Those wanting to make money out of property are starting to set their sights further afield. With cheaper property prices and less strict regulations, it can be easier to make a profit out of foreign properties in many cases. That said, there are many challenges to buying abroad that you need to factor in. Here’s how you can make the best investment possible when buying property abroad.
Decide your investment strategy
There are lots of ways to invest in a property abroad.
The most basic form of investment could be to buy a property in order to rent it out to locals to live in. This rent can help to cover any property costs such as mortgage costs and repairs, whilst allowing you to still receive a small profit. In some areas around the world there is a big demand for rented property, however you will need to have a good understanding of the local renter’s market.
Another option could be to rent out a property as a vacation home. This could allow you to make money by renting it out to guests. This type of investment is more hands-on as you constantly need to be marketing it in order to keep it booked up. Of course, an advantage of owning a vacation home is that you can use for your own leisure whenever you fancy a getaway.
It’s also possible to ‘flip’ property abroad. This involves buying a cheap property in auction and renovating it in order to add value before selling it for a profit. This could allow you to make a more instant return but relies on your ability to find a local buyer.
Choose the right location
In order to make your investment a profitable one, you need to buy a property in the right location. The location depends largely on the strategy you’re choosing. If you’re renting the property out to locals, you may be best choosing cities and urban areas where lots of people are looking to rent. If you’re choosing to invest in a vacation rental, you’ll want to buy a property in a tourist zone – ideally somewhere that attracts tourists all year round. As for buying a property to sell, you’ll want to focus on areas where there are a lot of homeowners living.
Researching the location is vital. It could benefit you to be somewhere that you’re familiar with – perhaps an oversea location where you have family or somewhere you’ve been on vacation to. Make sure that you’re aware of any local threats such as flood risks or a high crime rate – these could jeopardise your investment by putting renters/buyers off.
Start shopping around
Thanks to the web, it’s easier than ever before to shop for property abroad. You can simply use listing sites such as https://rumahdijual.com/jakarta-selatan/ to find property rather than having to visit the location in person. Many realtors can even organise viewings via Skype, allowing you to take a guided tour from your home. That said, before committing to a purchase, you’ll probably still want to see the property with your own eyes just to ensure that it’s right for you.
If you’re not a cash buyer, you’ll also need to shop around mortgages. It’s possible to set up a mortgage on a property abroad from home, however you may find that only certain lenders are willing to lend you money for overseas properties. International mortgage companies may be more willing to approve you. Be wary that down payments and interest rates can vary massively from country to country – in Spain, the average down payment is 30 to 40% of a property’s value, whilst Argentina have average loan interest rates of 50%.
Budget for hidden costs
Whilst properties prices can be much cheaper in certain countries, there could be other hidden costs to watch out for such as high energy bills, land tax and capital gains tax. This is something to research into before you buy so that you know exactly what you’ll be paying.
It’s also important to take into account the difference in currency rates. If you’re charging rent to locals, you could find that you’re getting a different amount of rent coming in each month as currency values fluctuate. Similarly, if you use a foreign mortgage lender, you may find that your monthly mortgage payments are different from month to month. Transfer fees may also be something to factor in – different forex dealers will charge different rates. For more information on this matter, it could be worth visiting a site such as https://www.currencytransfer.com/blog/expert-analysis/buying-property-overseas.
Plan to make improvements
It’s likely you’ll have to make some improvements to your property. If you’re renting a property out as a vacation home, adding certain luxuries such as a new bathroom and air conditioning could help your property to appeal to guests. There may also be certain local living requirements such as having certain security or health and safety features if you’re renting out to tenants.
Make sure that there’s enough money in your budget to handle these renovations and decide how you’re going to take on the project – will you do it yourself or hire professionals? Whilst DIYing it could save you money, you’ll have to spend some time in that country whilst you do the renovation work which could result in extra travel costs or money lost by taking time off work.
Get support from locals
You’ll need to work with locals in order to make your investment a success. If you’re renting a property abroad, you’ll need to keep on top of maintenance – you may have to hire a local agency or property manager to handle this element for you. These people could also help you to find new tenants or hand keys over to guests.
Locals could also be useful for various legal and financial advice when buying a property. When handling the paperwork involved with buying a property, you’ll want a local conveyancer who can do this for you. Local investment advisors meanwhile may be able to offer financial advice.
A translator could also be handy when dealing with another language. A translator can ensure that every detail is covered and that no piece of information is lost through miscommunication. It could also be worth getting certain documents translated into English for your convenience.