Buying an overseas property as an investment can be a smart financial move – but to maximise your profits you’ll need to do your research. We explain how to get the most out of your investment in overseas property.
Why invest in property abroad?
There are many financial advantages to investing in overseas property, regardless of whether or not you plan on emigrating. Here are some good reasons to consider buying property abroad:
- Potential for a regular passive income. Like any property investment, international property buying can generate significant earnings without too much input on your part, if you choose to rent it out.
- Long-term growth. Buying overseas offers you the opportunity to snap up a property at a lower initial outlay. If you’ve made a savvy investment, the value of your property may then appreciate over time. (It’s important to thoroughly research the country and region that you are considering buying property in, to maximise your chances of growth).
- Exchange rate profit. This is an advantage that is specific to investment in overseas property: if the foreign currency appreciates relative to your domestic currency, you can benefit from higher returns when you sell. Seek expert foreign currency support to ensure competitive returns.
- Diversification of your portfolio. Every investment has risk attached, so putting some of your money into an overseas property can help you to spread your assets. It means that should the rest of your savings or property be affected by market fluctuations at home, you have a safety net in the form of your overseas property.
Costs to consider when investing in overseas property
While ultimately, your investment in overseas property should generate a profit, there are of course some essential costs to take into account when buying property abroad. You will need to be prepared to spend money upfront, as well as meeting ongoing expenses. Don’t get caught out – none of these costs should take you by surprise.
Initial purchase costs
First of all, you’ll need to put aside enough to make the initial purchase when you invest in overseas property: a deposit to secure the property, plus extras which are likely to include legal fees, agency commission, title insurance and stamp duty.
Is there stamp duty for overseas buyers?
It depends on which country you are buying property in: specific stamp duty rates vary widely from country to country.
Some countries may have higher stamp duty rates for foreign buyers compared to domestic residents. On the other hand, certain countries may offer stamp duty exemptions or reduced rates for specific types of property or under certain circumstances.
Ongoing property investment costs
You will of course need to budget for certain ongoing costs and be prepared to make regular overseas payments, including mortgage repayments, any property taxes, insurance, maintenance and repair. If you are not based in the country where you are buying a property, you’re likely to need to pay a property management company to take care of your property for you.
Don’t forget to factor in the cost of travel, if you are planning to visit or stay in your property on a regular basis. You’ll also need to be aware of the exchange rate, and be prepared to pay currency exchange fees when switching between currencies.
Don’t get caught out: hidden costs to budget for
The course of overseas property investment doesn’t always run smoothly. So be prepared to stump up for additional expenses, if you encounter complications.
- For example, you may need to pay for legal advice and representation: even if you know a lot about UK property investment, the laws may be very different when buying property overseas.
- You’ll need a fund for unforeseen maintenance issues, just in case something needs fixing.
- While renting out your overseas property can be lucrative, it’s always possible that exchange rates will fluctuate, and your anticipated rental income is not worth as much as you expected.
- You may have periods when the property is vacant, and you are not receiving your anticipated rental income.
Getting a competitive deal on money transfers for overseas buyers
Investing in overseas property involves the transfer of large sums of money. So it’s really important to ensure that the exchange rate is as far in your favour as possible, when you make your payments.
At Foreign Currency Partners, we’ll act as a dedicated FX partner, offering support to help your money go further. Our responsive service means that you can act quickly on property deals to snap up the best bargains at competitive rates. Our fixed rates help protect you from exchange rate fluctuations, and we offer comprehensive end-to-end assistance with property purchases.
Want to find out more? Open an account today, or speak to a specialist to discuss your investment in more detail.
