Times have changed, and investing in property abroad is now a standard addition to anyone’s real estate portfolio. While our parents thought holidaying abroad was a treat, owning a home in another country is the new norm. The proof is in fast-track citizenship programs offered by various countries, where in return for investing in real estate, home buyers get the same privileges and rights as a citizen.
However, despite the hype, careful navigation and knowledge is needed. Remember, real estate investors’ main aim is capital appreciation and with a buy-to-let, high rental yields. So, here is some generic advice that applies to buying overseas real estate no matter which country you choose.
Consider your current finances, especially if buying a property with a mortgage. Some countries like Turkey offer mortgages to foreigners investing in real estate, but higher mortgage-interest rates than the UK eat into appreciation potential. If funds are ready, use a foreign exchange company to get the best currency exchange rates when converting your money to the currency of the market you buy real estate in.
Anyone buying rental real estate should find tourist hotspots for a lucrative income. Potential districts should have a long tourism season for maximum occupancy. Asses current competition by researching sites like Airbnb, and set up an action plan to market and manage the property. Don’t forget taxation on rental income. British buyers used to pay 18 per cent in Spain, but now they have left Europe, 24 per cent. Also, remember that every country has different laws when it comes to tenants.
Buyers who struggle with time or means for rental investment, can consider leaseback apartments. France’s government approved leaseback scheme takes care of maintenance, paying property taxes, marketing, and a 20% VAT rebate. If you want to explore this option, contact us to receive a portfolio of potential properties via email.
Some real estate investors buy overseas property purely for capital growth rather than passive income from leasing. Regardless, any property that is not occupied for a period of time presents problems. What happens if there is a waterflood. This is your investment portfolio that needs careful property maintenance so consider a management company to handle the month to month running and perform checks if you are not living in the country.
Flipping houses is all the rage, and while some people achieve profitable returns, it is a risky market to make money. As a real estate investment, renovating a distressed property often becomes far more expensive than initially planned. Likewise, with renovation projects. Buyers’ priorities should be researching current real estate market trends and pinpointing neighbourhoods with long-term potential.
Every country’s real estate laws, tax regulations and buying processes differ, so consider this when you find a country to invest in. In Turkey, buyers do not need a lawyer, but in other countries, they do but their responsibilities differ from the UK. No matter where you buy, use an independent lawyer, and clarify their legal obligations before taking on their services. For paperwork in a foreign language, like registering title deeds, use an official translator.
When browsing properties for sale, also consider the extra purchasing costs and taxable amounts that will vary from country to country. This will include but are not limited to land tax, notary, utilities connections, solicitors, translators, and land registry fees. Every one of our customers buying a property through us receives a payment plan detailing extra costs, aside from the property price and what needs to be paid and when.
Ideally, investors want to buy-and-hold property for the mid to long term to maximise property value. However, there may come a day when you face financial hardship and suddenly need to sell it to get hard cashback. The best real estate investment always happens in a market with high liquidity. So while that remote luxury villa may appeal, you have already cancelled out half the market when you need to sell your property. When buying property overseas, always choose a market with both local and international buyers.
Start your international real estate research now by browsing our property listings. Including new build and residential resale properties, each listing contains everything to know, including location, purchase price, home features and contact details to find out more or arrange a viewing. Our portfolio includes property in Spain, Turkey, France, Portugal, the USA, and other hotspots therefore giving buyers a good insight into the investment market.
If you know which country to buy in, email us for a buyer’s guide which lists the buying process, tax implications, expected timelines, legal laws and much more. Our sales representatives can also give more information more about current trends and which countries show the most potential. Otherwise, for regular updates, property news and advice about investing in property abroad, follow us on Facebook or sign up for our monthly newsletter about property investment opportunities.