Diversification, search for better profitability, geographic areas with more growth, a security in case of crisis, or lighter taxation … The reasons to invest outside of your country are multiple.
This change in relation to the distance and, more generally, the emergence of a globalised world has opened a huge field of possibility to investors. And more and more people put a part of their investments abroad.
Here are our top 2 investments.
1. The American real estate for the potential of more-value
“This is the time to buy real estate in the United States. It is today one of the most attractive markets for the investors. Since the crisis, growth has resumed, the market is restored, but many opportunities are still available at prices always very attractive”, ensures Victor Pagès, President of Altitude International Realty (AIR), a real estate agency, specializing in foreign investment.
Specifically, there are two markets. The first relates to the high-end real estate, in New York or in the Miami area, with goods of a value greater than $400,000. This is then not the performance of the investment that is sought (between 2% and 3.5% after expenses and before taxes, according to air), but more the potential value and the security of this placement of diversification. In Miami, for example, “the prices have increased considerably since 2008, reaching a plateau in 2015. But it is only half of the path “, advance Laurent remains, President of Coldwell Banker France & Monaco.
Second type of market: medium-sized cities of type Memphis, Tampa, Atlanta, Orlando or Little Rock, where the consequences of the real estate crisis still allow to obtain yields net annual between 6.5% and more than 10% after expenses and before taxes, according to air. The price of houses in these cities, where the haircut is the most important (10 to 20 per cent compared to the middle of the Years 2000), vary between 100,000 and 200,000 euros, and should go back to the medium term.
The American market has certain advantages, including the importance of the rental demand. In effect, a large number of American households having lost their real estate during the crisis are obliged to rebuild their “credit history” and rent for a few years.
Also, the taxation on real estate is favourable. The tax is 10% up to $9.275 of the taxable base, 15 per cent up to 37.650 dollars for a single person, against a French taxation of 45%, if the individual is located in the high range of taxation, with 15 per cent of CSG-Additional DRES. The ease to separate a tenant bad payer in the United States is not to be underestimated. “The eviction process did not take that approximately six weeks,” according to Victor Pagès, against rarely less than two years in France.
Before investing, it must however be attentive to certain points: the funding first, which can be quite complex. “It must have at least 40 per cent to 50 per cent of contribution in cash, because the American banks are quite chilly vis-a-vis foreign investors,” says Victor Pagès. The administrative steps also are numerous and time consuming. Once the owner of a property in the United States, he has yet to be put in tax compliance, fill out forms for the rental manager reverse all of the rents, etc. Then, the land tax is often very high in the United States, without counting the charges and expenses of condominium ownership for the apartments in residences in top-of-the-range services.
Finally, buying a house requires to have a good manager in-situ to manage the daily problems.
2. The contracts of Luxembourg for the diversification and security
Very popular after the crisis of 2008, the success of the life insurance contract of Luxembourg cannot be denied. “Their Tailored made Management seduced, but especially reassures a large number of people”, explains Maël Toledano, Country Manager France & UK among Iwi.
Starting from 250,000 euros (125,000 euros in theory but this presents little of interest) on your life insurance in Luxembourg, you have access to funds called “dedicated” (FID). Fully customised, they offer many more opportunities and flexibility that their English equivalents. The wide variety of eligible assets within the FID has made the fame of the Grand Duchy. As soon as the Fund entry range, it is possible to integrate titles vivos, then the spectrum of assets expands as the funds invested are substantial: hedge funds, assets not rated assets to reduced liquidity, Venture Capital Investment Company (SICAR), precious metals…
The life insurance contract of Luxembourg also allows more flexibility in the structuring of the heritage. In the case of the dismemberment of the life insurance contract with children living in different countries (Belgium, Germany), the cross-border transmission is optimized.
Added to this is the extent of the financial possibilities. A customer can invest in the currency of his choice, in dollar or in pound sterling for example, and then it will not be able to invest that in euro in a contract French. A flexibility that allows diversifying its risk of currency. “Even if the fear on the euro, very acute there are three-four years, is dimmed, it may be wise to invest 20 to 30 per cent of its heritage in the dollar for example or in another currency strong”, advance Didier Bujon, Director General of Equance.
The Luxembourg system is well protected. First of all, your assets are not held directly by the insurer, but with a bank depositary. Unlike the French legislation, they are therefore separated from the own funds of the insurance company. This means that in the event of the bankruptcy of this last your savings can not be entered by one of its creditors. “The main interest of the Luxembourg is that it secures the customer in its approaches. A statute defines the principles of the protection of the assets with the establishment of the “triangle of security” (subscriber, company, depositary). It protects the investor against the bankruptcy of the insurance company, separating the assets of clients to those of the company,” explains Jean-Maximilien Vancayezeele, Director General Delegate of the Crystal Group. Then you have the super priority that allows you to retrieve your assets in priority to other creditors. But this system does not guarantee you to recover for sure your starting. Your assets you will be returned, but to the value of the market.
Protean, the life insurance contract of Luxembourg adapts to the legal rules and the tax revenues from almost all countries, it also has the particularity of n be submitted only to the taxation of the country of residence of the subscriber. “an expatriate who hand ten years abroad may transfer for example its contract on the English market and return to France without losing the tax grandfathering of its life insurance”, explains Maël Toledano. Very advantageous for the persons with an activity to the international, the life insurance contract of Luxembourg does not present on the other hand no tax interest for French residents, since it is then the French taxation that applies.
We have made a selection of various property markets that are currently ideal for real estate investors and can give you a good 7-10% rental yield. Check on www.ourbestinvestments.org/real-estate/ for more info.
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