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NOTABLE! Live Rent Free in Multiple Countries

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GlobalWealth

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Maybe I'm just paranoid but what is stopping your property manager from cutting you out completely? You'd be none the wiser, thinking there is no one renting while your pm collects all the money under the table.

As others said, if you use airbnb, vrbo or similar, you remain in control of the cash flow as guests pay through the respective reservation system.
 

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GlobalWealth

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I can not speak for GlobalWealth, but my PM in Tofino uses VRBO, AirBNB, as well as his own website for bookings. I can see the availability calendar there. I have not gone through and kept track of days and matched them up to his detailed statement I get every month. (My statement shoes each guest, which unit they booked, days, rate, etc). I have to have a level of trust/comfort with him. I will say, that it is a small community, and if he were less than honest, the word could spread quickly and squash his business.

I also have a report my pm provides each month to me that is reconciled with the reservation systems and she provides me with expense receipts. I created the spreadsheet report so I get what I want to see. She just fills in the blanks. All guest reservations sync with my google calendar as well so I can see at a glance the availability on my laptop.
 

GlobalWealth

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@GlobalWealth sorry if I missed it, but can/do you depreciate foreign properties on your taxes? Certainly that would make it even more appealing as your depreciation would shield a significant portion of your revenues from taxes.

Based on the US 39 1/2 year cycle that comes out to essentially 2.5 percent of the purchase price in tax deduction each year. But this assumes you file in the US.

Yes you can deduct depreciation on foreign real estate as well as mortgage interest (if any) and any other related deductible expenses. If residential the depreciation is over 27.5 years though, commercial is 39 years.
 
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GlobalWealth

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I've been looking at the numbers as well and I think 80€+ per night is pretty high in locations such as Budapest. I can see most decent apartments for 2 people rents out for 35-50 USD per night, but again I guess it all comes down to the math? Which I am not so good at, hmm. Feels a bit overwhelming. Guess I'll have to do some more reading :)

I was in Budapest in August. This is one of my top picks in Europe right now. For good properties in the center in district 1 or 5 you should be paying around eur1000/m2. That can be very attractive for short term rentals.
 

GlobalWealth

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If I understand it right, you look for countries with low wage, low consumer price index, but closer to 100 on the local purchasing power. Do you then look for top tourist towns within the country, or stick with a popular location within the capital city? I imagine this would involve a fair bit of research about the country, its economy and attractions.

First of all, I like to look at places where i personally like to visit. Secondly I look at places where the income is low, but local purchasing power is good (as you noted). I like capitals or tourist towns that get a lot of regular visitor traffic.

For example, I would never choose anything Norway, Switzerland, Germany, etc. The incomes are too high making local cost of living high, which also means less foreign visitors due to their own low purchasing power.
 

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At what point would you consider investing in foreign real estate for a beginning investor? Meaning, is it something you'd do right after taking care of the basics (savings for 12 months, buying some precious metals, perhaps some local real estate, etc.) or would you do it later on as an additional level of diversification once you're already well diversified in your own country?
 

GlobalWealth

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At what point would you consider investing in foreign real estate for a beginning investor? Meaning, is it something you'd do right after taking care of the basics (savings for 12 months, buying some precious metals, perhaps some local real estate, etc.) or would you do it later on as an additional level of diversification once you're already well diversified in your own country?

I really think this is a personal question subject to each person's goals. If you can earn 10% in foreign property or 10% in a p2p lending platform, but the property also gives you a place to spend time when in that country, then all else being equal, why not buy the property?

If you have no plans for ever, or rarely, visiting Lisbon, why bother buying property there to begin with?

Investing is a complicated subject with way too many variables to just make blanket statements.

For example, my nephew does construction. So he buys plots of land and builds duplexes for himself. In a way it is his own "401k". He builds them at his cost as a contractor, rents them out (he is 100% rented with 6 duplexes - 12 units) and manages himself. But he doesn't travel except for the occasional vacation. He has no interest in living in multiple countries. He hates the stock market and finds it risky. So he leverages what he knows (construction) to build a portfolio of rental duplexes. He earns 15% (ish) net per year and is rapidly paying off the mortgages.

