October 22nd, 2013. Ben Lloyd
The Dos and Don’ts of Investing in Overseas Properties
Buying commercial properties overseas can be a great investment opportunity if you do it right. Do it wrong however, and you are simply throwing your money away. Unfortunately this can be a very tricky process to sort out due to having different currencies, languages and laws involved. Here’s everything you need to know about investing abroad:
Don’t forget the exchange rate
When you’re dealing with large sums of money and foreign currency you need to make sure that you’re getting the best possible exchange rate. A difference of just a couple of pence can drastically change the cost of your investment, giving you a lower or higher return on your investment. You can either act very quickly when the exchange rate is low or make a deal that gives you a set exchange rate from the time of proposal all the way through to point of sale. The latter is a great option if the interest spikes during the acquisition process, but you risk losing money if it goes the other way.
Do research the location
Location is key when you are looking for an investment property. Do not buy a property just because you think it would make a nice holiday home, choose somewhere that has started to become a tourist destination in recent years. Buying or building holiday properties in this location will drastically increase in value, giving you a much higher retail value. If you are aiming more towards businesses properties then find out which major cities are expanding or set to undergo developments or expansion of the infrastructure.
Do look into development
To get the best return on your investment it is definitely worth considering commercial development, building hotels and holiday resorts that will become increasingly popular in upcoming years. This will give you a great return through rent and resale, drastically increasing the return on your investment. Buying land will often be much cheaper than pre-build facilities, and labour and material costs are normally cheaper than they would be in the UK.Talk to commercial mortgage brokers in order to get the best possible deal whether you decide to buy right-out or want to go down the development route.
Don’t buy without visiting
In this day and age it can be so easy to start and finish deals from halfway across the world without stepping out of your office. While many people are honest there is still a chance that you are being conned. Before you complete any deal make sure you visit the site and area where the property is and make sure that it looks as good in reality as it did on paper. This isn’t necessary for all transactions, but it is highly recommended – after all it is your money that is going to be invested and you need to make sure you’re getting exactly what you want.
Do use a commercial mortgage broker
Finding the right finance option for investing abroad can be a real hassle. You may struggle to find many lenders who are willing to provide loans for use outside of the country, therefore the rates you receive may be very high. By using a mortgage broker you can get quotes from every single lender, allowing you to pick the best package and rates for your needs.
Article By Ben Lloyd
October 22nd, 2013
Ben is the Director and Co-Founder of the Pure Group and Managing Director of Pure Property Finance.
Following a career in Barclays, where Ben was in the real estate finance team for 8 years, he decided that the market needed a more forward-thinking type of commercial brokerage so founded Pure Commercial Finance (now Pure Property Finance), the first company within the Pure Group.
Ben has extensive experience across the real estate sector and has participated in over £2bn of real estate transactions during the course of his career.
Ben oversees the general strategy at Pure Group and works with the senior leadership team to drive the Group forward. Ben is also on the Executive Committee of FIBA.See more articles by Ben