Buying property abroad is a big step most people will never take. The lack of confidence and knowledge limits buyers from investing overseas. But confidence and knowledge can be gained through doing your own market research, as I have learnt from investing in Australia and the U.K.
How do you begin buying property abroad?
You MUST visit the destination you want to invest in, even if you hire a buyer’s agent.
During your first visit to this destination, arrange three or more viewings with a local real estate agent (even if you are not ready to buy right now). 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.
Use this visit as a market research opportunity to validate, in person, your assumptions about the risks and gains associated with investing in this specific market.
And, more importantly, use the expertise of the local real estate agent to fill in your knowledge gap. It’s the quickest and easiest way to learn about a new property market if you do not know a local person. Additionally, agents will only spend time with you if they believe they can earn a sale commission from you.
Tips on buying property abroad
- Invest in countries that welcome foreign investments, and have a good economy and a stable government.
- Be aware of taxes for foreign investors. For example, foreign investors who own property in Australia have to pay a land tax surcharge.
- Invest in towns that have proposed regeneration plans and / or transportation routes as it’s cheaper to buy before the redevelopment begins. Remember, information may not always be published in English.
- Invest in towns with high employment opportunities, and, a large white-collar expat community. There will be more renters with higher incomes.
- Follow the art scene. Many trendy and hipster towns were once poorer communities inhabited by artists. Budding artists often move to cheap and undiscovered property hotspots before the middle and upper class. Once a town becomes a creative place to live and work, property prices increase.
- 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.
- Real estate agents often paint a brighter picture of the town so speak with the local residents – from all backgrounds – to get their views on the area.
- Full payment for your property purchase can take months to complete so follow the currency exchange rate. Political or economic issues can decrease the exchange rate. Remember, it may take days to transfer a large sum of money internationally.
- Hire an in-country accountant, as they know the local tax system, and how to claim tax deductions on your behalf.
- Hire a local letting agent. You need to use their knowledge about the local market to fill in your own knowledge gap. Let them be your ‘eyes and ears’ for new investment opportunities.
- Visit the neighborhood in the morning and the evening, especially if it’s a high crime or nightlife 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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