Is it Time to Invest In Property Abroad?

This is a contributed post

Property has always been a relatively secure way to invest your savings. While the market certainly fluctuates and 2008 came as a nasty surprise to many investors, bricks and mortar tend to recover their value over time and are the most likely way that you can double the value of your invested assets if you are prepared to wait.

In the last couple of years, though, the housing market in the UK has become less certain. First, the decision to have the referendum on Europe flattened the market and since Brexit proceedings have begun, the uncertainty surrounding the housing market means that investing now feels a little too risky for many people’s tastes. Essentially, until we know exactly what the fall out will be from Brexit, it’s probably better to hold off on investing in British property for now if you aren’t planning to move in.

However, this doesn’t necessarily mean that you shouldn’t be investing in property at all. There are a lot of different property options you could be considering abroad. While the USA may not be such a good idea while a certain President is in office, there are lots of countries to choose from where the property market is still healthy and there are plenty of investment opportunities of all different sizes you may be interested in.

For example, holiday homes are always a good proposition, especially if you and your family have a particular vacation spot you enjoy visiting each year. Holiday homes are often a good way to make immediate return on your investment through holiday lets. And, as long as you choose a popular destination with a long season, your home should be a good asset to have many years into the future.

Another option is to buy a property and look for a local who needs a long term let. This is a good option if you are looking for a regular income and works in a similar way to the holiday home. However, unless you are willing to fly out to solve problems, you will certainly need a letting agent to help you with any issues that arise including fixes.

There are plenty of properties looking for some TLC abroad too. Fixer uppers are a great choice if you have time to spend on a project and a good eye for what will improve the value of a run down property. Again, this isn’t for everyone and can end up becoming quite expensive if you don’t know what you are doing or what the local planning laws are.

With a bit of research and thought, investing in property abroad could be a great way for you to make your money work a little bit harder and to gain an asset for your family.

How Will You Profit From Your Investment?

The first question you need to ask yourself is how you will profit from your property and, most importantly, when you expect the profit to appear. This works differently depending on the type of property you have chosen so here is an idea of what to expect.

If you are investing in a holiday home, you will need to factor in a few extra costs such as an agent in the country you have purchased in, a maid service and any renovations or decorating that need to be done between seasons to generally spruce things up. However, you are likely to make a profit a little bit faster on a holiday home because you will be taking in rent each month to cover the costs of the mortgage and any extras. This means that you should be taking in a small yield each month. A long term rent opportunity works in a similar way, but rather than a resort, you should look for an area close to a city or another commuter hotspot to encourage a local to rent from you.

A fixer upper that you plan to sell, on the other hand, is a much longer game and you will have to invest a lot in order to make your return on sale. This is a slightly riskier proposition, but if you are already a skilled trader and can make lots of the necessary changes yourself, this will be a huge advantage and lower your costs significantly.

However, do remember that you are also gambling on a future property market and that selling your fixer upper at a profit won’t just be about how to add as much value as you can, but also what the market rate is at that time. One way to avoid this issue is to turn your fixer upper into a holiday let if the selling market isn’t so good and wait for a better moment to sell on.

Working on fixer upper properties abroad is a good idea if you are willing to give your time and effort but isn’t a great option if you are working full time here in the UK. Do factor in the costs of taking leave from your job to go and see your property develop or do some of the work yourself into your investment calculations. It might not be as simple as it sounds.

Where to Buy

Once you have figured out the type of property and how you will earn from it, you should look at where you would like to buy. Choosing a stable market like Singapore is a good idea at the moment as property values are expected to double by 2030 but you should also consider the type of property you are looking for too.

So, staying with Singapore for a moment, you might want to consider whether you are looking for a holiday rental or a long term rental. Given that Singapore is a long flight away, you might prefer the latter option since getting there will be more expensive and time-consuming. However, don’t rule anything out until you have spoken to a local agent like PropertyGuru Singapore, as they will be able to advise you on the best deals and how to make the most of your investment. They have a lot of data at their fingertips so can give a detailed analysis of the current and prospective markets.

For a holiday home, you should obviously consider where you and your family like to go. Choose a resort that is popular with holidaymakers from the UK for easy communication and organisation but do bear in mind that you will still need an agent to help you locally. You may also wish to factor in flight times and costs. If you are spending a lot on getting there and back, it will eat into your yield.

Similarly if you are going to and fro to a fixer upper, or need to rent somewhere locally while the work is going on, this is a cost you need to factor in. You should also consider how popular the area is with your chosen demographic, so either a popular resort for tourists or the ideal location for commuters.

Tips For Investing Wisely

Finally, there are a few tips that will help you along your way to getting the perfect property for your needs. This is always going to be a long process, so take your time and understand every single step as well as you can before moving on.

Always use a trusted local agent to help you with your search

A trusted local agent is a fantastic advantage to have. They can tell you a lot about a place that you might not get from having a wander around. Be honest with them about your budget and ambitions and they will be able to find you the right place and even manage it for you. However, do be aware that they are also trying to make a sale. Don’t allow them to be pushy or try to make a quick sale with you. This is your money, so take your time.

Always do the maths – is this investment going to work for you?

The setting might be perfect and the yield sounds great but can you afford this investment? Always ensure that you know what your investment spending limit is and then make sure it will cover every aspect of your investment. This is most important if you are looking for a fixer upper as building works can eat away at your money really quickly.

You should also work out whether you need a return monthly or if you can wait for a profitable sale. Do remember that even if your property isn’t yet habitable, you will still need to pay your mortgage each month and factor in other unexpected costs. Allow for a contingency budget to cover yourself should prices suddenly get hiked.

Do consider exchange rates and market fluctuations

A final point is that given that you are purchasing abroad, you will need to factor in exchange rates and market fluctuations. This means that while an exchange rate could be favourable this month, next month could be different.

So now you are ready to start looking at the market, bear all these things in mind, form a plan and then get to it!

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