Basic Considerations Regarding Buying A Foreign Property

You may have an acquaintance that purchased a property outside your home country and thought that perhaps that might be a sound investment for yourself. Well, things are usually not as simple and straight forward as you are led to believe. There are some possible drawbacks with this type of investment.

Sure property “gurus” and seminar operators talk about how great those investments are. But surely you cannot expect them to say anything less right? They are after all remunerated by advertisers and sponsors of developers and promoters all over the world who are seeking funding for their projects at every corner of the globe.

In countries that are going through a depressed economy, it’s often noted that a beautiful house can be bought for a significant reduction. When there is a bargain like that to be had, there are people known as “flippers,” who jump on the property. These flippers buy the house at a cheap fire sale and then look to unload it at a much higher price to an unsuspecting foreign buyer. Some flippers go so far as to contact real estate companies abroad in the hopes of finding foreign investors to take advantage of.

They might even declare that they have the best “no money down” creative financing strategies that would allow you to secure a stake with little to no money. The question on everyone’s mind would then be “if no money is required, why don’t they go ahead with their projects themselves?”. I don’t have the answer, but I think if there is indeed a genuine answer that is tailored to the pragmatic, it could be a very disturbing one.

While in your home country, you have the opportunity to speak with a number of institutions to get sound financial advice. Even a con artist would think twice before making a move on you as there is always a possibility that you are too familiar with the local laws and industry practices. You will then be able to call out a fraud when you see it. Too often, foreign investors rely only on the advice of one company…from the country they are investing in. There is no way to get an accurate picture of what the pitfalls might be.

Even if they seek the opinion of other experts in the foreign land, there is always a nervy feeling about how legitimate and credible these sources are. And even worse, the law firm that you are going to is one that is referred by the promoters who are working on a partnership arrangement.

I’m not saying that international real estate developers and promoters are scammers who sell questionable investment opportunities. My point is that if they are looking for investment funds internationally, they should be prepared to spend the money involved to make a prospective investor to feel safe from it. A simple talk on stage and a flyer taking up the opportunities they present is not enough.

But the fact that people are pouring their hard earned money into such investments solely based on a sales pitch, a glossy booklet, and a slick website, is convincing international developers to stick with what works instead of taking thing to the next level.

I mean… you wouldn’t buy a home if you have not seen it. So why are you making it so easy to be convinced of buying real estate in places you have never been to in your life. If you ask me, the least a promoter could do is fly potential investors all the way to London or California to show them what the deal is. As investors, if we don’t demand it, the organisations that collect our checks will not offer it. And by continuing to buy without demanding it, we are saying that these things do not matter. Maybe that’s why individuals are usually the target segment that these trade shows target. Because they tend to be more lax in diligence compared to a corporate power house that generates their income from investments.

In addition to purchasing the foreign property, there will be taxes added. Property taxes will differ from country to country, city to city. You will need to be fully aware of all the local laws, from property taxes to tenancy. Now if you are renting out the property that you have purchased, it will be difficult to keep an eye on anyone who rents the property.

The possibility of tenant damage is also great. A good number of people will not have respect for the property they are renting or any regards for the neighbors. This is a fact that experienced landlords will have grown accustomed to. It would be in your best interests to find out what the local laws in the foreign place are and what you may be liable for in regards to tenant damage.

A lot of times, the differences could be too huge for someone to comprehend. This is when you will have to enlist for independent help. I mention independent because if you are to rely on the investee for information, you will most likely get a beautiful picture of how the project is doing. If that is really the case, good for you. But you can never tell could you?

Every year people invest in foreign properties with the intentions of making their money work harder for them. This is while they also entertain the brief thought that the foreign homes could be a place they might retire in when it’s time for retirement. The need for a caretaker or someone from the area to keep an eye on the property is a must. While you are not in residence, there may be severe problems like pest infestation, water damage or vandalism.

It is possible that your insurance may not cover such damages. Damages that are not attended to can escalate quickly when left unattended. A few pests can quickly multiply to numbers you cannot comprehend. One common type of pest damage, is electrical wires that have been chewed on. This can be expensive to repair and the possibility for a fire breaking out is huge.

It is recommended to sit down and make a list of possible issues with buying a property in a foreign country. The projected returns could be very attractive. But the potential problems can be very unattractive. Just make sure you have all the bases covered before you make a final decision on your investment.

You May Also Like...

Latest Singapore home loan rates	Hidden items that bring up mortgage costs	Hiring a competent agent	How to burn more calories in the office