6 Things You Should Know Before Investing in Foreign Real Estate

By : Nick Marr

Foreign real estate holds many opportunities for investors. Emerging markets, economic growth and favourable currency exchange rates can represent amazing investment opportunities with great pay offs in terms of both property value increases and rental returns, if you invest in the right place at the right time.

There are a number of common mistakes which people make when looking for a property. When it comes to buying a property overseas, these mistakes multiply. Investing in foreign real estate involved a number of risks and potential pitfalls. The benefits and advantages of foreign property investment make it worth taking these risks, but there are certain approaches and knowledge which can smooth the way.

Check these top tips for things you should know before investing in foreign real estate.

1. Use Online Resources

As with almost everything these days, a great deal of information about foreign real estate can be found online. Of course, there is no substitute for visiting a property in person, but the initial stages of research and information gathering can be done on the internet. Furthermore, this is the best way to capture information about the maximum number of markets to make the best decision. You can search for properties in Europe on europeanproperty.com, or if looking further afield there are a number of online resources available for the Middle East, Asia, and South America.

2. Hire a Local Lawyer

Investing in real estate in a foreign country can represent an amazing opportunity, but it also involves dealing with a host of local laws and regulations which you are probably not familiar with. Breaking these laws could represent serious risks: you could incur a fine, lose your property, or even end up in jail. Avoid all of these risks, as well as more minor headaches, by enlisting good, local help. Hire a local lawyer and to help you navigate the legalities of purchasing a property in their country.

3. Choose Your Market

When looking at investing in property overseas, where you decide to put your money is crucial. Make the right choice and you could see incredible returns on your investment in the long run. Look into historic price appreciation (that is, how much property values have gone up) in the area or areas you are considering for you investment. Also look into other factors which affect property prices, such as economic growth and the development of tourism.

Other factors to consider include  the local laws pertaining to real estate ownership: how easy is it for foreigners to buy property or are there special requirements for foreign investors? Also, think about currency payments and how the local currency is predicted to perform. If you are making repayments on your property in a local currency which is weak or even depreciating against the US dollar, this can save you significant amounts of money.

4. Uncover Hidden Costs

There can be a number of fees and charges associated with buying a property. Buying real estate overseas is no exception, and here you can be particularly vulnerable to being caught out by unknown fees because you do not know the system. Property taxes, condo fees, utilities and other charges can take you by surprise, and they can add up to a substantial amount of money! Before you make a final decision, make sure to check the fine print and discover these extra costs, so you can be sure to make the best decision.

5. Hire a Professional Property Manager

Once you have successfully bought your property, in most cases you will decide to rent it out. This can be a very wise move, delivering strong returns on your investment, especially if the market is right. However, renting out a property always comes with its own risks and hassles: tenants may be slow to pay rent (or not pay at all), suddenly leave, or cause damage to the property.

Dealing with these issues becomes ten times harder when your investment property is located in another country. However, a good solution is to hire a professional property manager located in that city in order to keep an eye on things. There are a number of property management companies in Dubai, for example, which will look after your property while you are overseas, and send you regular status updates.

6. Look Into Infrastructure and Services

Be aware that in certain countries you cannot guarantee certain things which you may take for granted in your own country.

Some factors which you will need to double check are up to standard may include:

  • Infrastructure such as roads and high ways
  • Plumbing, including whether the water is safe to drink
  • Electrical systems
  • Internet availability
  • Education and health care
  • Political stability

When considering different locations for your investment property, and before making a final decision, do your due diligence and check into all of the above. Always visit the location, and the property you are considering buying, in person before signing anything.