The vast majority of buyers and investors will enjoy a hassle-free experience when buying property, but it is always worth keeping a note of some basic, common-sense tips when embarking on a transaction.
Do not assume laws are the same everywhere. if you are purchasing a property in new, unfamiliar country it is even more important to take independent legal and tax advice, and follow some or all of these tips we have provided for you.
Strategy: Decide from day one what you want from your investment. Are you looking for a second home, capital appreciation or rental returns? The answer to that question alone should determine the location and type of property to focus on. Work out a time frame, and a strategy for a quick exit should the need arise. Remember that you may be liable for a sizeable loss if you need to sell in a hurry.
Act Early: Remember the phrase: “The early bird catches the worm.“ When it comes to property investment it is almost always true. Moving fast and being first in line at a new development will also allow you to take advantage of the best units at the best prices. In many locations you will find that prices can rise by anything up to 30 percent between buying off-plan and completion.
Buy Wisely: Check the status of your purchase. Can you buy freehold condominiums in your own name, or can they only be leasehold? Can you purchase landed property legally? Does a property purchase entitle you to a long-stay visa? Who can you sell to? These are all questions that any well informed property buyer and investor needs to answer.
Size Does Matter: Buy the biggest unit you can afford but do not extend yourself financially. Buying bigger in most locations will generally mean a better return from long-term rentals versus short-term holiday lets, if rental returns are you goal. Your independent real estate agent will be able to tell you what types of units are in demand in your chosen location.
Avoid oversupply: If renting is your strategy, avoid high-density developments. You could be competing with thousands of investors with the same strategy and goal. You will need to spend more on interior decoration and furnishing your unit to make it stand out to tenants. Always remember to think like potential tenants. What will they want from your property?
Maintenance: Check for any fees. Generally, you will get what you pay for. What might seem a good, low maintenance deal may equal a shabby, hard-to-sell unit in five years’ time.
Unexpected fees: Check who will pay for what throughout the entire buying process, and beyond. It will vary from country to country and may not the same as your own country. Fees may also be open to a small amount of negotiation, but be careful with this as it could be considered illegal in some jurisdictions. Know what taxes may be payable before you sign anything and seek professional, independent legal and tax advice. Read, and most importantly, understand the sales contract before you sign. If you have any doubts, question the real estate agent of the developer, and if you have any doubts whatsoever do not sign.
Rental Guarantees: Guaranteed returns do offer a degree of peace of mind for first-time investors but check the financial stability history of who is offering the guarantee? Do you really need one? A good property in a good location will achieve a good rental return. If you opt for guaranteed returns you should ask what levels are to be expected after and guarantee period expires? Talk to real estate agents and property owners to get the facts for when the guarantee expires.
Finance: In some countries it is almost impossible to get finance as a foreigner so if you have cash you are in a stronger position. Check if your chosen developer is offering developer finance, but also check how that compares to local interest rates. Often they can be double or triple.
Use a lawyer: Would you buy property in your own country without a lawyer? This is such an important point in the buying process. Your lawyer will do due diligence on your behalf and ensure you understand everything before signing the contract. Use a lawyer who is an expert in the country you will purchase in, and also understands property law. This will be a very small price to pay for peace of mind.
Use a professional agent: Remember that real estate agents have a job to do – and that is to sell property – but the best ones will give you their own advice on what you should be buying – not just what they’re selling. They will also make you aware of any developments or developers who are best to avoid.
If you have any additional tips we would love to share them with our readers. Email our Group Editor or leave a comment along with this column.
