Many of us might see the beachy havens of the southern Mediterranean or the tropical landscapes of the Caribbean as an attractive place to invest in property. It’s particularly alluring if you know you’ll only spend a small amount of time there and that you can earn a tasty side income through rent.
However, although it may seem like there are no down sides to buying property where there will be lots of demand, you also need to make an informed decision about whether this is the right investment for you.
If you’re thinking about buying abroad, here’s everything you need to know.
The pros of building and investing overseas
Let’s start with the good news, of which there’s plenty to steer you into the direction of investing abroad. Firstly, foreign markets typically have low entry rates, especially if you can offer a property some kind of economical stability and will contribute significantly to the local economy.
One of the main reasons people invest in property overseas in the first place is so that they can have a holiday home in one of their favourite holiday destinations. Not only will this make family vacations less stressful, but it also might work out cheaper.
When you’re not holidaying at your holiday home, you can always rent it out to other holiday makers. Investing in property is a great way to earn a passive income, with most investors turning a profit as real estate assets usually increase in value over time.
Lastly, by being open to buying property abroad, you might also strike gold with an emerging market. Perhaps it’s the hottest holiday destination, perhaps it’s an area that’s experiencing an economic boom. Whatever the reason, such an investment will diversify your portfolio and make you an attractive buyer in the future.
The cons of building and investing overseas
Although it may seem like a dream come true to own a property in paradise, it also comes with its fair share of problems. Whilst many areas look for investors from wealthier countries, some are more closed to foreign buyers. Some countries have certain legislation that make life really difficult for foreign buyers and this could make buying and eventually selling your property more trouble than its worth.
With foreign investment, you should also expect additional costs. Seeing as you’re not nearby, you need to hire contractors and real estate managers to maintain your property; and this service doesn’t come cheap.
Before you invest, you should also investigate the market thoroughly and seek expert advice. If the country is politically and economically unstable, the market might crash altogether, leaving you with much less than what you started with. It might take months or years to sell the property, as well as potential debt that accrues when there is a currency risk.