Reality Checks For Those Buying Properties Abroad

So you’ve got the 2.4 children, the Labrador, a nice family home and good dual incomes and now the next step on the ‘keeping up with the Joneses, middle class Britain’ ladder is to acquire the property in the sun – after all, your peers all have homes abroad so you just have to have one as well.  Well stop right there – anyone reading this who is thinking of buying a home abroad just because everyone else has seemingly got one is mental mad crazy!

You could say that the international property scene is not what it once was – but in truth the international property scene never was that good!  It is not easy to make money from property abroad and anyone who is heading into such an investment without having taken a reality pill first will fail and deserves to fail!  Here are the Shelter Offshore reality checks for those buying properties abroad – and forgive us if we sound a bit harsh, we are simply jaded!

Yes, jaded – fed up in fact.  Fed up with all those who harp on and on about how they are buying an apartment in Brazil, a holiday home in Cape Verde or a villa in Morocco because the markets are emerging and just can’t fail.  Because there is just so much room for growth before prices are anywhere near on a par with the likes of France and Spain for example.  Oh come on you guys!  There’s a reason why prices in Cape Verde are cheaper than Spain – it’s currently a bit of a dump with nowhere near the appeal of Spain and what’s more it’s a fair old flight to get there!  And there’s also a reason why properties for sale in Natal are going for a fraction of the price of a house in France – it’s a long haul flight away in a country with a long history of political, economic and currency instability.

YES, YES, YES many of these emerging markets are genuine opportunities – but only if you do your research first and are sure about what you’re buying.  You need to know HOW you are going to use the property.  Is it a holiday home for your family?  Do you want to earn rental income from it?  Be clear about your objectives.  These should guide your buying decision.  If you’re going to be letting or reselling for profit you are buying for your rental tenant or your buyer – you are not buying for yourself – what will they want from the property?  Now look at accessibility to the property – if you’re relying on the cheap flight operators who currently fly in to an airport near your chosen destination, what happens if they withdraw their service – it happens, it really happens.  You need a backup plan.

Now you need to think about who is going to rent your property – if this is the approach you have chosen.  Don’t believe a single word a single developer or estate agent tells you about the rental potential of your property.  They are telling you lies at best and fairytales most probably.  Find out how long the season is, look at what you might be able to earn, take of taxes and expenses, insurances and fees and you will soon see that anything you will get will simply be a nice to have – it won’t cover your mortgage costs 9 times out of 10.

Now, have you thought about the long-term appeal of where you are buying – what about changes to government and policies that might detract from the tourism appeal of the country.  What about the amenities and facilities in the area – and the infrastructure – again, promises from developers that there is plenty in the pipeline is BS at best.  You need a lawyer who will look into the viability of an area for you, who will ensure there is no motorway about to be driven through the middle of the estate onto which you’re buying and who will be able to tell you whether the person selling to you even has the right to sell.  That lawyer also needs to tell you whether there are any debts on the property.  A popular one for those who buy off plan is to buy on a development where the underlying land is mortgaged to the hilt by a dodgy developer who is useless with money – he’ll walk away leaving the debt behind – the buyer will discover he has paid out for nothing more than headaches and heartache.

Do not boldly venture forth on an inspection trip with a company who can do no wrong and who are currently bending over backwards and being obsequiously lovely to you.  Open your eyes and take a reality pill for goodness sake.  And when you have looked into every single potential aspect of buying abroad – take another look and keep looking long before you leap.  And if you do leap – well good for you and we hope it all works out well we really do. shelteroffshore.com