First-time buyers who are considering buying abroad should face reality, says Bill Sunner of Landlords Only
Buying abroad has become the latest trend for wannabe landlords, but those who are thinking of buying overseas should know that it is not for everyone.
Investing in a country which is being developed obviously allows more scope for capital growth – and of course there is the draw of the exotic sun and a change of scenery. However, emotions need to be put aside and the harsh realities of the practices and pitfalls of buy-to-let abroad assessed.
There are key defining qualities that make a landlord suitable for buying abroad, with experience being top of the list. This is paramount to success in overseas property development. First-time landlords are not ideal candidates because usually it is the novice investor who gets caught out by drawbacks they did not expect and were not prepared for. Because of this a landlord needs to be resilient and patient, as inevitably they are going to encounter problems.
Having capital behind an investment abroad is a must. Often a 30 per cent deposit is required to secure a property and it is essential that a landlord have enough money behind him to ride any storms which may come along.
Before embarking on an overseas investment, a landlord needs to be aware of the processes that are required of him. It is necessary to open a bank account in the country where the property is located; in fact, this is mandatory before any purchase goes ahead. It is normally this bank which provides the landlord with a mortgage, if required, and although similar structures to those in the UK are in place, landlords will find that there is less mortgage product choice than they will find domestically.
There are many risks to investing abroad, and as with any property investment the basic rules of economics apply. Landlords should check out the supply and demand of an area – they need to make sure that there are enough potential renters in that location to let the property and also that the market is not already swamped with landlords offering a similar service.
Buying abroad often means buying into a country where the laws, regulations, rules and even the language are different. This can broach many unexpected problems and learning how to ‘talk the talk’ in a new language is often the key to success.
At the moment, property hotspots seem to be Bulgaria and Croatia, mainly due to the low property prices. When buying a property to let in any country, landlords should look out for properties in resort settings, as these appeal more to renters.
Properties with good transport links and amenities are a good choice; renters look for facilities such as a swimming pool and a local golf course, and take note of how close local shops and restaurants are to the property.
If the draw of buy-to-let abroad is just too strong, landlords should make sure they take their wealth of experience, full pockets and a phrasebook to the best resort in Europe.
See landlordsonly.co.uk