Foreign property investing is an exciting step that can prove highly lucrative, but it is crucial that anyone going down this route takes a cautious and considered approach to ensure everything goes as smoothly as possible.
There are several potential pitfalls in the overseas property investment process, which can be avoided with some careful planning.
Read on to find out more about some of the key factors to bear in mind if you are thinking about buying a home abroad.
Choosing where you want to buy is one of the most important parts of the planning stage for foreign property investors.
Think about what you hope to gain from your purchase and search for locations accordingly. For instance, if you are intending to buy a holiday home for personal use a few times a year and to let out at other times, you will probably want to restrict your search to popular tourist areas with good amenities and transport links.
If you are looking for a retirement property, on the other hand, you might be more interested in remote destinations where you will get plenty of peace and quiet and a genuine feel of a foreign country.
Investors whose primary aim is to make money from their overseas property purchase should research prices in different markets.
Some eurozone countries could offer attractive prospects owing to the drastic decline in prices during the financial troubles of recent years, while emerging economies such as Brazil and Turkey could also offer promising opportunities.
It is a good idea to visit the destinations you are considering and familiarise yourself with the local market before deciding to pursue an investment.
One of the essential parts of the foreign property investment process is drawing up a detailed and realistic budget that encompasses all of the costs you are likely to encounter.
After you have decided where you want to buy, do some research into the local market to find out about the various fees and expenses associated with purchasing a property and, if necessary, getting a mortgage.
Independent legal advice is a necessity, so factor the price of this into your budget.
You will also need to think about your own personal expenses – such as the cost of travel to your chosen destination while you are planning and finalising the purchase – as well as the financial implications of maintaining the property.
The Association of International Property Professionals advises people planning to buy a home overseas to keep an eye on exchange rate movements. When you are dealing in large sums, it only takes a small fluctuation in exchange rates to have a big impact on your finances.
Another important cost consideration is tax. You will be liable to pay the local equivalent of council tax in your chosen investment destination, and any rental income you gain from your property will also be taxable.
If you are planning to buy property abroad, it could prove highly beneficial to use a currency transfer service to move money between the countries where you are investing and living. Find out more about this here.
Estate agents and lawyers
It is important to ensure complete professionalism when dealing with estate agents and lawyers.
Remember that estate agents are private companies looking to make a profit from their business with you, so always put your own aims and considerations first, and maintain a sceptical outlook when agents are trying to win you over with promises of huge investment gains and rental potential.
One of the best ways of protecting yourself during the foreign property investment process is by getting a good independent lawyer who can represent your interests. Go with an experienced legal representative who can speak English as well as the local language.
Before deciding to deal with a particular lawyer or estate agent, do some background checks and ask plenty of questions about them and their business. Do not proceed if you have any uncertainties or concerns, which could develop into serious problems further down the line.
About the Author: This article is provided by Nick Brahhanin