The international property markets (across select markets) have enjoyed months of steady growth. Which has led most investors to believe that the worst is over and that it is now time to get back into remote property investing. While the prospect can be an exciting one to contemplate, remote property investment brings with it a host of challenges, which most novice property investors may not be aware of. With that in mind, here are the top 5 things all remote property investors should know.
Financing can be a bit more difficult to secure
When it comes to remote investment opportunities, the best ones tend to be in foreign countries. This means that financing becomes an international affair that is subject to international laws and taxes. On its own, financing can be difficult, once you add the international aspect of it all, it becomes a whole different breed of monster. The best way to go about this is to use a solicitor who understands international real estate laws and financing to help you navigate through those choppy waters.
Exchange rates matter
If you are going to buy property abroad, you need to factor in the exchange rates when calculating the kind of financing you will need. These exchange rates also have to come into play when projecting your potential income. The complexity of it all is due to the fact that exchange rates are constantly changing. What might seem like an excellent idea today might be under water come next week
What about tax liabilities?
From stamp duties to land tax, inheritance tax, title transfer tax to even taxes levied just because you are a foreigner, there is a lot to consider when it comes to your tax liability as a remote property investor. Every country has its own set of tax laws and many of these requirements tend to eat into your capital over the years. Hire a solicitor who understands international property tax laws as well as the tax laws of the specific target country and you will get a clear picture of your liabilities.
The property investor, Rick Otton, had an interesting video on building a team when transacting remotely. Have a quick look to know more or less which contacts to get in touch with and which services you will need.
What about the language and cultural barriers?
In most cases, these do not come into play because the smartest remote investors always have a local solicitor or estate agent who handles everything on their behalf. If, however, you decide to go it alone (not advisable when dealing with huge real estate transactions) then you will need to consider the language and cultural barriers that might come into play. Take the time to study the local cultural tenets so that you can get along with whoever is selling you the property as well as the local neighbours.
Always have an independent valuation of the property
This is true even for those properties that are not foreign. Whenever you are thinking of investing in any real estate property, always make sure to have an independent valuation of the property carried out. This might save you a lot of money in the long run.
Take your time to find the right remote investment property. But after that, take even more care to go about the entire process in the right, legal and financially sound manner.