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10 Things to Consider When Investing in Overseas Property

10 Things to Consider When Investing in Overseas Property

While the global real estate market may have enjoyed months of uninterrupted growth, large-scale investors have recently begun to sell luxury properties amid fears that surging prices are creating a bubble. Although this may represent the higher end of the property market, it is a worrying development at a time when the global economy is finally beginning to emerge from the shadow of long-term decline.

This is just one aspect of the real estate market, however, which continues to evolve and create new challenges for investors and vendors alike. Just recently, British real estate firm Property Rescue collaborated with the national ombudsman to launch a new National Association of Property Buyers (NAPB), which will operate in the controversial “Quick House Sale” sector and provide self-regulation that protects both investors and home-owners alike.

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    The Key Considerations When Investing in Overseas Property

    Whether buying a home domestically or overseas, there are clearly a high volume of challenges that need to be overcome if you are to safeguard your investment. These issues are amplified when buying property abroad, especially if you are expanding your portfolio into new and relatively uncharted territories. With this in mind, consider the following factors before finalizing your international real estate investment.

    1. What is your reason for buying overseas property?

    This is arguably your single most important consideration when buying a property overseas, as it will have a direct influence on everything from your budget to the type of insurance that you invest in. If you are buying a property for the purpose of investment, for example, you will need to execute all financial decisions in line with your estimated return. If you are purchasing a home with a view for relocating, however, you will need to focus on standard considerations such as the surrounding area, local amenities, and school catchment regions.

    2. The need for finance and funding.

    With a clear understanding of your motivation, selecting viable properties to suit your needs is a relatively straightforward process. Securing finance is a far more challenging exercise, however, especially when you consider the fact that it will be subject to international laws and usually discussed in local currency terms. As a starting point, be sure to obtain an “Agreement in Principle” before confirming the purchase as this will safeguard you in the event that you are not extended a loan and enable you to reclaim your initial deposit.

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    3. Consider your tax liability as an investor.

    Everyone’s tax circumstances are different, and this is especially true in the diverse and changeable real estate market. Each nation will have its own unique body of tax laws and legislation, which may require you to repay costs such as stamp duty, title transfer tax or even inheritance tax at the point of purchase. Beyond this, some countries also require home-owners to pay land tax as a condition of their mortgage, and this is usually an annual cost that can eat into your capital. These potential costs must also be factored into your budget, as otherwise you may face significant legal penalties.

    4. Understand the value of local money and exchange rates.

    On a similar note, it is also worth understanding the value of local currency and any associated exchange rates. If you intend to bring money from your own country overseas at different junctures, you may also need to obtain a Certificate of Importation and open a local bank account. This makes it far easier to repay affiliated tax debts and legal fees on time, as you can quickly establish a series of standing orders to suit your requirements. If you are going to execute a smooth and trouble-free transaction, this should be considered a crucial part of your preparation.

    5. Obtain an independent valuation.

    If you were purchasing a home in the UK, you would not think twice about requesting a structural survey and an independent valuation. Many investors fail to do this when purchasing an international property, however, due to the cost and logistical challenges of organizing these tasks from a remote location. Obtaining an independent valuation and guaranteeing the integrity of the property is a fundamental part of any real estate transaction, however, and it is important to remember that any costs are a small price to pay to protect a larger investment.

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    6. Overcome the language barrier.

    Even if you do not intend to relocate permanently, you will still need to engage directly with international vendors and agents when purchasing property overseas. This may pose an issue with regard to any language barriers, which can easily create miscommunication and either delay completion of a deal or have a negative impact on cost. While you can overcome this by taking time to learn the relevant language, it is often far more tome-effective to employ the services of a legal professional with a knowledge of conveyancing.

