| Lately I've been barraged with a particular question on property: folks want to know what I think about investing in properties overseas. I know where these people are coming from. They've seen the advertisements in the media – both on the television and in the newspapers – promoting the investment. The write up looks good and word is that they can make a decent profit from the investment. The theory is that we can get a higher return by investing in properties overseas. Add the fact that we are diversifying our money instead of concentrating it all in one country does make it a very interesting proposition. While there are advantages of investing overseas, like everything else, it is not all roses. So here I'd like to share the realities of investing your money overseas. Firstly, let me admit that people have made money by investing in property overseas. In fact, I've a few friends who have done exactly that. But I must add that my friends bought the properties many years ago (when they were studying or working there) and then sold it also many years ago. In other words, I do not know of anyone who has made money from investing in properties overseas lately. I always ask this question to anyone thinking about investing in properties overseas: do they know all the rules, regulations, requirements and laws in Malaysia? Not surprisingly, they all would shake their heads. So I told them that it is nothing to be ashamed about. I don't either. As a matter of fact, nobody does, not even the lawyers. And because they were not aware of the regulations and the laws, some people (actually a lot of people) have lost money when making investments. They get caught in the bureaucracy. Now if that can happen in our own country, can you imagine the problems of investing in a land thousands of miles away? With rules, regulations and laws that you never even heard of? Wouldn't these only complicate matters, and reduce your chances of making money significantly? Wouldn't it be like jumping off a cliff – at night? Next point. While I have no doubt that the companies involved in these investments are legitimate, I can foresee problems dealing with them. Basically all of us who have bought houses from local developers in Malaysia have faced problems (fortunately most are minor). It took much time and effort to sort out the problems with the developers. Now can you imagine trying to talk to a company whose headquarters is in a different continent and multiple time zones away? The usual excuses that the manager is away or the manager is in a meeting will be compounded tenfolds! Hey, you might even get to hear an excuse you never heard before: the office is closed because of heavy snowfall! Then there is the currency risk. While the people selling the investment will tell you that you could be making some extra cash from the rise of the ringgit, you also realise that the reverse can happen. While the ringgit may be appreciating now, it may not do so tomorrow. If the ringgit goes south, it could wipe out all the gains you made from the investment. Next, you should bear in mind that the promoters may stretch the truth and present a situation that is rosier than the actual. When I read the statements made by some of the promoters, I often shake my heads. They tell how goods things are in these exotic places. But since I actually go to those places, I know that the situation is a little bit different – sometimes very different. The locals there are complaining about the drop in property prices while their newspapers are highlighting possible further drops in prices. But the promoters are saying good things over here. So those are four major negatives already. But wait, because there are two more risks that you must consider. "What? There are more?" You are asking Yes, dear readers, there are more. See, while foreign governments are welcoming you (and your money) with open arms today, they can change the laws just like that tomorrow. They can turn around and say to us, "Sir, you can leave but your money must remain right here." That country may turn out to be a tragic version of the lyrics in Hotel California: you can check in anytime you like but your money can never leave! By the way, governments are allowed to change rules anytime they see fit. As a matter of fact, they do not even need a reason to do so. If the president or the finance minister wake up on the wrong side of bed, and decided to change the rules, they can do so. And it is all perfectly legal. Nothing and no one can do anything about it (except maybe cry). "But no government in the world would do that!" Unfortunately, that retort is good in theory only. See, a government will do what is best for their citizens. Their citizens. The last thing on their minds is what foreigners, who by the way do not vote or pay their salaries, think about them. Incidentally, that was exactly what Malaysia did in 1998 when the government implemented capital control. A lot of foreigners and their money were caught. They were obviously not very happy but I supposed we did what we had to do to save our country. But perhaps the biggest risk of all is when you can only afford to invest a small amount of money overseas. If you invested a small amount, say RM10,000, you are for all sense and purpose, not doing anything much to improve your financial situation. Because even if your doubled your money, you are still broke. Investing a small amount will ensure that you remain small. In order to make it big, you have to invest big. While we all have to start somewhere and obviously start small (which is nothing to be ashamed about), we should concentrate on our resources. Choose one or two investments, and then keep increasing that amount as you go along. That's how you become rich. And there are plenty of such investments in Malaysia as it is. Why bother going overseas when you cannot even take advantage of the super investments in our own country?
Copyright © Azizi Ali 2011 | 
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