The Internet has opened up a whole new world of online information and many property investors are now better informed than ever before. As a consequence, at the touch of a button you can now research overseas property investment in any part of the world. In some ways this offers a great way to diversify your property portfolio but there are a number of issues to consider when investing overseas.
One issue which is often overlooked by property investors is currency movements. Historically, short-term currency movements tended to be fairly small between the major currencies of the world. However, over the last couple of years, in light of Brexit, we have seen a dramatic demise in sterling against a basket of currencies. This perfectly illustrates how currency movements can have a significant impact on overseas property investments.
There are ways and means to hedge currency movements while negotiating a deal which will effectively cover you against any volatility on the currency markets. While some currency movements may prove beneficial, the certainty of a firm property purchase price is vital when calculating your potential return on investment.
Unfortunately, many people investing in overseas property have been caught out by assuming the regulatory framework will be the same as their home country. The reality is that cultural and regulatory differences are commonplace across different countries. There may be certain issues regarding planning permission, additional charges or even restrictions on the ownership of homes by foreign investors (New Zealand is a perfect example). It is sensible to seek the services of property experts who can advise on regulatory differences between your home country and the country in which you are acquiring property.
Whether or not your property is occupied for the full year the likelihood is that you will still require some kind of local management of your assets. The idea that you can simply visit your overseas property once or twice a year to see if “everything is okay” is naive. There may be security issues or tenancy problems, the majority of which you will not be able to solve from thousands of miles away. The cost of management services (and to a certain extent security) should be factored into your calculations when looking at your potential long-term return on investment.
As a consequence of growing demand for overseas property, there are now many specialist mortgage companies who will be able to assist. There may be additional expenses, there may be conditions and you need to know the full cost of finance before setting out on your overseas investment journey. However, if you are eligible, the likelihood is that using a specialist mortgage company will open up other services which can assist you in securing the best return on your investment.
There will be situations where a cash purchase is possible which would alleviate potential mortgage issues.
Closing the deal
We only need to look at issues in northern Cyprus to see that problems obtaining ownership documents can prove extremely costly further down the line. As we touched on above, the regulatory framework may well be different from your homeland. Many people tend to appoint a local legal representative who will ensure all legal obligations are covered and the relevant paperwork is in place. There will obviously be a cost for this service but, in the long term, for many people it will turn out to be money well spent. Security, peace of mind and legal ownership of your overseas property will allow you to look towards the next deal.
Contact FJP Investment for details of property investment opportunities for you.