Buying Property Abroad
Posted by Allison on 5 April 2009, 11:08
When people talk about the possibility of buying property in another country, our first thought is probably that they are looking for somewhere nice that they can retreat to when they go on holiday each year.
In some cases that is the only intention, but there is another group of people that look into buying foreign properties for another reason altogether. For this group it is a question of investment rather than enjoyment – although even then they may still be looking to use the property for a few weeks out of every year.
So why do people look at buying foreign properties rather than ones in their own country?
Quite often the reason can be a purely monetary one. The exchange rate between currencies changes all the time, but in general certain currencies will often be stronger than others and that means your money will go further in other countries than it will in your own. A good example of this can be seen by looking at the British pound sterling. This will go much further when exchanged for other currencies, especially in Europe. Even the current strength of the Euro hasn't wiped out all the possibilities for buying cheap property in Europe, since it also depends on the state of the market prices and the economy in the country you are looking into.
In this case, the same money that would buy you a one bedroom flat in Britain might actually buy you a three bedroom house in a European country. Once you start doing your research you will be able to see which countries your own currency will stretch furthest in.
But it's not just a question of money. You also need to consider the area you are thinking about buying a property in. Just because you won't be living in this foreign property all year round like you would your own home, that doesn't mean you should pay any less attention to where it is. Firstly you will want to make sure it's in a pleasant location to go to for holidays and short stays, and secondly you will want to know that you can easily get someone local in to rent it out from you if that is the route you want to take.
Of course you may decide to keep it purely as a holiday property, in which case you would probably rent it out to other people during the weeks that you won't be staying in it yourself. In this case it is definitely worth doing your research to ensure you pick a property which is in a good area, has plenty of options for sightseeing and getting out and about, and would also command a good price for each two week period during the year.
Obviously you will make more money in the peak of the season than you would in low season, but so long as you can keep the property occupied for most of the year you will make a nice profit even after your mortgage on the property is paid each month.
There are downsides to buying property abroad and one of these is that it can be very complicated to actually go through the buying process in the first place. It can also be difficult to arrange bookings with people for staying in the property once you have completed any decorating or renovation that needs doing.
Fortunately there are companies in each country that help foreigners negotiate the various legal hoops you will need to jump through each time, and they can also help you with other matters relating to your new property for a fee. While you might be thinking that any kind of fee will cut into your profits on the property, these people are usually worth far more than you will be paying them – both in peace of mind and in the essential knowledge they have about what needs to be done.
So is buying property abroad for you?
The answer usually comes down to money. No matter how far your cash will go when it is converted into another currency, it doesn't always mean you will have enough money readily available to buy another property with. You also need to consider the ongoing maintenance costs involved with any property, and figure out how you will arrange and handle the payment side of things in this respect.
Many people are attracted by the idea of having their own property abroad that they can go and stay in whenever they want, and in the long term it can mean cheaper holidays for you since you only have to think about flights, but you do need a certain amount of knowledge if you want to buy the right property in the right area.
The fact that you could literally choose any country you wanted to as a location for your foreign property actually stumps many people before they even start! There are so many wonderful places to choose from that picking a location can be tricky. If you are going to be staying there yourself then it obviously needs to be somewhere you will want to visit and enjoy every year, perhaps on more than one occasion each time.
But if you are purely buying to rent out to someone else then it's wise to go for an area where there is a need for long term rentals. This can be a very different location from the ones that provide a great base for a holiday.
There is certainly a lot to think about before you jump into a major purchase such as this. But by doing your homework first and finding out as much as you can about how the buying process works in the particular country you have in mind, you can get off to a great start and encounter far less in the way of problems en route.
You could soon be holding the keys to your very first foreign property.