Investing in property overseas has the potential to be profitable, and to open up markets that are more accessible, more stable, or higher-yielding than the UK. However, like all investments it inherently comes with a degree of risk. Nonetheless, the right strategy and a well-thought-out approach can do a lot to minimise risk and maximise the chances of your property purchase proving successful as an investment.
Make a good, thorough study of the country and the specific part of that country you are considering buying in. Take any information on official websites with a pinch of salt, and try to find impartial information from specialist investment websites and discussion groups. Be especially careful with countries that have suffered recent political turmoil. These can be a good way to take advantage of recovery for quick value growth, but they also have a vested interest in putting out information designed to attract foreign investors back. Make sure things are stable now and that you are truly happy with the risk profile before you buy.
When thinking about the property itself, consider not just the quality of the property on offer but how it will fit within the rental market and your investment goals. For example, if you want to let your property to tourists, is it actually the kind of property that people will want as holiday accommodation. What kind of tourists will want to rent it (for example honeymooners/couples, individuals or families), and is there a lot of demand from this particular kind of tourist within the location you are looking at? If the property is located in an especially busy market, does it have anything – or could anything be added easily and cost-effectively – to make it stand out from the competition.
Have an Emergency Plan
Nothing will completely eliminate risk from the equation, but if you're prepared for the worst and have a plan this can significantly lessen the impact of a disaster. What if there's a housing crisis in your chosen location and your property starts to lose value? What if demand for rented accommodation falls through the floor. Often, if it looks like a minor blip it is worth riding out and if it looks more serious it is worth either being prepared to grin and bear it for the duration or getting out while you still can and before too much damage is done. Which leads onto the final point…
Have an Exit Plan
If things do go wrong, you may want to exit your investments and liquidate your properties with the minimum of delay. Even if things go perfectly, it's entirely possible, even likely, that you won't want to hold onto the property for the rest of your life and will want to part with it sooner or later. If your plan specifically involves taking advantage of capital growth, then selling off the property at the right time could even be an integral part of your strategy. Familiarise yourself with the selling process in your destination country, and research how demand currently stands for this property type and how it is forecast to progress. This kind of research can help the far-from-quick process of selling a property go that much quicker when the time comes.
This article was contributed by The Overseas Investor, international property investment specialists with a large portfolio of investment opportunities in countries across the globe.