Nomad Capitalist Chapter 11: Investing Overseas - A Home on Every Continent and a Cattle Ranch Too

Henderson is in Phoenix, Arizona. He calls a real estate agent named William. They go see two properties. The first one is ideal. Nice finishes, good floor plan, easy to resell later. The second one is a dump.

William starts talking about pulling more listings. Henderson stops him. “Let’s make an offer on the first one. We’ll need to be aggressive.” William is stunned. Apparently most people in the western world feel a compulsive need to look at dozens of properties before deciding anything.

Henderson bought that house for $170,000, barely half its peak value. Two years later he sold it for $262,000. A 54% profit, about 19% annualized. Not bad for a snap decision.

Except it was not a snap decision. He had done the research beforehand. He knew what he wanted. He just executed quickly instead of spending weeks agonizing over it. The same approach, he says, applies to investing overseas. Research first, act fast, do not overthink it.

He once bought an apartment near Georgia’s free trade zone for $5,200. Five thousand two hundred dollars for an apartment. That is less than what some people spend in Las Vegas on one weekend. And it gave birth to a philosophy Henderson now lives by: know why you are buying.

Why Invest Overseas at All?

You might wonder why a book for entrepreneurs has a whole chapter on real estate investing. Henderson’s answer is diversification. If your income comes from one business, you are one bad decision away from zero. Amazon FBA sellers are at the mercy of Amazon. Consultants depend on their reputation. Even profitable businesses can disappear overnight.

Henderson tells the story of Jay Leno. He hosted The Tonight Show for twenty years and never touched his TV salary. He lived entirely off his stand-up comedy income. The TV money just accumulated. Henderson does something similar. He uses investments to fund his lifestyle and leaves business profits in the company to reinvest.

This is especially powerful if you run an offshore company. US citizens cannot take money out of a foreign company without paying big taxes. But they can reinvest it. So instead of pulling profits and getting taxed, you put those profits into real estate, gold, or other investments inside the company. The money compounds without a tax hit.

Henderson’s company had its best month ever with marketing spending of $337. Basically zero advertising. Word of mouth and content marketing. When your business is a cash cow like that, you need somewhere smart to put the profits. That is where foreign investments come in.

The Anti-Silicon Valley Approach

Here is where Henderson’s philosophy gets interesting. He calls the Nomad Capitalist lifestyle the “anti-Silicon Valley.”

He has nothing against Elon Musk. But he points out that for every Elon Musk who succeeds, there are a thousand who fail using the same all-in strategy. Musk famously reinvested his PayPal fortune into Tesla and Solar City so fast that he had to borrow money for rent. Admirable courage. But terrible risk management.

Henderson asks a question I think about a lot. Do you want the appearance of success, or its results?

If investors who are better at reading charts than you or me are throwing $50 billion at Uber, what happens when it fails? Are they living the life they want, or just chasing trends to look successful?

The Nomad Capitalist way is different. Minimal risk. Let the life you want come to you. Hire skilled employees at a fraction of Bay Area prices. Pay almost zero tax without an army of accountants. Deploy profits into investments that generate passive income. No need to bet the farm on every venture.

Tim Ferriss made a similar point in The Four-Hour Workweek. Most perks of extreme wealth are available now, at a fraction of the cost, if you think about it differently. You want a fancy car? Lease an exotic for a few thousand a month. You are probably paying that in taxes already. One business tweak could make your dream car free.

You want multiple homes? Henderson says you can have them. His beach house is not in the Hamptons. But he can rent a halfway decent place in the Hamptons for $50,000 a month. Or find a better version in Ibiza, Montenegro, or Rio de Janeiro. The point is, stop waiting and start living.

The Perpetual Runway

Henderson introduces a concept he calls the “perpetual runway.” In startup language, your runway is how much cash you have before you run out of money. Even successful entrepreneurs have limited runways. Even Elon Musk said he was one step from homelessness at one point.

Instead of worrying about your runway shrinking, Henderson says to build one that never ends. How? Reinvest business profits into cash-cow investments that generate monthly income. Live off that income. Keep growing your business on the side.

Start small. His first property in Tbilisi, Georgia cost $49,000 to buy and $12,000 to fix up. He got an offer for $70,000 before taking it off the market. A $9,000 profit is not amazing. But he learned how contractors work in Georgia, where to buy furniture, what the building rules are. He got paid to learn. That is powerful.

After that first deal, his returns improved. 10%, 11%, even 22% cash yields on subsequent properties. He focuses on cash flow, not appreciation. He would rather have a property that sends him rent every month than one that might go up in value someday. Linear growth with consistent income beats speculative gains.