This strategy would never work for him. But his first investment dollar went into building his first duplex.
 

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Thanks, @GlobalWealth. It makes a lot of sense. I like the example of an apartment in Lisbon vs P2P lending. However, I think there are other benefits of owning foreign real estate even if you're not going to spend a lot of time in a foreign country, for instance it can be a bolt hole in (an unlikely, but still) case of a local collapse, or just a way to diversify yourself internationally with a real-world asset (vs digital P2P) as well as a way to increase your financial privacy.

I have something in common with your nephew as I also stay away from the stock market. I was a bit concerned that my options are limited because of that, but this example shows there's nothing to worry about and one should focus on what works best for him.
 

GlobalWealth

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Thanks, @GlobalWealth. It makes a lot of sense. I like the example of an apartment in Lisbon vs P2P lending. However, I think there are other benefits of owning foreign real estate even if you're not going to spend a lot of time in a foreign country, for instance it can be a bolt hole in (an unlikely, but still) case of a local collapse, or just a way to diversify yourself internationally with a real-world asset (vs digital P2P) as well as a way to increase your financial privacy.

@MTF, yes I agree. There can be numerous benefits to real estate if bought properly. A wise re investor once told me you only make money in re at the beginning. My interpretation of that is the price you pay is critically important to your long term gains.

There is a very famous investment book call F Wall Street. He covers it in the realm of stocks as well in his discussion about the price you pay for a stock. For example, a stock at $50/share paying a 4% dividend is good. But the same stock (assuming the business remains functionally the same) at $25/share now would pay an 8% dividend. That gives you a higher cash yield and higher potential gain in capital appreciation, from the exact same asset.

Its the same in re. If you pay 100k for a property that brings in 10k/year that is a 10% yield. But if you can get the same property (again, functionally the same market) for 50k, then you have a 20% yield and higher potential appreciation.

Real estate offers the benefit of a place to live, or a 'bolt-hole' as you call it. I prefer the more positive thought of a place that I enjoying spending part of my life.

This strategy may not be your ONLY strategy for wealth. But it can be a good lifestyle strategy to perpetuate wealth and make it grow while you continue working on your primary cash machine.
 
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JAWS

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After reading @G_Alexander post here - https://www.thefastlaneforum.com/community/threads/stop-paying-rent-live-for-free.51893/ - I thought I would share with you a similar strategy that can be implemented on a more global scale.

First of all, this is not for everyone. This is for people who are interested in living in multiple countries and have the ability to work from anywhere.

This is not a get-rich-quick or even a business strategy. This is only for people who have a bit of money to invest and a virtual type income allowing them to work from anywhere in the world.

If this appeals to you however, I can teach you how to earn 7-10% net cash yield on multiple properties in multiple countries allowing you to live rent free and make a pretty good return at the same time.

Let me explain....

First of all, ideally you need cash. It is possible to get loans, but getting a mortgage outside of your home country can be a bit more difficult. Not impossible, but more difficult.

Secondly, you need the ability to travel to the place that interests you and spend some time on the ground meeting with real estate agents, contractors, property managers, etc. This is not passive getting started. It can be once set up, but requires real work on the front end.

The lazy need not apply.

Third, you need to open your mind a bit and get out of your comfort zone. You have have had dreams since you were a kid to live in London, but I can tell you - London is a horrible option for this strategy because you won't get any reasonable rate of return doing what I am suggesting.

You need to consider places off the beaten path that you may not have previously considered or have been negatively swayed due to mainstream media - Colombia, Serbia, Portugal, Brazil, Lithuania, Hungary, etc are all great option - but not places most have considered.

And lastly, be prepared for your friends and family to criticized this new life you have created flying to different countries every couple of weeks living in cool locations and experiencing things they would never have the courage or dreams to experience.

Let's get started.

First of all, you need to be aware of airbnb(dot)com and booking(dot)com. These are your platforms (there are others as well, but if done properly you won't need others). Also recognize this violates @MJ DeMarco's book's rule of control. Yes, you are somewhat in the hands of these marketplaces, but many of you running Amazon, Etsy, Ebay, Shopify, etc stores are in the same situation. And this is not your primary business model either. This is a way for you to invest in international real estate, live like Richard Branson, and earn some cash in the investment.

