Beginners in the real estate market who want to invest in overseas property are on the right track. Many advantages include affordability and diversification, of which the latter is an essential strategy for building your net worth and investment portfolio. Some countries also present higher capital growth appreciation forecasts and rental yields. If you don’t want to enter the buy to let market, but own a first or second-home for holidays or future retirement, many destinations also await.
However, before diving into the deep end, planning an Investment strategy is necessary. Every country operates differently, ranging from purchasing procedures, property management, additional closing costs, inheritance and tax laws and future predictions for capital appreciation. To maximise the potential of profiting from investment properties, consider the following when purchasing a real estate portfolio abroad.
To make money, know your current cash flow and expenses exactly. Allow lee-way, when looking at another country, because their housing market will be priced in another currency. For example, the Turkish lira is currently running at over 1 pound to 10 lira, but this is high, and the long-term aim of the government is to get it back to around 4 lira. Always use a foreign exchange company to exchange currencies and send money abroad. Know your purchasing budget but also factor in extra costs like taxes, lawyers, and translators. All successful real estate investors know what their money is doing before entering property markets.
To borrow money, look around at lenders or use a mortgage broker to get the best deal. Always look at the fine print for long-term low-interest rates. Many banks in other countries offer foreigners a home loan, but with high rates, so look closer to home for financing opportunities. Do not forget to factor in monthly mortgage payment into your yearly budget mentioned above.
Some property investors go one step further than capital-gains and look to make passive income from filling their rental property with tenants. To do this, once again, research and due diligence are essential, especially locally. Take one look at renting websites, whether this is for holiday lets or long-term, to see an abundance of homes to rent. This is the landlord competition.
For holiday lets, 100% occupancy rates year-round is an unrealistic target. Many investors do not use a property management company but have good advertising skills. Another option is rental guaranteed, offered on residential and commercial real estate, but always read the small print on the contract. Also, investigate local tax laws regarding a rental income and obligations when leasing to renters. Owning a rental property can be a good pay-off, but be on top of your game.
Many home buyers often ask us which is the best country to buy-in. Some that stand out noticeably more than others, but we strongly recommend drilling down to regions. Take Spain as a good example. Most foreigners buying property gravitate towards the eastern and southern Costas, because of more robust tourism markets with a more cosmopolitan feel.
What local councils do also affect profit. Councils actively investing in infrastructure, tourism, and transport attract any real estate investor looking for a stable market. Property prices per square meter differ from region to region, and an abundance of empty houses on the market generate lower prices, but ideal long-term investments. Once you decide on the county to invest in, research each region to understand the housing market fully. Micro-thinking is vital here.
Imagine, you find the perfect property for sale. Now decide how to manage the upkeep and maintenance, especially if you do not live in the country. Some buyers look for an investment company who handles key-holding and will perform monthly checks. Others fly out regularly, to spend time in the home and carry out routine upkeep and maintenance. Also, consider how to pay monthly bills. Pay most online, but laws regarding things like council tax will vary from country to country.
So we established, research is the principal aim of making money when buying a house abroad as a foreigner. Some countries make buyers jump through hoops; others make buyers form a company, while others with relaxed and standard rules are easy to navigate. As an international real estate agent, we already have an eye on laws, which areas are potential investment hotspots and how to handle finances to maximise value for money and cut down on costs. So, call us to speak with an estate agent who can answer questions on real estate investing.
When investing in real estate abroad, avoid house flipping and renovation properties. First, to find cheap bargain properties, buyers need intense knowledge of local foreclosure and auction procedures. Second, renovation projects need careful management to ensure they do not drain you of money instead of making it. Often, they also involve lengthy red tape process, that adds stress and do not guarantee an outcome.
Also of Interest
Best Places to Buy: To look at market trends for property investment, it is worth knowing which countries top the list of the most popular foreign house sales. We collected the stats from various publications and listed them here, including the reasons such as value for money, language and culture, or lucrative investment opportunities.
Property Market: Start your search to buy a home now by browsing our portfolio covering many countries, including Spain, France, USA, UK, Turkey and more. Each listing contains everything to know like price, location, home features and photos. Just use the enquiry details to arrange a viewing or receive more information via email.
About Us: We are Spot Blue, an international estate agent who helps buyers invest in overseas property. Having been featured in many publications because of our local knowledge and years of experience, we can answer any question and help you become an international property investor.