Key Factors - Successful Overseas Property Investment

We believe the following should be the blueprint for anyone looking to purchase property overseas.

Price & Currency

Are you purchasing the property at its true value or can you purchase it below its current value? Buying “off plan” often means the buyer has an initial discount on the expected market value at the expected completion. Currency can play a large part in buying overseas. Can you take advantage of a strong currency exchange to purchase or mortgage the property, engineering “more property for less”.

Equity Growth

A growth of 20% or more is a good marker. You need to know the yearly or assumed yearly growth in a regions property market. Many external and internal factors contribute to equity growth however; good equity growth does not happen all over but in specific areas due to these factors. Use only proven and assumed yearly growth rates as well as the time span of the growth from professional opinion allowing you to form an exit strategy.

Finance

Borrowing the majority of the cost of a property is wise if this option available. It often gives you a tax break on income generated from the property and frees up your cash for further investment.

Rental Market

In terms of rentals review the expected tourism figures as well as external factors which could bring an influx of jobs to the area. How buoyant is the local rental market? Is the market based on holiday/vacation lets, professional long term tenants or near universities? Is the market short of rental units or over crowded? As a rule, the rental income should at least cover your mortgage payments and management costs and leave you a modest profit.

Exit Strategy

Often a point overlooked, when buying a property. Always plan your way out, your “back door”. Take the time to think of what market you will sell your property to in a set time period. The number of buying markets in an area is important as it dictates the selling markets. Look for 3 or more such as Local, out of state Americans, British and South American. In this sense if one or more cools off there is still a good market.

External & Internal Factors

Outside factors such as the addition of international airports, tour operators setting up shop, iconic landmarks, corporate expansion, zoning changes, legal blocks on future building or over population of nearby areas can all dramatically affect the future value of a property taking an area from bust to boom. Strong governmental involvement and support can be seen as positive.

Repatriation of Profits

Some countries may seem to be a good investment with the opportunity to make substantial profits, but the repatriation of the profits (bringing the money back into your own country) you make could be a long and painstaking process. We focus on regions where this process if simple and there are no issues.

Land Title

Often taken for granted, title is the sole most important factor in an overseas property acquisition. There are currently title issues in Croatia, Turkey and Cyprus. The availability of clear title should be the first and foremost enquiry in the buying process.