Why investing in property abroad can be a profitable purchase

Thursday, 10 March 2011 10:56

Investing in property abroad can be one of the best ways to make your money work for you, providing you make good decisions about where to buy and how to finance your purchase.

With volatility in the financial markets during recent years making it difficult to predict how a number of asset classes will perform, property has become an increasingly attractive purchase for investors – whether they are looking to diversify their portfolio or switch to a sector perceived as being safe.

While property markets all over the world suffered during the global economic slowdown, people who invested in bricks and mortar know they still have an asset.

There are a number of reasons why you may consider investing in property abroad, ranging from acquiring a holiday home for your own use to simply seeking profits in a location you may never visit.

Buying overseas has become a popular choice with Britons since the boom in low-cost air travel made having a second home in a sunny location a realistic choice – particularly if the properties are likely to rise in value significantly during the time owners are repaying their international mortgages.

Many people have made their second homes overseas pay for themselves by choosing properties in up and coming areas and then benefiting from capital appreciation during the time they own it.

Similarly, others have invested in a property abroad to use as a holiday home, but also used it to generate a second income by letting it to tourists for most of the year.

If you are hoping to retire overseas it can make sense to take out an international mortgage and buy a property a number of years in advance of actually finishing work.

As well as possibly giving you the opportunity to buy at a lower price, you will be able to rent the home out to help cover its cost. When you retire, you can then sell your UK property and use the equity towards funding your retirement, rather than buying your overseas home.

If you are planning to buy an overseas home and let it out, you will probably need to use a local property management company to take care of all the arrangements. They are likely to pay you in the local currency, so it can be a good idea to open an international bank account.

Many investors have managed to profit from overseas properties they have never visited.

With the help of extensive research it is possible to identify foreign property markets which are about to take off. For instance, areas which are close to planned new airports or high-speed rail links often see a sustained rise in house prices.

Buying in the right areas at the right time can allow you to make healthy profits from capital appreciation and rising rents in just a few years.

This kind of international investment strategy can be affected by factors such as unexpected economic events and foreign exchange rate fluctuations, so you need to have a clear but flexible exit strategy in mind.

While there is money to be made from investing in property abroad, there are also regulations to be followed. It is a good idea to use an independent local lawyer when buying and selling overseas properties and to seek advice about UK and local tax laws.



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