He tells a cautionary tale about a British couple who bought a stone house in Kotor Bay, Montenegro. They put almost their entire life savings into it. 240,000 euros to buy, 80,000 euros to renovate. Listed it for 500,000 euros. Great potential profit. But what if something went wrong? Their entire life savings locked up in a stone house they never intended to live in. If either of them lost a job or their business dropped, they would have zero liquidity. That is not smart investing. That is gambling.

Henderson’s rule: go small on the first deal. Focus on minimum viable success. Learn the lessons. Then scale.

Agricultural Land

This section surprised me. Henderson makes a strong case for buying farmland overseas.

Agricultural land is interesting because pricing is flexible. Unlike gold, where everyone knows the exact price per ounce, agricultural land does not have a clear market value. The only judge of its worth is what someone will pay. That means you can get good deals, especially on foreclosures or quick sales. Nobody is going to sell you gold for $200 under spot price because they need fast cash. But they might sell you farmland at a steep discount.

The long-term case is simple. World population is growing. Emerging countries will demand more high-quality protein as their economies develop. More people eating better food means more need for agricultural land. If this plays out, land values go up.

For US citizens, foreign real estate is one of only two types of non-reportable assets. You do not have to tell the IRS about property you own in another country. Same privacy advantage as gold. Add currency diversification on top and you have a solid long-term hold.

Henderson recommends putting 10-15% of your investable portfolio in long-term agricultural land. About the same percentage as precious metals. A third or quarter of your portfolio in tangible long-term assets. 10-25% in cash. The rest in income-generating properties that you can sell relatively quickly.

Why Henderson Hates Retirement Accounts

This part of the chapter is a rant. A well-argued rant, but a rant.

Henderson says retirement accounts like IRAs are a trap for entrepreneurs. Here is his logic.

First, broke governments have a history of raiding retirement funds. Ireland, Hungary, Argentina, Poland. Eleven countries and counting have dipped into private retirement savings when they needed money. With over $25 trillion in US retirement accounts and over $20 trillion in national debt, is it that far-fetched to think the US government might be tempted?

Second, retirement accounts lock up your money and give you a list of what you can and cannot invest in. For an entrepreneur who could double or triple their money in a business, why tie it up for piddly returns and a small tax deduction?

Henderson walks through it with a client named Roger. Roger paid $200,000 in taxes. If he had that money, he would invest it in property earning 10% a year. That is $20,000 per year. After ten years, $200,000 in passive income. Could a retirement account do that? Not a chance.

The tax deduction is the bait. Henderson compares it to Wile E. Coyote laying down birdseed for the Road Runner on the exact spot where the boulder is about to drop. The deduction distracts you from realizing how much the system actually costs you.

I have to say, coming from a post-Soviet country, the idea of trusting the government with your retirement money feels strange to me. I watched pension systems collapse. I watched savings become worthless overnight. Henderson’s skepticism is not theoretical for me. I lived through something like it.

His advice: if you are young, get out of the retirement system now. If you already have an IRA, you might be able to roll it into an offshore company that makes a wider range of investments. But only if you have at least $75,000 in the account to justify the expenses.

Lifestyle Investments

Not every investment needs to make money. Henderson calls some investments “lifestyle investments.” They exist to build the life you want, not to maximize returns.

He once worked with someone who wanted a condo on every continent. Both to live in and to invest. Henderson himself dreams of a ski chalet in the Alps, a beach home in Montenegro, a cattle ranch where he can build his “Summer Palace” and escape civilization. Owning land gives you flexibility to customize each location.

But there is an important distinction. Lifestyle investments are not the same as profit investments. If you buy an apartment in Kuala Lumpur because you love the view of the Petronas Towers, that is emotion. Emotion has value. Being comfortable in your home makes you productive. But do not call it an investment.

Henderson tested this in Kuala Lumpur. Apartments near the Petronas Towers cost around $650,000 to buy. But you could rent the same apartment for $1,700 a month. That is a 3% gross yield, what you would expect in Switzerland. So he rented. Then the Malaysian ringgit crashed and his rent dropped to $1,200 for a brand new penthouse. He kept $644,900 in his pocket by not buying.

The lesson: home ownership is overrated. The idea that your home is your best investment is something real estate agents say. When you average out everyone who made money selling property with everyone who broke even or lost money, the numbers are not pretty.

Buy a home because you want control over your space. Because it makes you happy. Because you need it for a residency permit. But know that it is a lifestyle choice, not a financial strategy.

The Albania Scouting Trip

The best part of this chapter is Henderson’s trip to Albania. He goes looking for the “next great European beach city.” A friend in the hotel industry told him Albania had the last slice of undeveloped coast in all of Europe.

He checks into the Sheraton in Tirana and gets upgraded to their best suite. Not because he is important. Because nobody else is staying there. The suite has Egyptian-style table lamps and furniture that reminds him of his father’s office in Cleveland, Ohio in 1997. That is exactly why he is excited. No tourists means opportunity.

