Overseas Investment: Classic errors and how to avoid them
Tuesday, 1 November 2011 9:54 AM
What should you consider before investing overseas? AboutProperty speaks to Stephen Anderson, property expert and managing director of Infinito Real, about the classic blunders many novice investors make and how to avoid them:
Budget
Before starting to look at properties, either on the internet or by arranging a viewing, set a budget and know how much you can afford.
Too many times investors come looking for their dream property but haven't looked to see if the amount they can afford matches that of their expectations, and this often leaves them disappointed.
There is more than just the cost of the property, so consider all fees, mortgage arrangements and furnishings as part of this budget so you do not use your entire budget on the property leaving you with a hefty bill for all the extras.
Location
Consider where you want your property to be located. If you want something in the middle of nowhere look at the ramifications of this in accordance with the purpose of your purchase.
For example, if the property is for your own use then a holiday retreat for some peace and quiet is no problem. However, if you are looking for a buy-to-let investment, you can't expect to cover 20 weeks of rental throughout the summer if it is not near local facilities.
Property Profile
Make a list of priorities in order of importance i.e. private swimming pool, near to the beach, strong rental opportunities, sea views, child facilities, and then consider what you would be prepared to sacrifice.
Without an unlimited budget, it's rare you will find everything you desire, so there has to be some compromise. Highest on the 'wish list' is usually sea views, but this is something which can bump the cost up quite significantly.
That is especially true in somewhere like the Algarve where there is only about 150km of coast line and the surrounding land is very flat so frontline properties are more scarce, and therefore come with a hefty price tag.
Research
Look at the competition and know your market. Make sure you are paying the market value and not what you have been told is the market value.
Always visit a property before making a purchase and do not rely on an advertisement 'selling the dream'. It has to be your dream and suited to your individual requirements and this can only be judged by seeing it yourself.
The Future
Consider re-selling as an important factor. Many buyers only look at the immediate purchase, but even if you have no plans to re-sell in the near future, this should always be considered as circumstances can change.
Lots of people who bought in 'the boom' were lured to buying new properties which looked great, but were built on estates with numerous other properties exactly the same.
This has left them with much competition and a lack of rental demand, therefore limiting the properties 'saleability' going forward.
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