What you are looking for are cities with low wage and cost of living. You can research this on sites like numbeo(dot)com and others. I like numbeo because it allows you to research all aspects of cost of living and compare to other cities. It is very useful.

You want a a low cost of living city because these cities tend to attract tourists - your target audience. For example, British tourists tend to travel to various Eastern European cities for holiday because their money goes much, much further.

Anything in Switerland, UK, Norway, Finland, Sweden won't likely be candidates as they are typically very costly locales.

Next you want to find cities that have relatively high tourist traffic. These places need to have something of interest for visitors. Festivals, arts, architecture, Unesco World Heritage sites, beaches, food culture, etc.

One way you can check that is to go to airbnb(dot)com and look up your city of interest. Look up 15-20 properties for rent and look at their calendars for the next 2-3 months. Do they have a lot of vacancies, or are they rented out 15+ days per month? You can also get a feel for the pricing in the market for what a 1br, 2br, etc apartment may rent for per night/week/month.

If craigslist(dot)org is in the city, it is also a good resource to check the rental rates. But typically airbnb is good enough.

As is the case with much real estate investment advice, location is key. It is especially key in short term rentals. I would pay 2x as much for a center city apartment that is walking distance to local attractions than for an apartment that is 5km away that forces guests to drive or use public transport. Of course yield is key here, but the center city apartment will rent out much easier and will also be an easily saleable asset if you decide to unload the property in the future.

Next do some research on the local market prices for apartment sales. You can find real estate agent sites or other sites that aggregate real estate for sale in every medium+ sized city in the world (thanks Al Gore for the internet...).

Start building a spreadsheet to analyze pricing. Depending on where you are in the world will determine the unit, but for argument sake here let's just discuss euro/m2.

Create a spreadsheet and start analyzing similar properties in the city where you are interested. You will get a feel for the euro/m2 to give you some baseline for measurement.

Now look at airbnb and see what the average rental rate is per night and the average number of nights those apartments rent for.

For example, let's say you can buy a 50m2 apartment for eur75,000. That is 1500 eur/m2. If that apartment can rent for 80 eur/night and the average for those type apartments is 15 nights/month then....

So 80 eur/n X 15 n/m X 12 m = eur14,400 per year. That is your gross income.

eur14,400 / eur75,000 = 19.2% gross cap rate.

Of course you will have expenses associated with that but you can count on 40-50% expenses.

I pay my property manager 25% of gross rents. She handles meeting guests, dealing with any questions, checking them out, checking for damage, collecting deposits, cleaning, all communication, everything. The only extras are hard costs of paper products, soaps, lightbulbs, etc.

After you factor in utilities, property tax, insurance and holdback funds for future repairs, you can expect to have a total expenditure of around 40-50%.

Based on 50%, that leaves you with eur7,200 income, or a 9.6% net cash yield.

That is not uncommon.

In some cases you won't do that well, in some cases better.

For example, you may find a place in Florence, Italy you really love and would love to spend time there. After analyzing the numbers you realize you may only get a 6% net cash yield. But if it enhances your quality of life by spending a week per month in Florence, go for it. There is more to life than just money.
But getting a net cash yield of 6% and a free place to live in Florence is still pretty damn sweet.

Using your airbnb(dot) come platform, you can basically just block off the days on the calendar as unavailable for when you want to be at your apartment in Florence (or wherever). It takes a bit of preplanning but still pretty simple.

You can play around with the rates and charge more during holidays or certain events. For example, if you owned an apartment in New Orleans around Bourbon St, I would raise rates significantly during Mardi Gras.

Of course this is a strategy that cannot be completed overnight, but if it appeals to you I would start researching some place that appeals to you. Maybe it can be a good opportunity.

One last point to make. I truly believe people nowadays need to consider investing some of their wealth outside of their home country. This strategy is a multifaceted diversification approach allowing you to diversify outside your home currency, diversify into hard assets (real estate), and diversity outside your home country.

