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In selling real estates to overseas buyers you must take always into account the exchange rate factor, which plays a major role in any investing strategy because it impacts markedly the final payoff. I am most familiar with euro to dollar exchange since I am mostly concentrating on selling US real estate properties to European investors, but these considerations remain valid whatever currency your buyer is planning on using.

The euro to dollar exchange ratio has varied from the highest of 1.4737 on September 23, to the lowest of 1.2446 on October 27. This means 23 cents difference per euro, that is a 23% variation in the cost of anything bought in the US using the euro currency. Today the exchange rate is 1.2596 therefore the down trend is continuing, but it might revert in the future and it will affect the palatability of any kind of investment and the price at which you can sell.

Let’s make a real life example: one of my investors bought a shortsale single family home in Florida in June 2008 for a negotiated cash price of $215,000 which corresponded to about euro 145,000. The assessed price of the home was $292,000 at the time and the original owner had two mortgages on it for the overall payoff balance of $ 320,000. It was already an aggressive short sale discount at the time.

He spent about $18,000 of rehab costs but the market has declined and the new estimated value of the home is today approx $256,000. That would leave about $23,000 of net margin. This would still be a reasonable 10.7 % return on his own dollar investment in just 7 months, yet when we look at the currency exchange we can add much more because the euro now has gone down markedly and the sale price of $256,000 corresponds to euro 200,000! This gives him a 38% return on investment in 7 months, minus rehab costs that become marginal with the currency appreciation.

If you become somewhat familiar with these trends you can build success stories that will entice overseas buyers that can get a short term profitability out of their own investment and that can see market appreciation potential if they hold on to it.

Roberto Mazzoni

Roberto Mazzoni has been an author, computer journalist, magazine editor and real estate investor for over 30 years. He has developed a special knowledge on international real estate investing. You can find many more of his articles on his blog: http://www.landwriting.com. Article Source: http://EzineArticles.com/?expert=Roberto_Mazzoni

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