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When buying a property overseas you should ask yourself why? The wise investor will not be driven by price alone, nor emotion, and will look mainly at the figures.
Naturally, there has to be a degree of flexibility, depending on why you are buying in the first place. If it is for pure investment, then the figures alone should be the deciding factor, but if the property is to be a holiday home or retirement home also, then a certain amount of emotion will be considered; clearly you will need to enjoy going there! Overseas purchases fall into four main categories:
- Properties bought off-plan for capital gain, either for the contract to be sold on prior to completion, or to be sold immediately after completing
- off-plan for capital gain, either for the contract to be sold on prior to completion, or to be sold immediately after completing
- Those bought off-plan for capital gain and then to be let out and/or used by the purchaser
- Re-sale properties to be held for capital gain and to be used principally by the purchaser as a holiday home
- Re- sale properties bought principally to be let out
Of those categories
purchased with the intention of letting at some stage,
the two key considerations are (1) the expected rent and
(2) the expected occupancy. Occupancy will be reflected
in your the target market – ie are you planning on holiday
lets or long term rentals?
Naturally, before buying you will also need to satisfy yourself
that your target market is strong enough to support the financial
goals for the property.
Holiday lets have a better chance of gaining bigger returns
if they are easily accessible (eg an easy drive from the
airport), close to, or front line to the beach or have a
pool and are close to local amenities such as restaurants,
bars and clubs. Front line golf properties attract short-term
tenants year round.
Longer term lets
require greater planning by the investor and more local
knowledge. Don’t discount the possibility
of long term lets to workers. Always consider the prospect
for future rental growth - an estimate of the annual increase
in rent, or a projection of the actual future rent. There
is also the prospect of capital growth, which can increase
as a direct result of an improved infrastructure.
Buying overseas can be a fantastic investment and tears
can be avoided by asking these fundamental questions. The
word investment can mean different things to different buyers.
Purchasing property is like everything else in life - It
is about people and change. If your information sources are
good, you will have an investment advantage. Happy hunting!
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