Buying property abroad is not a walk in the park. Buyers have to assume different risks for the sake of achieving the dream of living abroad.
During the span of my career, I have encountered many buyers and investors who lost not only their house abroad but also their life savings because they failed to take the necessary precautions when investing in remote properties.
Hearing stories like these can make one ask – is property a good investment? The answer is still a big yes so long as you follow these general safety tips on how you can secure your remote property investments:
Assemble a superstar team to represent your interests
Don’t be a lone wolf. When buying property abroad it’s best to assemble a team of property professionals dedicated to protecting your interests.
This team must be composed of a lawyer, an estate agent, or a property developer. The lawyer will guide you on the local laws on buying property, while the agent or developer will help you locate the right property for your budget.
Rick Otton, a renowned property mentor, mentioned in his article that your property team abroad should also include a number of experienced mortgage brokers. Their presence in your team will help you get financing easily, because they have good relationships with lenders who have the capacity to borrow you money.
Mr. Otton also mentioned that it’s also advisable to work with private lenders. He explained that even though most private lenders can charge up to 15 per cent on interest rate annually, they can turn up with all the funds for you to buy a house within about an hour or two of you finding the property deal.
Beware of common pitfalls when buying property abroad
Prevention is better than cure, so in order to protect your remote property you have to know the problems you may encounter when buying one.
According to an article from Money.co.uk, people who are looking to buy a second home abroad should be prepared for the financial burden of this decision, especially when your house in the UK is also bought through a mortgage.
When you pay for your second home abroad through a 100 per cent mortgage, you’ll end up paying for 2 mortgages at the same time.
Buyers looking for a second home should also be in love with the location of their house abroad, since they will be obliged to visit this property for a vacation every year. Hence, if you are the type who seeks variety in the locations you visit, then buying a house in a certain location may not be the best decision to make.
On the other hand, if you’re buying an investment property abroad, there are different concerns to address.
In the same article, Money.co.uk also mentioned that the amount of profits you receive wouldn’t be the same every month due constant fluctuations with foreign exchange rates.
Other major concerns for property investors are the maintenance and operational costs. These costs may balloon further if you hire a foreign management company to look after the property for you when you are in the UK. So make sure you are considering all these things on top of the price.
The whole concept of investing is to make more money than you originally spent. The challenge with remote investing is that people end up biting more than they can chew because they simply didn’t know what to expect. But if you take these tips into consideration and plan ahead, remote investing can be very profitable.