Cheap property abroad some good advice.
Overseas property investors all know that the profits in
any investment property abroad are made at the purchase.
That is too say the property is bought cheap enough that
capital gains are almost certain. Seasoned investors
continuously search the overseas property markets for cheap
property abroad, but is this really the best way to find a
good investment property?
I once learnt of an apparent Chinese proverb which said
"cheap things no good, good things no cheap "which runs
along the lines of if it's too good to be true it probably
is.
Cheap property abroad is cheap for a reason and this is
where investors will have to place their attention. Why is
this property so cheap?
Off Plan property
Pre construction property can bought before a brick is laid
and sometimes before even planning permission is granted.
Off plan property is a great way to make your profit on
the purchase. Typically buying property at this early stage
almost guarantees you a profit when the property is built
and ready to sell. However investors need to study the
market, in generally stable markets builders will offer the
property cheap enough for investors to make a profit. Some
builders will guarantee that the price of the finished
property will be 'X'. This can be ideal as investors can
anticipate profits and even plan what they will do with the
instant equity in their property once it has been finished.
Investors need to be careful with title and planning
permission and should seek legal advice to make sure that
these are correct at the time of purchase. Off plan
property can be cheap because the builder needs to raise
funds to continue building and without your early
investment money the project may not even start. Investors
need to seek guarantees regarding projects that don't take
off. A safe way is to have your money held in an escrow
account. Here are some considerations:
1.) What guarantees do you have that the developer would
not go under or this project would not go under?
2.) Will my deposit be placed in an Escrow Account?
3. )Research the building company, what work have they done
in the past
4.) Has the builder secured planning permission and local
permissions for the project?
5.) Are there any legal safeguards for foreign investors in
the case of non-completion or poor construction work by the
developer?
6.) What if you decided to sell before completion of the
project, would that be possible and would I be penalized in
anyway?
7.) How easy is it to buy and sell property in this country?
8.) What if I decide to sell my (residence/hotel suite)?
9.) Are there any other fees while the project is being
built and what about after completion?
10.) What do you anticipate the rental income to be once
the facility opens based on current rates at similar
properties?
11.) What is the payment schedule?
12.) What happens if the building is delayed?
13.) What is the rental yield I can expect?
14.) What are the tax and inheritance implications?
15.) What is the buying process in this country?
Cheap property for sale it could be the location
Many overseas markets have not been subject to the over
inflated prices that many European and US cities have
undergone. These prices have been driven by demand over
supply. So why has this not happen in the region that is
offering cheap property? It is clear that many countries
are new to the overseas property markets. Former eastern
block countries are a good example of this. Regions that do
not have very good access and low cost of living will also
offer cheap property abroad. However it could well be that
there is so much land i.e. supply is plenty that property
prices are not being pushed up. Emerging markets where
investors have not had a chance to buy property could be
ripe. Consider the buying and legal process some
governements make foreign buyers jump through so many hoops
that it puts investors off. Healthcare, government
stabilty, lack of infrastructure all reason why property is
still cheap.
It is clear that cheap property may not be all it seems but
research can make cheap property abroad a profitable
business for the overseas property investor. Investors who
find cheap property abroad should know the reason why and
identify features that will remedy these factors. A good
example is a region with a lack of infrastructure but there
are plans in place to improve upon these in the not too
distant future. This sort of foresight can save money on
purchase and make money on sale.
