malach hamovess

Foreign Real Estate ETFs Present a Better Risk-Reward Scenario

really, now? when you buy a foreign reit you have even fewer benchmarks for control over your investment.

1. they may be investing in countries with a lack of transparency which in real estate can be devastating - imagine how a "legal" nationalization or "taking" can effect the value of your investment when all that's needed to effect such a "taking" is for a locality to connive with the central gov to raise real estate taxes.
2. the currency risk - if you need returns in dollars (to buy corn flakes at the 7-11 or to pay the Mexican girl who comes in at 2:00 pm for your "massage"), you'll find that local returns might be wonderful, but when translated they may provide a rude surprise. Bear in mind that it's a lot easier to effect an inflationary spiral in the real estate markets than in companies involved in international trade.

so, before you pay a 1 percent annual fee for someone to invest in foreign reits which have their own rich management comp structures, figure if that illusory return is really worth the risks, and don't make the 2004-2007 mistakes again.