getting Turkish citizenship would represent a very high percentage of your net worth probably too risky.

10:02If it represents, you know, if you're worth 10 million plus Okay, whatever, 4% allocation to Turkey, get the passport for the whole family and knock on wood, you know, things will be fine. So, again, it then it's about position sizing. Okay. — That makes sense. Speaking of risks, let's let's talk about a little bit of it the risks involved and then also from a structural standpoint what that looks like cuz in the US it's it's, you know, you can get a 80% DSCR loan on pretty much any property that cash flows.

10:37And leverage is is your best friend. I know in a lot of countries that just doesn't exist. So, I guess let's talk about risk first then we can kind of get into maybe some of the structuring of how it works. — Yeah, so I think let's go into the structuring first. Yeah, when you venture overseas they're mostly cash markets. You can get some mortgages in some cases, local ones targeting non-residents, but they'll charge you a lot more which makes it non-interesting. And then if you're US person, it's even more complicated cuz most financial institutions don't want to deal with you due due to FATCA.

11:14Due to you know, the US government just putting pressure on banks worldwide which makes reporting requirements on US people very onerous and risky, actually. So, just go out there in your mind if you're going overseas, it's cash. If you buy from a developer, you can get developer financing and pay over, you know, 2 3 years, something like that. But if you're hoping for nice cheap 20-year, you know, mortgage at a fixed rate with just 20% down, then just stay in the US. And and I'll repeat, in most cases, you're better off investing in the US than you are overseas.

11:48The US really is full of opportunity. — In terms of return. Like the US really is full of opportunities. So overseas, I'd say it's really about diversifying, not being all in all in the US, right? Cuz you never know what could happen. Empires come and go, right? As they have historically. So in terms of risks, I'd say the big biggest risk going into real estate overseas is being cheap. And cutting corners.

12:21And not hiring a lawyer. — Mhm. — When you, you know, sometimes you'll see shows on TV or like something on YouTube and it's like, "Oh, you know, Jonathan went to Mexico and he bought some land and then it turns out that it's not that plot of land he bought, but something else." And — Mhm. — It guess what? Like, you know, Jonathan didn't use a lawyer. He you know, he just trusted his girlfriend's cousin or you know, his wife's uncle. Or he used, you know, the the uncle of his girlfriend who's a local lawyer, but doesn't understand like foreigners.

12:55Like places like Colombia, for example, where you can get some very decent returns actually in in Medellin. Tourism is really booming there. But again, post war moves, will tourism still boom? I don't know. — Yeah. — You need when you invest in like if you just go to I've I've had this to some clients of mine where they they hired and they became clients afterwards. They they bought real estate in Colombia and they got a local lawyer who was cheap cuz they don't want to pay, you know, expensive money for the gringo lawyers and the lawyers that speak English and all that.

13:30They you know, they were trying to be smarter. And they would buy property and send the money directly to the seller's account in Colombia. And that's fine. It works. You can buy this way. But then when you sell, the bank will ask you for a central bank declaration stating that the the money was registered, the initial investment was registered as a foreign investment. And if you don't have this, you can't take the money out of Colombia. Right? And And it's just it's just one document that you the bank actually needs to fill out or the broker through which you send the money.

14:04And it's not complicated, but it needs to be done. But most local lawyers, because they just deal with local clients, don't know this. You know, so just don't be cheap. When you go do a deal in a country where you're not familiar with how things work, just hire, you know, lawyers that are experienced with foreigners. And they're typically more expensive. — Got it. — Yeah. — That's the single biggest risk. The second biggest risk is overestimating liquidity.

14:38In North America, we're used to liquidity. We're used to putting a house for sale and if the price is fair, market-related, you know, it'll be gone I don't know, a few days, a few few weeks max, you know, maybe same day. Few weeks max, generally speaking. In And if it hasn't, you've mispriced it. In a lot of countries, you can put the apartment or house at market price and it'll take you 6 months to a year to sell.

15:09— Mhm. Just not as many buyers. — Yeah. Less liquidity in the market. Less mortgages, less this, less that. And you know, not every country is as rich as the US, right? So, just less liquidity around. Many people but less people with money. So, people should just be aware of this. You know, if if you're going to put your last cents in like foreign real estate and you're like, "Oh, you know, if if I can if I ever need the money, I can sell it." It's like, Yeah. Like maybe maybe this is not right for you or you just do it to get this paperwork and then pull the money out later but just, you know, be reasonable.

15:46— Got it. Yeah. That makes sense. That makes sense. I I spent some time in Kenya, actually, and I I as we were driving around, I noticed there was a lot of not for sale signs and you get some used to for sale signs. And I was like, "Why why would people put a sign in the front that says not for sale?" And it was explained to me that there's not the title system like there is in the US and so people would just sell a random house that's not theirs and so you got to like designate that it's not for sale, which was interesting. — Yeah, the coast in Kenya is particularly dangerous for this.

16:17Nairobi's fine. But the coast in Kenya is notorious for multiple correct and all completely valid title deeds on the same property. — Jeez. Wow, interesting. — Yeah. Both with like impeccable history. — Yeah. I wonder how that happens. So, what do you look for like if you if like when you're going to buy your next deal, what makes it a deal for you? Like is there a specific type of return or Okay.

16:51— No. No. It depends. It depends. Like it depends on the objective. Am I looking for cash flow? Am I looking for capital appreciation? Do I want a unique piece of property that's just going to go down the generations where I know it's just, you know, so beautiful it'll just, you know, some historical building somewhere with like a unique view that'll never get blocked, you know. It depends. It depends. — Oh.