Buying a property investment outside your country of residence can be a fantastic way to diversify your property portfolio. Buying a property overseas often allows you to take advantage of lower costs, favourable exchange rates and ensures that you face less exposure in just one country.
In many cases, buyers choose to invest in property overseas to use as a holiday home, or a place in which they wish to spend their retirement, while simultaneously generating an income from letting the property in the meantime.
While the advantages of investing overseas are numerous, there are several pitfalls which buyers should seek to avoid. We highlight the common mistakes that overseas investors make, and how to avoid them.
Not having a strategy
This is the first mistake many overseas investors make. To invest successfully thought should be put into what your aims and objectives are. Are you looking for a long term investment for capital growth, or is your aim to fund your retirement home by letting it out.
Knowing what you wish to achieve with your investment will help you to devise a strategy where the property you choose helps you to achieve your goals.
Not doing the research
One of the biggest factors which makes overseas investments fail is the failure to undertake enough research before committing to a purchase. In addition to understanding the supply and demand at your chosen location, it’s essential that you are aware of growth predictions, and factors in the wider economy which may impact on your returns.
For a successful long term investment, it’s essential to gather as much data as possible, not just on your initial investment costs, but longer-term associated costs such as the costs to let, manage and even sell your property.
Choosing the wrong location
When it comes to property investment, location is up there as one of the most important considerations. For those investing in a country which they are less familiar with, undertaking research into your chosen location is even more vital.
Consider what you want from your investment. If you are looking to rent to professionals, consider the employment data within your chosen location, and how accessible your investment is to business centres. Looking for a long term holiday home? Are flights easy to come by?
Not understanding legal and tax implications
This is one of the easiest mistakes for investors who “go it alone” make when purchasing offshore. It’s vital to understand all of the implications when investing in a foreign market. Legal structures and taxes vary hugely across the globe, so make sure that you are fully aware of taxes and laws around income, capital gains, and also ongoing costs such as local taxes or taxes on foreign owners.
It’s also important to understand the tax implications that overseas ownership may have on your at home.
Choosing the wrong partners
You’ve heard to horror stories. Individuals putting their life savings into a retirement home which doesn’t have required planning consents and is knocked down. Or putting down deposits overseas, never to see their agent again.
Even in not such extreme cases, choosing the wrong partners can make a huge impact on the viability of your investment. Choosing the right experts to guide you through the purchase process overseas will help you maximise the profitability of your investment, and add value throughout every step.
Benoit Properties have been assisting clients across the globe to simplify the property acquisition process since 2005, and are a trusted partner to hundreds of investors. Find out more about us, or take a look at our existing opportunities.