The 25 best countries to buy rental property and make money on the side

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The best country to buy rental property? The Philippines.

• Buying a rental property is a good way to earn passive income and build wealth.
  
• Some American real estate investors prefer to keep their portfolio local, but you can also earn money as a landlord if buy rental property abroad.
• The three best countries to buy rental property outside the US are the Philippines, UAE, and Costa Rica.

Buying a rental property is a wise way to earn passive income.

As a landlord, you're getting paid to own something, rather than paying to own it. The mortgage is often covered by rental income from tenants, and if you play your cards right you'll profit after covering insurance, taxes, and maintenance costs.

But while some American real estate investors prefer to keep their portfolio local, others may want to take their business international.

For its latest study, GOBankingRates found the best countries to buy investment property based on the potential return on investment. GOBankingRates turned to Global Property Guide to source the following three data points for more than two dozen countries:

• Average monthly rent for a 1,292 square-foot home.
• Rental income tax rate, assuming a monthly rental income of $1,500.
• Average rental yield, or the amount that a landlord can expect as return on an investment before taxes, maintenance fees, and other costs (expressed as a percentage).

Each metric was assigned a score, and the three scores were then combined for each country to form an overall score, which determined the final ranking. The higher the score, the higher the potential income for property owners.

The final list is dominated by several European and South American countries. Remember that before you decide to buy property in a foreign country, it's important to understand the laws and tax codes that go along with it. Or better yet, consult a professional.

Below, find out the best countries to buy rental property and make money as a landlord.

Are you a US resident who owns rental property in a foreign country and earns a profit? Would you like to share your story? Email tloudenback@businessinsider.com.