Overseas Property Investment Strategies

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When it comes to investing in proerty overseas, using good property investment strategies is essential to success. However, strategies depend on the investor’s objectives and can vary greatly. Here are our top five tried and tested strategies:

Exit

When investing, the first thing you should do is devise an exit strategy – a well thought-out plan, clearly focusing on how and when you’re going to sell your investment and make a profit and whether or not you are going to buy another. It’s crucial that you decide before you make your initial offer and seek professional advice on property investment. Be aware of the economy, interest rates and job situation in the area. They can all affect the total profit once you sell up. It’s also worth considering what you’ll do if property values begin to fall or if it takes a long time to find a buyer.

Buy-to-hold

This strategy is widely recommended when seeking property investment advice. It is the process of buying a property with the aim of renting it out to make capital gains as well as income returns. Typically, an investor will hold on to the property for a period of 2 to 5 years before selling. In the meantime, it can be rented as a holiday let or long-term rental in order to generate income. However, if you choose to use this strategy, a good property investment guide is to be clear about whether immediate income generation or capital appreciation is your main objective.

Flip

This short-term strategy enables fast cash and can be used to buy a property then quickly sell it on before the title is transferred into your name. In this strategy, looking for BMV properties (Below Market Value) is key. The average duration for this type of investment property strategy is usually between 18 and 24 months and involves the purchase of an off-plan unit (property that either hasn’t yet been built or is about to) and can lead to excellent capital appreciation. Emerging markets where prices remain low are typically the most successful.

Renovations

Another strategy for investing in property is to buy an inexpensive house and make major improvements to boost its price and leave you with a decent profit when it comes to selling up in the future. This is a popular option for first-time buyers who don’t have enough funds to wait for returns on a property investment.

Wraps

This investment property strategy entails buying a property at below market value, then selling it at market price using vendor financing but keeping the existing mortgage. This allows the investor to receive small regular payments as opposed to one lump sum settlement payout. This can be particularly beneficial to investors with little or no deposit funds/have difficulty qualifying for conventional finance. The investor makes a margin on the sale price and interest rate.

So now you have selected one of these overseas investment property strategies. To help you find a location, here a few options for where to buy property overseas.

1 Tuscany, Umbria, Lake Como areas of Italy
In times of trouble, classic favourites are safe havens. Italy’s prices have fallen, but not to the degree of other countries, and demand from Britons is reasonable despite the poor exchange rate. These locations offer lifestyle investments with an excellent infrastructure for airports and roads. There is also easy access from Britain and all-season facilities, including coast, skiing, countryside, cities. A two-bedroom apartment in a prime location starts at about £180,000.

2 Florida, United States
Prices are 30 per cent or more off peak and must rise soon. Sales in hot spots such as Sarasota have risen by 24.2 per cent this year. This suggests a market on the move. Expect to pay £150,000 for a three-bedroom villa, while another £20,000 gets you a private pool.

3 Tarn, France
“As properties have held their value on the Cote d’Azur, the Tarn region has become increasingly popular and represents good value,” says Claire Edgerton of Chesterton Humberts . Just over an hour from Toulouse, the area is easily accessible from more than a dozen British airports. Prices are not cheap, starting at £350,000 for a small house, but properties will hold their value.

4 Franschhoek, South Africa
This upmarket part of the Western Cape is typical of undiscovered South Africa. Although the World Cup did not kick off overseas home ownership in the country as hoped, it is still a popular tourist destination. Family houses with Dutch styling cost under £250,000.

5 Barbados
Despite high prices, demand is good. Homes take years to sell, so are ripe for hard-talking bargain-hunters. Low cost apartments go from £300,000, while the Sandy Lane set spend millions on their homes. Barbados is for long-term investors seeking rents, who are in no rush to sell.

6 Berlin
Germans rent more than they buy, so where better for investors than a city many regard as the new capital of Europe? Eastern central Berlin is now more chic – and pricier – than the West. In the central area, expect to pay £300,000 for a well-located apartment.

7 Turkey
The tourist resort of Altinkum has cheap flats (£25,000 upwards), but there are many of them so rental yield is unlikely to be high. Braver investors may pay £150,000 for Istanbul apartments hoping for big returns if Turkey ever joins the EU.

8 Brussels
There are rental yields of 5.5 per cent here, where canny landlords let to Eurocrats or offer short lets to tourists. New apartments start at about £140,000 and the Royal Institution of Chartered Surveyors says the city’s housing market has proved resilient in the downturn.

9 Malta
Many retired Britons rent here for the winter, so the lettings market is buoyant (small flats starting from £60,000) and property taxation is less strict than in much of Europe.

10 Atlanta, United States
You can buy repossessed properties in Atlanta, complete with sitting social tenants and two years of guaranteed rent. Prices are low – £40,000 or less.