Investing in overseas property is always a risk. However, diligent investors know that putting in money in overseas property is the same as investing at home. Getting into foreign property investment is tricky because investors have to be well-informed. What they know should not come only from developers but also from the people who have knowledge about the general real estate of the country. This includes the state of the local rental market, property location, and associated local rules and regulations. Will it be profitable to buy an overseas property?
Why Buy Overseas Property?
Investing in overseas property is often aimed at making money. In the past years, the overseas property has been included in the top financial performers and it is not expected to slow down anytime soon, particularly that there are numerous emerging markets with amazing investment opportunities for foreigners. Investors looking to improve their real estate portfolio often look at overseas properties as a source of passive and recurring income as many of these properties come with professional property managers. This minimises the need for additional knowledge, time and effort on the part of the investor.
Are Overseas Properties Worth the Money?
Any property investment is worth the money if investors are willing to put in time and effort. Buying an overseas property comes with doing due diligence and researching the real estate market.
Before buying a property overseas, it is important to first have exposure to the country’s property market. Many successful overseas investors first live in the country before buying. This way they have a feel of the country’s social conditions and local economic conditions.
Owning a property in a foreign land is worth the money if there is an intention to make that property a holiday retreat or a retirement home.
Big Risks of Investing Overseas
Changes in the value of the currency against the dollar is a risk common for foreign investors. This should, however, not negate future returns. Also, it would always be advisable to refrain from comparing gains of investment value in US dollars.
Markets of any type go through ups and downs and this does not mean that investors must always sell their property at the first opportunity. Some astute investors even use their foreign properties as defence investment against economic downturns in their home countries.
Transaction Cost Risk
Maintaining an overseas property may seem costly at first, particularly if there will be a need to send money. However, there are countries like Singapore that does not have high transactional costs. Different countries charge taxes in various ways. For instance, buying a real estate property in Hungary have a round-trip transaction cost on real estate approaching 10%. Their real estate market, however, is still one of the cheapest in Europe. Therefore, they can bring in more yields in the future.
Overseas property investing has involved risks which can be easily addressed or taken into consideration when pricing the deal. Once you deal with these issues, foreign properties can give high returns, ideal for a long-term, passive investment truly worth your money.