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Buying an investment property abroad

Photo: Images_of_Money / Foter / CC BY

Photo: Images_of_Money / Foter / CC BY

Wishing your holiday would never end is one of the worst reasons to buy a property abroad. That daring impulse on a rose-tinted summer afternoon soon fades when you find yourself shivering in a rotten, rodent-infested cottage in February.

But if you start out sceptical, with a sharp eye on investment value and an exit plan in mind, buying an investment property abroad could be a canny move. With interest rates on the floor and another property bubble looking set to emerge in the UK, lots of people are looking further afield for good deals. Overseas buy-to-let could be part of your business plan. Or if you have a location-independent online business, you could re-locate somewhere with much more attractive costs and climate.

Start with the end in mind. How quickly could you sell if necessary and who would your likely buyers be? What is the local property pricing trend and where are prices now in terms of the cycle? It always makes sense to buy when prices are near the bottom and sell near the top of a cycle.

Whatever your motivation for buying a property abroad, the following tips will help you make the most of the opportunity:

See it in person. Use the internet to scope out options, but always make sure you view properties in person before making a binding decision.

Take care choosing your estate agent. Ask for references from other overseas deals they have managed and follow-up. Make sure you are clear about all fees in advance. In addition you should also make sure that you get independent legal advice and a translation of every document that you need to sign.

Factor in all the costs. Those should include maintenance, repairs, local rates, insurance and, if you’re letting, agents’ fees and cleaning.  Also remember tax on any rental income, which you’ll be liable for in the country where the property is based and your main country of residence (although national agreements mean that you should not have to pay twice). And of course you can deduct expenses involved in letting the property. See the Which guide to Tax on overseas properties for more details.

Making secure international payments. It has never been easier to manage money abroad using companies such as Travelex; they also offer a handy advice regarding buying and renting abroad and there are countless options for receiving money from tenants if that’s the plan.

If you plan to let the property when you’re not there:

  • Make sure the property is reasonably close to an airport and has good amenities nearby. Put yourself in the shoes of your customers, what would make your property attractive and accessible for them?
  • Find out the going rate for similar properties in the area.
  • Ask around and find a reliable local agent who can look after the property and tenants when you’re not there.
  • Put together some marketing materials, including photos and testimonials. Then test a few different marketing strategies including local estate agents, holiday letting websites, social media and your friends and family grapevine. Before long you’ll find the most cost-effective marketing mix for your place.

Those tips will help to increase your chances of a successful investment. But with uncertain property markets and continuing economic volatility, do your homework, proceed with caution and be prepared to take a long-term view.

This article was submitted on behalf of Travelex international payments.

 

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