Making Sure An International Real Estate Investment Is Right For You
The most common reason to buy a property overseas is that you’re an expat who wants to live abroad. Or it’s for those who want to nail down a holiday home they can visit when they like.
However, if you’re looking at real estate as an investment, there could be plenty of benefits to looking across the ocean. Real estate can be complex. It should be no surprise that investing overseas can make it even more so.
So, here are a few ways to make sure you’re fit to the challenge.
Ensure you’re ready
This tip goes across the board as far as buying a house is concerned. Make sure you’re in the best possible position to get the best deal.
This means having a budget lined out not just for the price of the property, but also the costs associated with it. The conveyancing, the agency fees, and the inspection.
When buying overseas, this might mean the price of independent legal advice and translation services, as well. In particular, make sure you’ve taken steps to improve your credit, so you can get a mortgage that works much more in your favour.
Buying property should never be done without making sure you’re financially prepared to see it through all the way.
Research is crucial
Knowing your market when you buy real estate is essential. There’s a common mistake made when buying in countries with tropical climates, for instance.
Buyers think that because a climate is good, that it makes the property immediately attractive to other buyers or renters, but the property might very well be in an area with few other attractive features, so it ends not being as easy a return as expected.
Most importantly, it’s a good idea to get to know the current health of the property market abroad. Is it one of the best countries to invest in real estate? Is it a buyers’ market or a seller’s’ market? Does it have high-rental yields for locals or might it be a place more suited for holiday home rentals? Know how you expect to make your return.
Getting the finances right
Being prepared for the costs is one thing, but finding the right choice of financial services is essential, as well. When choosing a mortgage, you should always borrow from the creditors who are most likely to offer a deal specific to your needs.
Instead of the generic variety, it’s worth looking at brokers who can help you secure international mortgage loans. Consider not just the mortgage, but take a closer look at any arrangement’s repayment period as well as the extra fees involved in setting up the mortgage, arrangements for early repayment, and what cancellation fees might be involved.
On the right side of the law
Be aware that wherever you’re buying is likely to have a few different laws compared to how you would buy property at home.
To make sure that you’re not getting a deal that’s skewed heavily in the seller’s favour or, even worse, involved in a fraudulent deal, you should invest in independent legal advice with knowledge specific to the country you want to buy in.
Furthermore, get to know the steps of the legal process involved in buying. Are there any preliminary contracts, mandatory inspections, cooling-off periods on purchases?
Do you have to make the trip over there in person to sign documents or can you do it from your country of residence? Research it all beforehand so you can plan your time accordingly rather than being caught out.
Know the risks
Investments inherently involve some risk. As overseas real estate can often be considerably more lucrative, it stands to reason that there’s a level of further risk sometimes involved in it.
For instance, make sure you’re fully aware of tax obligations on the new property, for both your country of residence and for the country that the property is in.
Are there more tax obligations if you’re planning to rent it out? Again, make sure you’ve researched the process yourself and thoroughly, so you can make sure you don’t lack any of the essential paperwork, such as permissions, licenses and planning consents.
Is the exchange rate likely to play a big role in whether or not you can expect an easy return?
Being willing to look overseas for real estate investments is an idea with a lot of potential. It opens up your possibilities to high-value investments like holiday homes.
It also lets you work outside the domestic market when that’s not going so great. Just make sure you’re ready for the work and the cost involved.
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