Whether you live abroad and want to buy-to-let a property back home, or you live at home and want a property in a foreign country, there are some things you should be aware of before you commit.
Investing in a buy-to-let property overseas can be an extremely lucrative venture depending on where the property is located and where you, the owner, live. Taking into account the different currencies and appreciation rates, investing abroad has many benefits.
For example, if you live in the UK and want to buy a property in a quickly developing country like Thailand, you can find truly amazinEg deals on properties that will appreciate heavily. On the other hand, if you live in Thailand but want a buy-to-let a property back in the UK, the rental income alone will likely be enough to sustain a moderate lifestyle as it will be received in the much stronger British pounds (GBP).
If you are investing overseas, here are some tips to make sure that you set yourself up for success from the beginning:
Don’t buy without seeing the property for yourself
Of course you should always do thorough research on the property and the area you’re thinking about investing in, but that’s not enough to make the big decision of buying a property. It’s not wise to completely trust an agent or developer without seeing either the property or the area for yourself. A plane ticket might be expensive but compared to the cost of a property, it’s just part of the investment.
Buy fully furnished
When buying a property for you to live in yourself, part of the excitement about is to decorate and furnish it to match your personality, interests, style, etc. But when it comes to buying an investment property that you won’t be spending time in but will be instead renting out to others, it’s better to buy something that’s furnished, and for several reasons.
First, condominiums that come fully furnished have hired designers to strategically put together an interior that appeals to the masses. Secondly, buying already furnished makes the entire purchasing process much more simple and fast. You can start making a rental income immediately if you buy it fully furnished, because it takes a while to furnish an apartment appropriately on your own. Additionally, the furniture (even wallpaper and window curtains) was most likely bought in bulk to furnish other units as well, so if something happens to the furniture, you can more easily find access to a replacement.
Set up a financial plan from the start
When you buy a unit in a building, there will be fees involved well into the future. As a buyer, you should embrace the concept of these fees, which exist strictly to provide you with convenient services and maintenance that will only help and improve your experience as an owner and landlord.
One tricky things about these fees though is that when you are not living in the same country as the property, it can be easy to forget when payments are due (or to never know about them in the first place). Make sure that before you commit, you find out when fees are due. Then do yourself a favour and set up reminders for everything, including property maintenance fees, service charges, and even income tax. If this sounds overwhelming, don’t skimp on an accountant. It’s better to spend a little bit and not run into trouble in international waters.
Have a nest egg.
Don’t just assume your rental income will be all you need for the length of time you own your investment property. There is a countless number of things that can go wrong with a house or condo, especially when rental tenants are using it. From leaky faucets to earthquake damage or electrical outlet issues, you need to be prepared to cover those costs, no matter how hefty they are. If you already own investment properties, this one is a no-brainer. But for first-time investors, it can come as quite an unpleasant surprise when you come to realize that the property you recently bought needs a water-heater repair.
Luckily buildings in Bangkok are relatively new, so there are fewer maintenance problems for buyers who buy here. However places in London may be weathered from many years of use so if you are buying in that market. Always be prepared with a sum of money in the bank reserved exclusively for emergency repair situations in your investment property.
Make sure you pick a property manager you can trust.
When you live abroad and own a property that’s in another country, it’s imperative to have a property manager. There’s no real effective way to do it yourself and it’s better not to have family take on the responsibility either. You don’t want someone inexperienced handling it when you are not there to pick up the broken pieces when things fall apart. Your best bet is to source reputable and experienced companies and identify someone who has experience dealing with international clients.
It’s key to look for a property manager who does have the international experience because for someone unfamiliar, time differences can present many challenges and will make small problems that should only take hours to take care of can take days instead. When you do identify your property manager, get your systems established and habits in place. You can do maintain them by having a weekly check-in call for you both to stay up to date, aware of impending weather situations, predict tenant turnover, etc. Don’t just wait for the bad phone calls; the weekly call will keep you actively involved and ready to respond should an emergency happen.
Put everything in writing
When you live abroad and own foreign property, there’s no room to be casual. Phone calls over Wi-Fi can be scratchy but even if the connection sounded crystal clear, when you get off a phone call you should always recap the conversation in an email. This could save you a lot of time fixing problems that could have been taken care of but were forgotten about it, and helps you to avoid miscommunications about what you want and what needs to be done. Bulleted lists are always a helpful format in this situation.
