Assetz® News - Tips for overseas property investment

Tips for overseas property investment

18th May 2006 |

Investing in an overseas property certainly has its pitfalls and spending money unwisely can be extremely damaging. Buyers are often lured into purchasing a property simply on the basis of a love for the area or for the house itself, but this is rarely a solid foundation for a successful investment.

With buy-to-let investment in particular, long-term planning is absolutely central, as emphasised this week by experts from the Property Investor and Homebuyer Show North.

In all cases, it is crucial to have a firm grasp of exactly what it is that you hope to achieve from the investment. Some property investors will only be looking for a place that they can retire to and so issues relating to rental demand and capital appreciation will be of minimal importance.

For the vast majority, however, making money from the property will be the fundamental pre-requisite and so from this point it is essential to figure out whether short-term or long-term capital growth is the priority.

Property buyers are also being encouraged to adopt a slightly detached approach to the property investment project, by visiting at various times in the year and avoiding the temptation of simply following the sun.

Researching the strength of rental demand is generally of utmost importance and so buyers need to keep this in mind at all times. Investing near a golf course is often a particularly astute decision in this respect, with demand for these properties high throughout the year.

The experts from the Homebuyer Show have also drawn attention to the often underappreciated issue of airline routes. Simple though it may sound, investing in area that is extremely difficult to access it not only an inconvenience to the investor, but it also limits the appeal to possible holidaymakers.

It is no coincidence that the growth in low-cost airlines in recent years has sparked a series of property booms in Europe, as investors typically expect much of the demand for their property to come from tourists.

As an extension of this, it is clearly wise to invest near tourist attractions, as these areas will typically see the highest level of demand.

Financial issues also need to be taken into consideration, as different countries have different rules on taxation and inheritance. One of the issues noted by the experts at the Homebuyer Show is that in France, children automatically inherit the house and it does not pass to a spouse.

Nick Clark, managing director of the Property Investor and Homebuyer Show North, said: "Purchasing a home abroad can be both an excellent investment or provide a great holiday home, however purchasing a property overseas can be overwhelming to a novice investor."

With this in mind, it is clearly advisable to seek advice before committing to a purchase, to ensure that the property investment is as successful as possible.