If this lifestyle fits you or inspires you, then you can buy apartment #2, #3, etc and live rent free around the world.

Feel free to ask me questions.

For cash gross cap / net cash yield, keep in mind that vacancy will be much more volatile (given people are renting these for days, weeks, months). I would add 5-15%, depending on location/heat of market, into the model.
 
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GlobalWealth

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For cash gross cap / net cash yield, keep in mind that vacancy will be much more volatile (given people are renting these for days, weeks, months). I would add 5-15%, depending on location/heat of market, into the model.

I don't understand what you are saying here. Can you elaborate?

As for the model, I research the market to determine estimated occupancy rates. For example, I can pull data from airbnb or vrbo sites for similar properties and get a rough estimate of vacancy rates. For example, I may look at Lisbon and see that 1br apartment similar to what I am looking at rent for an average of 13 nights per month (just an example, not a real number).

So if I see the average nightly rate is eur50, then my gross monthly income would be approximately eur650, or eur7,800/year. If the apartment would cost eur78,000, then that is a 10% gross cap rate. Clearly this is not a "cash in the pocket" number, but only a metric I use to gauge the viability of a local market.
 

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JAWS

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I don't understand what you are saying here. Can you elaborate?

As for the model, I research the market to determine estimated occupancy rates. For example, I can pull data from airbnb or vrbo sites for similar properties and get a rough estimate of vacancy rates. For example, I may look at Lisbon and see that 1br apartment similar to what I am looking at rent for an average of 13 nights per month (just an example, not a real number).

So if I see the average nightly rate is eur50, then my gross monthly income would be approximately eur650, or eur7,800/year. If the apartment would cost eur78,000, then that is a 10% gross cap rate. Clearly this is not a "cash in the pocket" number, but only a metric I use to gauge the viability of a local market.

I agree with your model, but my trouble is the volatility that will come in estimating these occupancy rates. Do you use a certain time duration to measure this (1-3 years back)? I guess that is where the "art" of the deal comes in so the issue isn't what you are doing (because you already know), but the issue is letting others on the forum know to look out for it :)
 

GlobalWealth

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I agree with your model, but my trouble is the volatility that will come in estimating these occupancy rates. Do you use a certain time duration to measure this (1-3 years back)? I guess that is where the "art" of the deal comes in so the issue isn't what you are doing (because you already know), but the issue is letting others on the forum know to look out for it :)
To clarify. I don't understand what you "5-15%" calculation is a measurement or calculation of. Can you elaborate?

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JAWS

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The Delta in your occupancy rate per month. But given what you said, it may be higher...
 

GlobalWealth

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The Delta in your occupancy rate per month. But given what you said, it may be higher...

Forgive me but I am working off a mid 2 digit IQ.

So to clarify, you are saying that if I estimate my occupancy rate for a short term rental is 15 nights per month, then I should "cushion" my calculations by 10% (for example) and estimate an occupancy rate of 13.5 nights per month?
 

JAWS

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Forgive me but I am working off a mid 2 digit IQ.

So to clarify, you are saying that if I estimate my occupancy rate for a short term rental is 15 nights per month, then I should "cushion" my calculations by 10% (for example) and estimate an occupancy rate of 13.5 nights per month?

I really don't know, but yes. You (being in this market) know better than me and can better predict the % deviation per investment, which is both positive or negative.
 

TooSlow

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If you're coming up with an accurate average occupancy rate, the 10% cushion shouldn't be needed. It might be handy to use it as a worst-case scenario to see if you'll maintain profitability during weak periods.
 

GlobalWealth

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If you're coming up with an accurate average occupancy rate, the 10% cushion shouldn't be needed. It might be handy to use it as a worst-case scenario to see if you'll maintain profitability during weak periods.
I agree. I like to be overly pessimistic in my estimates and be happily surprised with the reality.

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I have a friend who was renting an apartment in Prague (she didn't own it in any way, just a rolling 12 month lease), over the summer when she went back home from college she did airbnb and got about $800 a week for her place to summer tourists. But she was only paying $600 a month in rent :greedy:.

