Why invest in overseas property?
Buying property has long been considered one of the safest and shrewdest financial investments that you can make. The old adage “you can’t go wrong with bricks and mortar” always, until more recently, held true. Nowadays however the British property market has had a bad case of the wobbles and in some areas it is very flat and in others still holding its own. The UK property market was over inflated by the vast quantities of easily borrowed cash and so it was hit harder than many other countries. Given the general low in property prices the world over (except Australia it seems) many people still see investing in overseas property as a great long term investment and for the canny investor there’s still a bob or two to be made.
Despite the UK property doldrums, property in the UK can still be expensive compared to some countries, meaning your pound sterling can usually get you a lot more property than it can at home.
There are some real bargains to be found if you look in the right places. And if you choose the right place carefully, there is every chance that your overseas property investment will increase in value whilst paying you a nice solid yield. So whether you buy a place abroad to keep as a second holiday home, rent it out to friends and colleagues, publicly let it to tourists or let it out on the local rentals market, buying property abroad can still be a great investment.
Location, location, location
Yes as the adage goes, location is everything and when it comes to property they are not wrong. We are always of the opinion that given your budget you should look to buy a primely located property that is maybe a little smaller than buy a sub-prime located property that is bigger. You will always be able to rent, enjoy and sell a prime property far more quickly and at a sensible price than a sub-prime one. Usually properties sell for what they are worth, it is the nature of supply and demand. If they were such a huge bargain you can bet the local property developer or local fish and chips shop owner with a buck or two in their back pocket would have bought it first. That is the way of the world.
It is important to take time and consider what location you are looking for.
Most people already have somewhere in mind. You might have a family connection to another country, an emotional connection to somewhere you have enjoyed visiting, or you may have heard or read about a particular destination that appeals to you.
The rise of the budget airlines has opened up many countries that you previously might have never considered as a destination. This has happened at the same time as the opening up of much of Eastern Europe to tourism. With regular cheap air connections, countries like Bulgaria, Romania, Czech Republic, Slovakia and Slovenia have all become unlikely sounding holiday destinations.
The Baltic States have also become increasingly popular with UK visitors and all three of the Baltic countries; Estonia, Latvia and Lithuania are worth considering. The same could be said of the Balkans with Croatia in particular offering some fantastic holiday destinations and, consequently, some great, potentially lucrative property investments.
We have concentrated on the classic British holiday locations; Turkey, Cyprus and the Caribbean. We have also looked further afield to Florida and Brazil.
Most people are aware of the tourism boom that has occurred in Turkey over the past decade. With hundreds of miles of dramatic coastline and thousands of beautiful beaches Turkey is a holiday hotspot and has a thriving holiday property market. See our pages on Turkish properties for more information
Cyprus is also a popular Mediterranean holiday destination. It has strong cultural and historical links with the UK and is unlikely to fall out of favour with British tourists. With the opening of the buffer zone between the two halves of the island in 2003, Cyprus now has more to offer visitors than ever before and its sun drenched beaches and rugged interior landscape are set to attract tourists long into the future. For more information on Cyprus properties check out our Cyprus property pages.
Some other traditional British holidaymaker destinations are still valid places for investment. France, Spain and Portugal all offer properties in fantastic locations that may be of interest to the overseas property investor. The tourism and property boom in these countries has levelled out however and although you can still make your investment work, the amazing bargains of the past are fewer and farther between. Bargain hunters are increasingly looking further afield for the best deals and perhaps the most exciting location for the prospective property investor at the moment is Brazil.
Brazil has an economy that is expanding at a tremendous rate and is grabbing the attention of investors in all sectors. It has stunning unspoilt landscapes and thousands of miles of some of the most beautiful beaches in the world. The Brazilian people are renowned for their friendliness and the carnival atmosphere is sought after by millions of tourists. Currently Brazil offers some outstanding property investment bargains and this seems set to continue for some while. See our Brazilian property for more information.
Thinking about investing in the American property market might start to alarm bells ringing. The slump in American property caused by the sub-prime mortgage scandal has been cited as the root cause of the global economic downturn. And yet, people are still going there for their holidays. The foreclosures market is of particular interest to bargain hunters and this is the place to look if you want to snap up properties at up to 75% below their market value. You’d need to be able to afford to sit on them if you are interested in resale. But buy-to-let investments in popular tourist destinations such as Florida have never been so lucrative. Check out our Florida property pages for more information.
The key to making the greatest profits in overseas property investments is in finding the next holiday hotspot and investing before the property prices rocket. It’s not all about looking for the latest destination though. They say that style and quality never go out of fashion, and in the same way exclusive destinations like the Caribbean will always be popular. Just the word ‘Caribbean’ summons up images of paradise; white sand beaches fringed by palm trees and lapped by the warm waters of the Caribbean Sea. I bet you’ve got mental images from an old bounty advert running through your head right now. The Caribbean islands really are like that. Take a look at our Caribbean property pages for more information.
Buy to let investments
There are a few different ways of investing in property overseas. Buy-to-let is the most common option and perhaps the most simple. Some people invest in buy-to-let properties purely as a business proposition. They will either let the property themselves or through an agency and simply pay the mortgage and count the rental income. Many overseas investors never even see the property.
Others invest in buy-to-let properties in order to finance their annual holiday. By renting out the property for the rest of the year it can pay for their fortnight or month in the sun. This is probably the most common way of doing it and makes the most sense if your motivation for buying a property in a particular location is because you love it there. Quite often people will take a few weeks in the quieter off-peak season for themselves, maximising their returns by renting throughout the high season.
For some people though, the idea of renting their second home to strangers for most of the year is off-putting. This is a serious consideration if that is an issue for you. Without a rental income from your property you will need to have other, independent sources of finance or be particularly inventive with your business plan to make it work.
Building your own property
Investing in building plots is always something to consider for the serious investor who is looking for more than just a home in the sun. As with property investments at home, buying the land and constructing the property can seriously increase your profits. However, if you have no experience at this type of project, cutting your teeth on an overseas property is not recommended. Different countries have different building regulations and navigating the labyrinthine paperwork can often be a nightmare. It’s hard enough at home!
If you do decide to build you will first need to buy a suitable parcel of land. You can either go directly to a property agent in the country that you have chosen, or use a UK-based agent that specialises in properties in the country of your choice. The best advice is not to just stick with one agent. Consult with several agents, both here and there, to make sure you are totally aware of all the options available.
When buying the land make sure that you have a good legal representative. Although the price of solicitors can sometimes make your blood boil, good legal advice is essential and this is not an area to scrimp on.
Having negotiated the land you will need proper plans for your building. Hire an architect or surveyor who you can communicate well with and who you think has an essential understanding of your project. You will need to present your building contractors with clear and workable plans. Your architect or property agent should be able to recommend good, reliable local builders to you. They should also inform you of any necessary requirements for the supply of utilities such as electricity and water. Remember that if there is a lot of development going on in your chosen location local builders may be very busy. Be sure about availability, time-lines and deadlines.
And when the building project is complete make sure that you are aware of any further legal duties that you may have to fulfil as the new property owner. Your solicitor should be able to give you the best advice. Building a property overseas can be a huge undertaking, but if you are diligent and have planned it all thoroughly it can be extremely rewarding.
Whichever way you decide to go about investing in overseas property the number of options available is overwhelming and the potential for success staggering. With good research and meticulous planning your dream home in the sun is within your reach. Good luck with your prospective project and think of us whilst you’re sipping a pina colada, watching the sun set from your balcony.