Five rules for buying abroad
Posted on 17 November 2006
Nick Foster for TimesOnline.co.uk writes about the 5 major rules when it comes to purchasing a property abroad.
1. Understand economic data
Interpreting economic figures is a vital part of
buying property in a foreign market, especially if it is an emerging one.
Remember this: the goose lays the golden egg when a particular economy is
improving from a low base, its growth is strong and sustainable, and when local
access to mortgages is limited. The main reason why property prices have gone
up so far in mature markets is widespread access to cheap home loans. In
2. Take care when calculating rental income
Even in the most apparently promising locations, such as
If you use a letting agent, you may notice that the electrician’s and
plumber’s bills are steeper than they might have been had you had the chance to
select your own workman. It all adds up. Be clear, too, about your tax
obligations. This advice should be shouted from the rooftops in the case of
3. Become a profiler
If you plan to let your property for profit, think hard about what kind of
person is likely to sign the lease. For example, studio flats work well in
cities bursting with civil servants, such as
4. Small is beautiful
Looking for a foreign buy-to-let? The next time you see a price list for a
new-build development, try this test: take the smallest and largest units on
offer and calculate their price per square foot. In every market I know, the
return per square foot generated by a small rental property (say, a studio) is
proportionally higher than that of larger accommodation.
5. Buy in a place you like
It’s late at night. Your overseas property has been burgled and you prepare to fly out to sort matters. Do you book your ticket on the familiar low-cost airline with a heavy or a relatively light heart? Foreign property ownership can make (or lose) you money. But you are almost certainly embarking on a relationship with a given community, its business practices, language, food and people (which is why the French countryside will always be popular with owners of second homes). Buy into a place close to your heart and the profit you make will be all the sweeter.
Story courtesy of Nick Foster & TimesOnline.co.uk
