Tips for Profitable Property Investment Abroad

If you’re thinking about venturing abroad to make the most of weakened property prices and falling property markets in many international locations, we’re right there with you!  Opportunities are abounding at the moment for the brave – and those with cash in their pocket.  However, if you want to make a profitable venture abroad there are a whole handful of points to keep in mind.

Because it can be hard to hold every thought in your head when looking at property particulars and going on inspection trips abroad, we’ve created a print out and keep list of tips for profitable property investment abroad.  You can place the tips alongside your shortlist of properties and make sure each one ticks the right boxes.

Not every tip may apply to your own personal circumstances, however the majority of tips will give you a good grounding to think about your potential property purchase abroad, and make sure it stands up to scrutiny and will indeed deliver maximum profit potential.

Accessibility

If you’re buying abroad to let out, your property needs to ideally be within 1 hour of the nearest air or seaport.  Any further and your guests will be discounting your property as too inaccessible.

Don’t Bank on Cheap Flights

As the recent news that Ryanair are cutting flights from Manchester shows, cheap flight operators can cut or alter routes at any time so don’t bank all your property profit on there being a cheap flight route near your chosen property.  You need more than one way to get to your property if you want to be able to let it out or even resell it on the open and international market.

Don’t Trust Your Estate Agent

Why trust what an estate agent says as being gospel?  Would you buy a property in the UK just off the back of what an agent says?  Surely you’d have a survey done, get your solicitor to do proper conveyancing and make sure all is in order with the property, its boundaries, the vendor’s right to sell it and so on and so forth.  Well, you have to do exactly the same abroad.

Don’t Trust The Vendor

Whether you’re buying from a developer or it’s a private sale, it doesn’t matter.  If your vendor points out boundary lines or says a swimming pool will be included with the sale, just smile.  Don’t believe a word of it until it is written down in a cold, hard and impossible to get out of legal contract.

Think Long-Term

Yes some people do make a mint out of flipping property – but not usually in a depressed market like this.  If you’re buying a property see how you can add value to it and turn it to profit over the long-term: for example, think about earning a rental income from it.

What’s a Bargain?

You are buying at today’s market prices – i.e., a bargain is only relative to the market you’re buying it in.  As property prices are sliding everywhere, all property is losing value apparently…however certain nations’ markets are not falling as fast or as far, so be wary of what constitutes a bargain there.  Compare and contrast with the local market.

Don’t Over Do It

If you’re going to be adding value to a property you don’t want to over do it and price it outside the local market.  Whilst you may be hoping to attract a foreign buyer, know that they too will shop around and if they realise your house is above what the local market can support or wants, they may be put off buying.

Don’t Give Up the Day Job

Until you know you can profit from property, you may well be unwise to give up your day job to pursue this dream.  Some would disagree and say you have to jump in at the deep end, but because the most property developers ever seem to make on average is 20%, can you afford to give up your day job yet?  Tread carefully.

What’s the Real Cost of Buying?

You’ve seen the purchase price and hopefully haggled it down, but don’t forget the fees, charges and taxes you have to pay to buy.  Know what these are up front and factor them in.

Check Out Ongoing Financial Obligations

What taxes and charges will your property incur on an ongoing basis – from income tax on rental income earned, to the price of keeping on top of your swimming pool and paying council type taxation.  Know upfront about all fees – particularly communal fees and how much they are allowed to move by each year.

Find Out the Cost of Exiting a Market

Will you have to pay capital gains tax if you sell your property for a profit and can you even take the money out of that country in which you have bought unhindered?  Knowledge is power in this area – it can turn a profitable looking venture into a no go in a nation such as Germany for example where CGT is ridiculous on any profit.

Who Will Make You Money?

Are you going to resell or rent?  Know who will be making you the money you want in terms of rental income or resale profit – and then develop your property with them in mind!

Trend Setter Alert

Are you better to set a trend or follow a trend?  Hard one to call – however, the base fundamental is, if you want to profit it’s best to appeal to the most common common denominator!  I.e., if you’re looking for a rental income, look where demand is consistently high and not over serviced.  If you want to resell for profit after adding value to a home, where is there demand from expats or even the local market for homes?  What is supporting that demand?  It needs to be an unshakeable foundation upon which you base your plans.

Buyer Beware

You are on your own when it comes to buying – yes you can read wise words on ShelterOffshore and employ a good solicitor, you can run ideas by friends and have the backing of your family – but you need to do the groundwork and the homework and be happy with what you’re about to do.  Those who are arrogant and jump in without much thought are more likely to fail than those who tread steadily and have a good back up plan in place.

Don’t Bet Your Bottom Dollar

Finally, don’t put all your eggs in one basket, don’t bet your bottom dollar and many more clichés besides.  In other words, have a budget, stick to it, make it work and don’t throw good money after bad in a sinking market environment.  You can make money from property in any market – as multi millionaire real estate moguls such as Robert Shemin have proven- but be aware of the market fundamentals of the nation you’re buying in, look closely at what’s driving the sustainability of demand, stop day dreaming and become a cold hard businessperson if you want to survive in the property investment game.