A dream can quickly turn sour if you don’t respect the risks involved with purchasing property overseas. But do it right and it can be a lifestyle investment as well as a financial one.
How many of us have stopped and gazed at advertisements in the windows of real estate agencies when overseas? Perhaps it’s a flat in Paris, an apartment in a Canadian ski resort or a pied-a-terre in London.
To own a piece of real estate in a far-flung destination as an investment and, potentially, a lifestyle choice is a wonderful fantasy. After all, a holiday house in Europe sounds more glamorous than a shack on the south coast.
But the reality and practicality of such a purchase turns most people away. As with any major investment a property overseas has its risks.
Get local knowledge.
The first is simply to do with distance and lack of local knowledge. When you’re living in a different country you can’t just pop around to check up on things or to fix a leaky tap. At the very least you’ll need to find and pay for a reputable and reliable rental manager. At worst you’ll pay a full electrician’s call-out fee every time a light bulb needs to be changed.
Without local knowledge it is difficult to know whether you’re buying into an upcoming area or into one that is on its way down. And a vendor or sales agent is not likely to mention the bikie gang that is moving in to the property next door.
Consider extra costs.
There could be plenty of extra costs, including legal and tax representation during the purchase both in Australia and overseas. Local councils may charge far higher rates than what you are used to. And in many older societies, such as those in Europe, legal systems can be arcane and complicated.
Of course, foreign exchange movements will have a major effect on the eventual true value of the property. Also, depending on what sort of a structure you’re holding the property within, you may not be allowed to utilise it for your own, personal enjoyment.
Tread carefully and get right advice.
But tread very carefully and take the right advice and your dream of an overseas investment property could be a perfect addition to your investment portfolio. Treat it as any other investment by removing the emotion and dealing only with facts. Do the research, and surround yourself with a great team to help you through. Then that fantasy could finally become a reality.