How to Buy Overseas Real Estate

Summary: Five critical points to keep in mind when buying real estate overseas so that you protect your interests and assets

In real estate markets in countries like the US and the UK a great deal of property investment potential has been and gone and been snapped up by others - and now affordability issues, interest rate hikes and talks of crashes versus soft landings are dominating the property market landscape - therefore it’s time to look further afield for affordable and profitable real estate.

If you’re scanning the internet for opportunities you’ll see there’s still a wealth of nations offering potential for sustainable growth in the property sector, and because even the most conservative independent financial advisers suggest a healthy and well diversified investment portfolio should have 10 – 15% of investment in property, it’s time we discussed with you how to buy overseas real estate…because there are pitfalls to be aware of and practical advice that we can impart.

If you’re wondering how to buy overseas real estate there are five significant factors that you have to bear in mind if you want to be successful in your investment approach. 

1) Property developers, estate agents, marketers and sometimes even government agencies will always do all they can to promote the real estate market that they are significantly interested in and involved with.  This means that there is a significant chance that anything you read or hear from people related to a given real estate market will be positively biased.  For this fundamental reason you should never, ever, ever buy a property in a country that you have never been to.

If you’re buying a property for your own personal use then this holds especially true, but even if you’re buying for investment purposes you have to travel to the country and ensure it is all you expect it to be and that the investment potential promises made by agents and developers are based on the truth and solid and tangible fundamentals.

Buying property abroad, or anywhere for that matter, is a significant financial commitment and so if you don’t do at least the most rudimentary of initial visits you are not being sensible with your money and you run a higher than average risk of regretting your purchase decision.

2) Remember you are only buying what is included in your sales contract.  This means that if you’ve been told a development will have communal amenities and facilities or that nearby there’s going to be a golf course or a five star hotel, you actually have no guarantees that any of these will transpire and reach the construction stage.  What this means is that you should be basing the value of a property on what you see now and you should not be hoping for future projected growth based on anything that is currently intangible.

This is actually one of the hardest considerations to keep in mind because you’re going to want to trust and believe in everything positive that you’re told about that could enhance the value of your chosen property…but at the end of the day you have no guarantees whatsoever so be careful and ensure that a property that you’re thinking of buying is attractive even without the addition of promised and proposed bells and whistles.

3) If you’re going to be living abroad and this is the reason for your desire to buy overseas real estate, don’t rush into your purchase decision.  No matter how well you know a given country, chances are if you’ve never lived there full time you known that country as a tourist rather than as a local citizen.  This means that before you commit to buying a fairly illiquid immovable property you need to rent in your chosen overseas location. 
If at all possible rent for an entire year so you can live through the drama of each season, so that you can witness tourism comings and goings and see how they impact on quality of life - and an added bonus of renting for so long is that you’ll get to make lots of really useful friends in the meantime.  The more you network as a local the more likely it is that when it comes time to buy you’ll be buying at local prices rather than tourist prices and you’ll know the very best areas and developers so you’ll make the right purchase choice for you.

4) Get every single promise made written in to your property sales contract, get every single detail about the property’s specification and all inclusions written in, make sure the supply of electric and water are confirmed in the contract and do not take anyone’s ‘word’ without them being forced to sign their name to their ‘word’ in the form of a contract!

5) Markets have cycles, they go up, they come down, some stay down for a long time, some shoot up to unsustainable levels and some stagnate or devalue dramatically.  Do not assume that the value of your overseas real estate will definitely go up, do not assume that if it is enjoying a period of growth that it will never stop rising and do not pin all your financial hopes, dreams, plans and ambitions on a single investment in the form of a property abroad.

Successful investing is all about diversification as well as timing market entry and exit. 

If you keep all of these points in mind, how to buy overseas real estate actually becomes a straightforward, relatively simple and hassle free process.

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