    7. The need to confirm title and ownership.

    Given the remote nature of international real estate investment, it can be difficult to develop trust with vendors and agents. This means that you must be extremely cautious when discussing issues such as title and ownership, especially as any debt that exists on a property may be passed onto you once the transaction has been completed. If a developer has previously borrowed money to complete the work and not repaid this, for example, you may be liable for the repayment and any affiliated charges as the new owner.

    8. Research the location and local amenities.

    Even if you are comfortable with the financial and tax aspects of purchasing a property abroad, you must still conduct research into the location, its transport links, and local amenities. This is especially true if you intend to live there, although investors must also have knowledge of the region if they are to successfully let their property and generate a consistent return. When buying a holiday home for rental purposes, you must also be sure to research off-peak travel times as you may well experience a fall in demand and income during this period.

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    9. How will your safeguard your property when you are absent?

    If you are buying a holiday home or investing in real estate in order to make a profit, then there is no need to relocate permanently. This means that your property may well be empty for a significant portion of the calendar year, so you must be proactive and prepared to organize security year-round. One of the best ways to achieve this is to employ a local property management firm, who will make regular visits to check on the residence and organize any necessary cleaning or maintenance tasks. Although this will require additional investment, it can help to save you money and safeguard your assets.

    10. Do you have an exit strategy?

    Whether you intend to relocate internationally or develop a global real estate investment portfolio, it is important to remember that even the best laid plans occasionally go awry. You will therefore need a suitable contingency plan and exit strategy, as this will minimize any inconvenience caused and the potential for financial loss. For those hoping to relocate, it is therefore important to retain strong ties in your country of origin and ideally retain an existing property for a predetermined period of time. Investors will also need to keep a keen eye on the global real estate market and prevailing economic trends, as these factors may dictate the need to sell or change strategy.

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    Published on September 17, 2018

    How Being Smart With Your Money Leads to Financial Success

    How Being Smart With Your Money Leads to Financial Success

    Achieving financial success is not something that just happens. Maybe if you win the lottery or something, but for the average person like you or me, it comes from a series of small steps you take over a long period of time.

    With each step, you form a new smart money habit. And with each smart money habit, you build towards financial independence.

    So what sort of habits can you form to get on that path? Let’s take a look at smart money habits you can start today to get you closer to a financially independent future.

    1. Avoid being “penny wise but pound foolish”

    It’s tempting to try saving a couple cents here and there when buying small items. However, that’s not where the real money is saved. You’re putting in extra effort for something that doesn’t move the needle.

    You get the most bang when you’re able to cut down on your bigger bills. For example, finding a lower interest rate for your mortgage could save you $50+ per month. And cutting your transportation bill by purchasing a cheaper car or taking public transportation can provide large gains as well.

    So, look at your recurring expenses such as housing, transportation, and insurance, and see where there’s wiggle room. It’s a much better use of your time than trying to pinch pennies here and there on smaller purchases.

    2. When you want something big, wait

    Impulsivity can get you in trouble in most aspects of life. Finances are no different.

    It’s human nature to see something and want it right then and there. It starts as a kid in the checkout line at the grocery store, and it continues on through adulthood.

    We get an idea in our head of something we want, and it’s hard not to go out and get it right then.

    A good example is wanting a new car. Perhaps you’ve had your car for several years. It’s crossed the 100k mile mark. Maybe maintenance is due, and you’re annoyed that you need to replace the timing belt or purchase new tires.

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    So, you get the itch.

    You start digging around online, and you realize you could trade in your current car for something newer and more exciting… all for a few hundred bucks a month. Then you get obsessed.

    Here’s where you have to take a step back.

    Your newfound obsession is clouding your judgement. Rather than giving into the impulse, wait it out.

    Set a timeframe for yourself. Maybe you come back to the decision three months down the road. See if the obsession lasts.

    It might, but often, a funny thing happens. Often, you forget about it. And often, you find that the new car wasn’t a need at all.

    The impulse faded. And you just saved yourself a ton of money.

    3. Live smaller than you can afford

    You finally get that big raise. And you want to celebrate – and why not?