Im sure this is illegal but just goes to show the profits involved in short term rentals.
I don't know about in Czech, but here it is quite common to do a long term lease and rent short term

Has anyone looked further into this?

I've been comparing Airbnb's rates to long term rentals in Eastern-Europe.

Interesting stuff.

Pay 3-500/month for a good location, you won't need a high occupancy rate to be profitable.

And you can still live there when you want.

Providing it's allowed in the lease you sign, why not rent an apt. for a year instead of buying it?

Reduces capital exposure. With market experience, you could sign 30 leases instead of owning 3 apts.
What's the ROI on that?

It's like going to a flea market where few people are internet savvy and then reselling on eBay for a large profit, but with real estate rentals.

What am I missing?
 

GlobalWealth

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Has anyone looked further into this?

I've been comparing Airbnb's rates to long term rentals in Eastern-Europe.

Interesting stuff.

Pay 3-500/month for a good location, you won't need a high occupancy rate to be profitable.

And you can still live there when you want.

Providing it's allowed in the lease you sign, why not rent an apt. for a year instead of buying it?

Reduces capital exposure. With market experience, you could sign 30 leases instead of owning 3 apts.
What's the ROI on that?

It's like going to a flea market where few people are internet savvy and then reselling on eBay for a large profit, but with real estate rentals.

What am I missing?
As you said, as long as it is not restricted in the lease I think you could do well here.

I am personally looking into this option starting this year.

Of course the obvious risk is not enough short term renters.

But if you pay eur500/m and rent for eur80/night it doesn't take much to reach breakeven.


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Of course the obvious risk is not enough short term renters.
Agreed. But let's be honest, some/a lot of East-European rent for cheap.

Worst case scenario, you lose a few hundred a month if you have just one property?

The discrepancy between the lease you sign and nightly rates on AirB&B is rather large - there's more upside than downside.

For beginners, there are no excuses anymore. It's a little bit outside the box, but plenty of good ideas are. It's no more about "Cool idea, but even cheap 100k apartments are out of my reach."

Oh, just read that last sentence of yours. My bad.

I would love to know how you connect to people on the ground. How do you find property managers in a country where you don't speak the language? Do you sign some sort of working agreement / contract (have it translated?)? Do they find / hire cleaning services? Does it ever happen that you have to make an emergency flight to one of your properties after a bad phone call from your prop. man.? How do you know, when you're transferring 80-120k in a foreign country, that you're actually getting ownership of the property? (Perhaps I'm paranoid after reading about how foreigners can't own land in thailand and all the accompanying scams...) I'm just fishing for the actionable details to fill out the plan.
 

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@GlobalWealth ...what do you think of Spain ( South ) as an investment right now ? i am seeing crazy prices ( a 2 bedroom, 5mn from the beach for 45 000 EUROS !!) .and it makes it very appealing

Spain is a great place. South near Malaga (South of Malaga). If its under 100k.
But I suggest Madrid or Barcelona because it will be easier to rent out.

The prices are growing tho, so be fast

Ukraine and Greece are also still good investments.
 

HyperFocus

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I like your idea and I have some friends who yield 15-20% by using Airbnb while still living in the apartment.

But I dont understand your connection to living for free. Its not free as you cant rent it out then. Its also much easier to just rent wherever u want to live.

Buy where u want to invest
Rent where u want to live
Is the motto
 

GlobalWealth

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I would love to know how you connect to people on the ground. How do you find property managers in a country where you don't speak the language? Do you sign some sort of working agreement / contract (have it translated?)? Do they find / hire cleaning services? Does it ever happen that you have to make an emergency flight to one of your properties after a bad phone call from your prop. man.? How do you know, when you're transferring 80-120k in a foreign country, that you're actually getting ownership of the property? (Perhaps I'm paranoid after reading about how foreigners can't own land in thailand and all the accompanying scams...) I'm just fishing for the actionable details to fill out the plan.

