Over the last few months there have been a number of forum members discussing their adventures in overseas real estate markets and which ones would appear to offer the best value. It is interesting that more and more investors are looking overseas for their next real estate investment as opposed to remaining in their “comfort zone” forever and a day. There are many issues to consider when buying property overseas which we will cover below.
One problem that many investors make is automatically assuming that for example the UK market is very similar to the Spanish property market. The reality is there are an array of subtle differences in the way the markets operate, how properties are bought and sold and the overall process. Those who automatically assume they are moving from a like to like situation can and do experience major problems that often cost them a lot of money in the long term. Simple research and professional advice will highlight issues you need to be aware of and this is one case where cutting corners and saving costs could backfire spectacularly in the long term.
Historically currencies have not necessarily been overly volatile but since the 2008 worldwide recession we have seen increased volatility. As a consequence, currency issues should be considered in great detail when looking to acquire property in a country which has a different currency from your homeland. Currency movements can sometimes wipe out profits on paper when looking to repatriate funds. In reality, acquiring property in a country which has a strong underlying economy should at least offer you some protection going forward. However, when acquiring property in a different currency it is vital that you monitor not only the local real estate market but also currency exchange rates.
Knowledge on the ground
Taking professional advice and seeking knowledge on the ground are two totally different issues both of which are important. The Internet has changed many elements of our everyday life and offers the ability to monitor both economies and property prices around the world. However, “knowledge on the ground” can very often be worth its weight in gold with appointed third parties relaying rumours and counter rumours so you are fully aware of what is going on. The ability to stay ahead of the game should not be underestimated and having a representative looking after your interests is something to consider.
Do not get emotional
A number of real estate investors have acquired properties overseas which they will often visit and make use of during the holiday period. It is very easy to become emotional and attached to a property even if you have acquired it as an investment. Holiday homes are interesting because not only are you able to use them yourself but there will be various opportunities to rent them out to holidaymakers over the year.
Remember, any asset that you acquire as an investment should be reviewed on a regular basis with regards to future prospects. There may come a time when better opportunities are available elsewhere and selling your “holiday investment” might be the right thing. Make sure you do not get emotionally attached…………