    You’ve been looking forward to this forever. And after all, it was all due to your hard work.

    That’s fine, splurge a little. However, make it a one-time deal and be done.

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    Don’t get caught in the trap that just because you’re now making more money, you should spend more.

    Too often, people get more money and feel like they that gives them the means to buy a bigger house, a bigger car… you know the drill. Resist.

    The fact is that living smaller than what you can afford is one of the fastest ways to build savings.

    But if you constantly upgrade as you begin to make more, then you’ll never get ahead. You’ll just build up more debt along the way and have just as little wiggle room as before.

    4. Practice smart grocery shopping

    Food… it’s one of the biggest portions of any budget. And if you’re not careful, it can be one of the biggest drains on your wallet.

    But luckily, there are a few things you can do to ensure that you stay smart with your money when buying groceries.

    Create a grocery budget

    Set a strict weekly grocery budget. When you know how much you can spend on groceries, you can then plan your weekly menu around it.

    Once you know what all you need, you can go shopping and keep a running tally as you shop to ensure you’re on track.

    I tend to do this in my head, rounding for each item. However, writing it down as you go would probably work best for most people.

    Make a list… and never deviate

    Never go to the grocery store without a list. If you go to the store with a ballpark idea in mind, you don’t have a true ide of what you need.

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    You’re not well-researched. You don’t know what the sales are. As a result, you’re going to make decisions on the fly.

    These impulse decisions will lead to overspending, which will derail your grocery budget.

    Eat before going grocery shopping

    It’s also important to eat prior to going to the grocery store. Hunger is a powerful force.

    If you’re shopping on an empty stomach, everything is going to look good. In particular, you may find a lot of ready-made, processed snacks will look enticing.

    After all, you’re hungry now and that food is easily available. So subconsciously, you may lean towards those items.

    Unfortunately, not only are those items typically less healthy, but they’re likely more expensive. You pay for convenience.

    However, when you eat prior to shopping, then you’ll shop with a clear mind. Your hunger won’t cloud your judgement, influencing you to make poor decisions like a cartoon devil resting on your shoulder whispering in your ear.

    This makes it much easier to stick to your grocery plan.

    5. Cancel your gym membership

    Now that you’re all set on your food, it’s time to get smart about managing your budget in terms of physical fitness. And let’s begin by avoiding the gym. The gym bill, that is.

    The average gym membership costs around $60 per month. That’s $720 a year.

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    Yet, two out of three gym memberships go unused. That means two-thirds of people who have a gym membership are literally giving away almost a thousand bucks a year. It’s crazy!

    I recommend seeking an alternative. One good alternative is to look into fitness streaming services.

    Streaming services allow you to stream hundreds of workouts like Insanity and p90x, right in your own home for around $10-20 a month. That’s $40-50 less a month than the average gym membership.

    Of course, then there’s the free option. The internet is full of free workouts that you can do on your own with minimal or no equipment.

    For example, there’s the Couch to 5K program, that I personally used a decade ago to ease myself from couch potato to running my first 5K race. If I could do it, anyone could.

    Then there are free resources like reddit that have limitless information on workouts. The Fitness subreddit has done all the research for you, populating workout tips and detailed workout routines for anyone to use in their wiki.

    There are several routines that require no equipment. And you can join in on the subreddit to become part of the community, making it easier for those seeking comraderie and encouragement in their fitness goals. All for free.

    It’s baby steps… And baby steps can start now!

    I’ve never met anyone that can’t stand to be a bit smarter with their money. And on the flip side, anyone can get smarter with their money. But remember, it doesn’t happen all at once.

    Begin by fighting your impulses. Prepare for the week and be smart at the store. And cut monthly expenses like gym memberships that are overpriced and you probably aren’t getting your money’s worth out of anyway.

    The devil is in the details. And the details can change your lifestyle and prep you for a financially independent future.

    Featured photo credit: Unsplash via unsplash.com

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