I just connect with locals by asking around. Talking to other real estate investors and seeing who they use. I have even stayed in a few airbnb properties just to talk to the owners about how they manage their properties. Pay a reasonable amount of money and have back up options. For example, maybe meet with a couple of real estate management firms and get quotes and contracts. I wouldn't normally use them, but in case of a needed back up, it would help. Maybe also give a friend you trust your keys just in case.

As for ownership, just hire a local lawyer to confirm the ownership rights. It can be tricky in some places. Don't buy if you cannot get clear title to the land and the apartment. I have run into some deals that didn't include the proportional land under the building. That was a no go for me. However, I have seen some eastern european soviet holdout long term leases for sale. In soviet times the govt would give 50 or 100 year leases to someone in lieu of ownership. I have seen people selling the remainder of their leases for very low money. True, you would not own the property, but you may pay $10k for 15 more years on a lease and you can do whatever you want with the property.
 

GlobalWealth

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I like your idea and I have some friends who yield 15-20% by using Airbnb while still living in the apartment.

I would like to see the REAL numbers to prove 15-20%. Not saying it is impossible, but highly unlikely. I have seen how people measure their return and unless they know what they are doing, they frequently leave out some expenses thus skewing the results.

I have seen airbnb owners who rent a room in their house/flat. I have also seen where people rent their place and just go to a friend's place while their guests are there. Personally I think those are both bad options, but that is my personal preference as both a guest and a host.

I don't want to share the space with either a guest or a host. Nor would l like the idea of being kicked out of my home on short notice.

But I dont understand your connection to living for free. Its not free as you cant rent it out then. Its also much easier to just rent wherever u want to live.

You are missing the point. It seems you are reading this from your personal frame of reference.

Consider this. You own 3 apartments. One in Barcelona. Once in Lisbon. One in Denver.

You plan your life around times in these 3 apartments. Two weeks in Barcelona. Traveling around in Europe for 2 weeks. Two weeks in Lisbon. Traveling around for 2-4 weeks. One month in Denver.

You block off your times in each of the 3 apartments making them unavailable while you are staying there. But you make them available for rent while you are away.

The rental income from your 3 apartments when you are not using them covers the cost of your apartments, all expenses, your personal expenses and travel, plus you earn some additional income from it.

This is the idea behind living rent free in multiple countries. Is that more clear?
 

GlobalWealth

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@GlobalWealth such a beautiful dream. Expect some PMs in a year or two :p

@ilrein . It really is not as difficult as you may imagine. Many people on this forum already live the virtual nomad life due to their businesses being location independent.

If you can put a down payment down on a house/apartment in your hometown, you can do the same thing in Barcelona. Like anything else, it starts with just one step.
 
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ilrein

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@GlobalWealth

I'm a bit younger than most of the posters on here -- I'm barely an adult with minimal savings and only recently have managed to get respectable employment (via self-taught programming).

I remember earlier in this thread speaking of high real estate costs in Toronto, and you recommended looking further out of the core to find low cost residences.

I'm not sure if I should begin my journey here in Ontario or to focus my energies further out. If I started here, I could at best afford a 5% down payment -- which would lock me into 9-5 since I'd need to pay the mortgage. That might be OK however, because I'm reaching this state where I can confidently find employment because of my skills. And eventually, I'd transition to a software orientated business.

Not to mention, there's a lot of remote work in my field, which is also advantageous.

What do you think, wise friend? Should I look into making a real estate investment outside the Toronto core with a 5%? I currently rent-free with my parents and am not under pressure to leave. I might be able to just transition straight into renting. Or should I look outwards?

Isn't there a certain feeling that real estate is a way to "park" your wealth, rather than grow it? Should I really do the mortgage thing?

I don't know if I want to fund this strategy through slowlane income. It feels like something I want to do with fastlane money -- but it might be a while before that happens, and in doing so -- I might be reaching the fastlane by default.

So, I'm all ears...
 

RHL

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I agree. I like to be overly pessimistic in my estimates and be happily surprised with the reality.

If there was like a Hustling 10-commandments this would be the roll mark on the side of the stone they were carved into.

Ask yourself, "What's the worst that could possibly happen."

Then figure out how you could still make money if things were 10-15% worse than that.
 

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