Next morning, the front desk offers to call him a Mercedes. He says no. He wants to take the bus. If you want to understand how a country really works, take the bus.

The bus to Durres costs $1. He gets the last seat in the back, next to a large woman who digs her elbow into him. A kid nearby makes noises like a horny lion. When the combined body odor of all passengers starts cutting through the uncirculated air like a knife, they arrive.

In Durres, he walks into a mini market to buy a Coca-Cola. The owner figures out he is American and starts pointing at him and shouting “American!” to other customers. A clear sign the hordes have not found this place yet.

He looks at a beach apartment. Not impressed. The elevator is plastered with random ads. The apartment itself is in poor shape. And the real problem: anyone can just build another apartment building next door. No scarcity means no long-term value.

His assistant finds something better. Five acres of undeveloped land at the Cape of Rodon. Henderson goes to look. In the end, he does not buy anything in Albania. The perfect deal was not there yet. But the trip was not wasted. He could now confidently strike Albania off the list and move on.

This is something I appreciate about Henderson. He does not pretend every trip is a success story. Sometimes you go, you look, you leave empty-handed. The value is in knowing, not in forcing a deal.

The Bell Curve Framework

Henderson’s big concept in this chapter is the bell curve of a country’s development. Every country starts at the bottom, rises to the top, and then the opportunities disappear.

Singapore in 1965 was a muddy swamp. Today it costs $50,000 to $100,000 just to get permission to drive a car there. Hong Kong in the late 1980s was panicking about the Chinese handover. Property prices crashed. Some people made 1000% returns by buying at the bottom. Today, $100 million properties dot the hills near Victoria Peak.

Both places are now at the top of the bell curve. Too expensive. Too restrictive. Singapore closed its immigration program in 2013. Hong Kong shut down its capital investment residency scheme. Why would they need another guy with a million dollars?

The opportunity is in places moving up the bell curve. Georgia. Montenegro. Serbia. Maybe Nicaragua or Albania. Countries with friendly policies, growing economies, and governments that actually want your investment.

Here is the key. Do not wait too long. Hungary’s 300,000 euro investment-for-residency program? Gone. Ireland’s business and investment program? Gone. These countries went up and over the bell curve and the window closed.

Henderson warns against arrogance too. Just because you are from the US or UK does not mean every country will roll out the red carpet. These places want to know how you will help them advance. If you can answer that, you have an opportunity. If you show up expecting special treatment, you will be disappointed.

How to Actually Buy Property Overseas

Do not expect it to work like buying a house in the United States. Most countries will not give you a mortgage as a foreigner. Banks are conservative. They want borrowers who clock in at 9 AM, drive the same car every day, and plan to live in the same house for thirty years. That is not you.

A few places will lend to foreigners. Belize will loan on properties from Central America to Panama. But they prefer overpriced gringo developments and charge double-digit interest rates. Georgia will occasionally lend to foreign residents at interest rates your parents paid during the Carter administration. Mid-teens.

Henderson sees a silver lining. When you buy entirely with your own money, you find better deals. No leverage means you cannot cover up a bad purchase with a loan. You have to be smarter about what you buy.

The best strategy is boots on the ground. Online listings in emerging markets are a mess. Wrong prices, fake listings, properties sold years ago, acres listed as hectares. You have to go there, talk to people, and find the real deals. Henderson says he has never overpaid on a first property in any country, but the truly great deals come only after you have been around the market for a while.

Key Takeaway

The biggest idea in this chapter is that the world is an investing playground now. A $5,000 apartment in Georgia. Oceanfront land in Albania for 25 euros per square meter. Cash-flowing properties in Montenegro at 10-22% yields. These are not theoretical. Henderson has done them.

But the window does not stay open forever. Countries that welcome investors today will close their doors tomorrow. Singapore did. Hong Kong did. Hungary did. The countries moving up the bell curve right now are the opportunities. Georgia, Montenegro, Serbia, parts of Southeast Asia, parts of Latin America.

Henderson’s framework is simple. Know why you are investing. Diversification? Cash flow? Lifestyle? Long-term wealth? Each purpose changes what and where you buy. Start small. Learn by doing. Get paid while you learn. Then scale.

Do not lock your money in retirement accounts where the government controls the rules. Do not put everything in one bank in one country. Spread your wealth across borders, asset types, and currencies. Buy real estate, farmland, gold. Build your perpetual runway.

And when you find a place that is moving up the bell curve with friendly policies and good fundamentals? Do not overthink it. Act. The people who looked at Phoenix property in 2009 and said “let me think about it” missed the boat. The same is true for every emerging market.

As Henderson puts it: the world is advancing at an incredible pace. Inaction will become costlier as time goes by. Do not be the person who looks back and says “I should have done that.” Just do it.

Book: Nomad Capitalist by Andrew Henderson | ISBN: 9798461831486

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Part of the Nomad Capitalist series