Property investment tip 29: 13 lessons learnt from buying property abroad

When a housing market becomes over-priced and too competitive, like Sydney and parts of London, you should consider looking for new property investment opportunities in other countries.

Buying property abroad is a big step – which most people will never take.

The lack of confidence and knowledge prevents many people from investing overseas. But confidence and knowledge can easily be gained through continuous research in your free time.

Property markets often fluctuate as I have learnt from investing in Australia and the U.K., so investors who own properties in different countries diversify their risk.

Additionally, investors who buy in a ‘cheaper’ country can gain more value as they pay less for larger properties and land. Or they can earn more money if they buy a property in an ‘expensive’ country, sell it and then convert the profit to their local currency.

Key lessons learnt from buying property abroad

As obvious as this seems, you MUST visit the city you invest in. Even if you plan on hiring a buyer’s agent, visit the location first. Don’t buy blind, especially if you’re a new investor.

You should always arrange three or more house viewings with a local real estate agent – even if you are not ready to buy in that country right now. The more viewings, the better.

Select a range of properties on the lower and higher end of your budget to better understand how much value you can get for your money.

My husband and I plan to buy a home in southern France. Last year, we went on a holiday to the French Riviera, hired a car, met up with a local real estate agent and viewed four seaside properties.

This holiday provided us with a market research opportunity to validate, in person, our assumptions about the risks and gains associated with investing in the French property market.

We used the expertise of the real estate agent to fill in our knowledge gap on the local property market. It’s the quickest and easiest way to learn about a new market if you do not know a local person.

And agents will only spend time with you if they believe you are interested in buying a property off them.

More tips to help you buy property overseas

Below are other helpful tips, in addition to of my two most important lessons learnt, above, to guide you with buying property abroad:

  1. Invest in countries which welcome foreign investments, and have a good economy and a stable government.
  2. Be aware of additional taxes for foreign investors. For example, foreign investors who own property in Australia have to pay a land tax surcharge.
  3. Invest in towns which have proposed regeneration plans and / or transportation routes as it’s much cheaper to buy there before the construction work begins. Remember, information may not always be published in English.
  4. Invest in towns with high employment opportunities, and preferably with a large white collar expat community, as there will be more renters with higher incomes.
  5. Follow the art scene. Many trendy and hipster towns were once poorer communities with lots of inhabitants who are artists. Budding artists often move to cheap and undiscovered property hotspots before the middle and upper class. Once a town develops its reputation as a creative place to live and work, tenant demand and property prices increase.
  6. Speak with local business owners. They have insights on everything: crime, regeneration plans, the best streets to invest in, societal problems, business challenges, you name it, they’ll have the latest gossip on it.
  7. Real estate agents often paint a brighter picture of the town so speak with the local residents – from lower and middle class backgrounds – to get their views on the community, and to verify supposed ‘facts’ stated by the agent.
  8. Full payment for your property purchase can take months to complete so follow the currency exchange rate. Political or economical issues can cause the exchange rate to suddenly drop. Remember, it can take a few days to transfer a large sum of money internationally.
  9. Hire an in-country accountant as they know the local tax system, and, even better, how to best claim tax deductions on your behalf.
  10. Hire a letting agent who is based in the same town as where your is property located. You need to continuously use their knowledge about the local market to fill in your own knowledge gap, and have them be your ‘eyes and ears’ for new investment opportunities.
  11. Visit the neighborhood in the morning and the evening – there could be a big contrast if it’s a high crime or night life area. If the seller is struggling to find a buyer because of the crime or noise, use this as a bargaining point.

So, what are your experiences with buying property abroad?

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