Investing in Property Overseas: A Beginner’s Guide
17/09/2018
Real estate is one of the most appealing ways to invest your money, for a variety of reasons. One is that it is generally regarded as safe. Although property prices, like any other investment, can go down as well as up, in the long term the value of property will almost always increase.
Property is quite literally a solid investment: you can see where your money is in the physical form of a building. You can actively increase the value of your investment by working on the property, and by renting it out, you can provide yourself with a steady income that can be used either to cover your maintenance and mortgage costs, or to provide you with regular property while you are waiting for your investment to mature. Alternatively, you might want to live in your property yourself, or use it as a second home for holidays abroad.
Why buy overseas?
Capital growth and rental yields are often better on overseas property than in the UK. Different countries offer different advantages in terms of tax breaks, desirability as a location and the overall state of the economy, and for those investing in a number of different properties, building up an international portfolio spreads your risks sensibly.
Owning residential property abroad can also be a way to qualify for citizenship or residential status in the country in question. You might want to do this for tax or business purposes, or you might actually want to live or retire abroad. If this is your goal, then be aware that many countries require you to keep the same property for at least five years in order to qualify, as well as spending a minimum amount of time there personally.
Is property right for you?
Before investing in overseas property, be clear about what you want from your investment. If you are interested in buying property to live in, use as a holiday home, or to pass on to your children, then you should consider different factors from someone who is buying property purely as an investment.
If you fall into the latter camp, then you should maybe take a moment to consider whether real estate is the best place to put your money. Managing buy-to-let properties can be hard work, and those simply looking for an international investment might be better off buying currencies using a forex broker. You can compare forex brokers with ForexTraders, and this may be the way to go if you don’t want the hassle of being an overseas landlord.
What do you need to know?
Investing in international property should be done on the basis of thorough research into the area in which you’re looking to invest. Consider the country as a whole – its economic situation and forecast for the future. Are prices likely to go up or down? Is there a recession on the horizon, or a revival of fortunes? What about the political and social climate?
Next, consider the best parts of the country to buy property. Major cities will have all the required amenities nearby, but a more rural location may also have an appeal. If you’re thinking of letting the property out to tourists, then try to see it from their point of view. Also, consider that the property may be vacant during the off-season.
Can you manage the property yourself?
Being a landlord means making yourself constantly available to your tenants, and when you live in a different country, perhaps even a different time zone, this is not at all easy. You’ll find that there will constantly be problems and maintenance issues to be attended to, both big and small. Going through a local estate agent will make things easier, but be sure to compare fees and find out exactly what services you’ll get in return.
Working with local maintenance companies that you can trust is also a good idea. If you do decide to rent to tenants directly, then you’ll definitely still need someone living nearby who can represent your interests and look after the property on your behalf. Finding someone who knows the local real estate market is also a good idea when buying property overseas.
Are you tax compliant?
When buying property overseas, you need to make sure you’re complying both with UK tax regulations and the requirements of the country your property is in. While you may actually pay less tax than you would if you bought property at home, you still need to fully understand where you stand to avoid getting in hot water. Make sure you’re aware of all your legal responsibilities as a property owner and/or landlord.
Buying property overseas is a great investment but requires solid research and understanding. Whether you buy to let or want to live in the property yourself, putting your money in bricks and mortar elsewhere in the world may be the best way to see it grow.
