Are You Scared of the U.S. Dollar?
Date: 04/22/2005
International Living Postcards-- Saturday Edition
Saturday, April 23, 2005
Paris, France
Dear International Living Reader,
When I made my first international real estate investment, I got a good deal because I was "in the market"--I was prepared to act when the right deal came my way.
In the world's hottest markets, you need to be prepared to act quickly. Otherwise, someone else will take the opportunity.
That preparation starts simply with the decision to diversify into international real estate…and doesn't end until the ink is dry on the right deal for you.
(In between, you need to put together a good team -- see Seven People to Make You Wealthy -- and identify a suitable market, i.e. location and type of real estate.)
If you haven't made that first decision yet…why not? You already know the reasons to invest in international real estate. Maybe you're waiting to see which way the dollar will go, worried that it might get stronger (if you diversify out of the dollar); worried that it might get weaker (if you don't).
Let me tell you something: Fear of dollar flux shouldn't stop you making the decision to diversify into a non-dollar denominated asset class.
You can't say which way the dollar will go -- no-one can.
If you invest in the right type of international real estate, you can leverage your purchase in a foreign currency (generating a rental cash flow in that currency to repay your mortgage) and create a non-dollar denominated net worth for the long term.
Should the dollar get stronger, you have a self-amortizing investment that doesn't affect your current dollar cash flow. Should the dollar get weaker, you will look smart to your neighbors.
If you've identified the best real estate market for you, help yourself get "in the market" by converting your purchase funds from dollars to the currency you'll need when the time comes to act.
The best way to do this is with an interest-paying foreign currency account such as one of the World Currency Deposit Accounts offered by Everbank. It's easy to set up and you can hold any major currency.
Until next week,
Lief Simon
Real Estate Editor, International Living
P.S. While I would recommend the company anyway, please note that my publisher has a commercial relationship with Everbank and may receive compensation if you open an account.
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