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Questions to Ask - First Purchase

Discussion in 'Buying Overseas Property' started by Fatman, Jun 13, 2008.

  1. Fatman

    Fatman New Member

    Im looking at a purchase in Tunisia as my first. I feel this will be an up and coming area, and if not, ill just use it myself!

    What Questions should I be asking the agent?
    Not just related to Tunisia, but in general.

    Thanks
     
  2. Investy

    Investy Senior Member

    You can ask the agent questions, but thats like asking your barber if you need a haircut.

    The due dilligence you must carry out should include;

    1) Find a large law firm probably one with offices in London and Tunis. Agree a set fee. Beware of using the agents / developers local lawyer - there are many stories of bent lawyers in cahoots that can tie you in knots and you will not ever get redress. Make sure everything will be done in English

    2) Who EXACTLY will let the property. The agent will likely say it will all be taken care off - but if it is not in the contract it might never happen. This is a key error investors make time and again.

    3) Bearing in mind many properties in Spain, Turkey and Bulgaria do not earn enough rent to even cover the costs of loss of interest on your savings and on going costs, really think whether the rent will be sufficient. You should be looking for about 7% yield AFTER all costs as a minimum.

    4) Now this is the greatest lesson I've learned - do not buy off plan. You will merely pay for the developers risk - if they go pop you wont see a penny. Instead buy built property - agents will tell you you wont get good value this way but that is a total nonsense. Many people struggle to come up with completion funds and are forced to sell thier built new property for a song - thats when you buy. So much less risk, much more peace of mind.

    5) How will your next of kin sell the property - who will they phone? The agent selling new builts I will bet will have no interest in resales - but beware they will tell you otherwise.

    6) How will you your next of kin get the money out of Tunisia - believe me this is another common mistake, where funds end up frozen in a foreign land because the necessary paper trail was not put in place when the property was paid for.


    As a note I am sure Morocco is a far superior investment with many large upscale devlopers developing there now, and closer than Tunisia, and I would say much more up market. Ive been to Tunisia and note its always features on the bargain holiday text channels. Perhaps thats the market you want - but for me this market is too OVERSUPPLIED - you could well struggle to let the place.

    Remember this - EVERY area according to the agents involved is up n comming.

    Bets of luck
     
  3. Investy

    Investy Senior Member

    I forgot to say, take no notice of Bank or other guarantees, they often do not pay out and are usually offered by a company set up by the developer just to offer the gurantees, and when things go wrong these shell companies just dissapear and no money is ever paid out.
     
  4. DC

    DC Member

    Good points by investy. Tunisia for UK citizens is a new market. What are you thinking of buying there?
     
  5. DC

    DC Member

    I would add get a mortgage if you can. Lowers your risk.
     
  6. Fatman

    Fatman New Member

    Thanks for your views, I would appreciate your comments on my reply

    Since i started looking for property abroad, I have been looking for:

    • Low Price <£40000
    • Close to Airport
    • Close to Beach

    The tunisian property meets all these criteria for a 1 bedroom appartment.
    This is in a 5* resort, with a private beach and health club.

    It just seemed to meet all my criteria.
    I had looked at morocco, but there already seems to be a lot of investment there.
    The developer is projecting up to 12% return after costs.

    The reason I want the property is for some rental income, but also for some personal use if the property does not rent.
    Some capital appreciation would also be nice.

    If someone can suggest other areas, or has comments on my reply, id really appreciate it

    Thanks
     
  7. DC

    DC Member

    You should not buy tourist places if you are thinking of buy to let.
    As unless you have super good management and marketing you wont get much yields.
    or if they is a tie in with a travel company.

    But if you want to buy to use. then fair enough.

    My question is why buy in North Africa if you can buy in South Italy with mortgages from 30.000 euros up. It is safer, and you can get leverage and already the low cost airlines fly there.

    Just an observation.
     
  8. DC

    DC Member

    Ps. No one can know the future, unless they are a mystic. I can say capital appreciation may be x or y, but is an unknown. So to say it should go up 12% or x or y, is kinda not correct.

    ie. No one knows

    We only know what happened before, not tomorrow. If we did we would put some money on the lottery as we would know the numbers.
     
  9. Fatman

    Fatman New Member

    the 12% i quoted was Rental return, not appreciation

    The properties in Italy seem to be Above 40k from my quick investigation

    Any other areas, you think may be worthwhile, that meet my criteria?
     
  10. Riccal

    Riccal New Member

    Italy/Egypt

    You wong get anything for 40k in Italy but you will get a mainstream European economy and a mortgage should not be too much trouble. Italy is currently about the top of most peoples want to go to list but its ongoing economic potential is less clear. Bit like Berlin - dead cheap and shouldnt be but nothing reallty happening to kick start the uplift in prices outside of supply and demand which is always quite short term and fickle. Our company is just about to start to list Italian property (mostly Calabria) and I do think its an environment where you get more bang for your buck but want to have a 5 year and out view for an outright exit strategy. Yields uncertain but should easily serve interest on a 70% LTV.

    Egypt will get you an outright purchase for 40k sterling. Probability of mortgages in a year or so and decent yields whilst you hold your investment. Genuine emerging market with a government that is on side regarding foreigners investing in the area. Legislative changes have been made and are continuing to be tweaked to allow non Egyptians easy access to the market and low level entry prices making the market very accessible. Again, 5 years and out in my opinion as no real resale market as yet to give you an exit strategy. But excellent potential given its early stage.

    Rick
     
  11. Investy

    Investy Senior Member

    I'm part of a small group of investors that buy reposessed flats in and around Berlin. £40000 would be enough. We buy from the Courts (not the public auctions) so the discounts can be very heavy.

    We have a chap on the ground that manages them for us. You wont get these offers from UK agents, they will tend to just sell ordinary property at market rates.

    I'm not an agent, but if you are interested let me know, but only if very serious and ready as the Court auction process is for the ready and willing only.

    My partner runs a prestigious investment fund for these properties if you prefer non direct investment.

    I cant see the rents in Tunisa being worthwhile. Tangier is a bustling rapidly developing Med city - Im sure Ive seen cheap new appartments there in a big glass tower block part of town.
     
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