The UK property market is thriving, with many property investors enjoying solid returns. However, it’s always wise to diversify your portfolio – not only to maximise profits, but to protect your savings if one investment stream suddenly becomes less lucrative.
One option that’s becoming more popular is investing in property abroad. If you’re considering buying overseas, here are a few things to consider.
The Benefits of Purchasing Abroad
As long as you’ve planned your purchase wisely, you’ll enjoy a range of benefits from investing in property abroad, including:
- Portfolio diversification (avoiding ‘too many eggs in one basket’)
- Relaxed tax laws (certain countries only)
- The possibility of higher rental yield / capital growth
- Your own holiday home
As part of a carefully managed portfolio, having a property abroad can be a real asset – and if you’re serious about growing your property empire, it’s an option that’s well worth exploring.
Should You Invest in Property Abroad? Questions to Ask
Is it an upcoming area?
There’s huge money to be made in investing in an upcoming location, especially if property prices are still cheap. Once the area becomes more popular, prices are likely to sky-rocket, which means excellent ROI for savvy investors. It’s vital to do your research though – just because a place is touted as ‘the next big thing’, doesn’t make it necessarily true.
Is it popular with tourists (or locals)?
As with your properties in the UK, it’s a good idea to check that your overseas home will appeal to your target demographic. Buy in a popular tourist destination, for example, and your property should generate plenty of interest – particularly in high season. You may want to rent to locals instead; which means you’ll need to check the buoyancy of the residential rental market.
Who will manage the property?
Managing a property abroad is far harder than managing one in the UK – simply because the geographical distance makes it tricky to keep an eye on things. It’s likely that you’ll want to hire a local letting agency to manage the house or apartment for you, in which case, you’ll need to do some number-crunching to ensure their fees don’t eat too much into your profits. This shouldn’t be too difficult – especially if you’ve invested in a good area.
Will you be using it as a holiday home?
One of the most attractive aspects of buying abroad is that you can use the property yourself – as a pleasant base for whenever you fancy a holiday abroad. This is a major perk, but you’ll need to be realistic about how this may affect your rental income; especially if you want to use it for an extended period during high season.
Do you understand the local tax laws?
In some countries, tax laws are more lenient than they are back home, which can help boost your profit. However, bear in mind that the reverse may also be true, and as such, it’s important to familiarise yourself thoroughly with the tax system before you start scouring the market for suitable properties.
Guest post by FJP Investment
For more advice on overseas property investment and information on our current overseas investments contact FJP Investment on 0207 183 0343 or online at www.fjpinvestment.co.uk