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Many expats like to keep a foot on the property ladder back home while generating some income by investing in a buy-to-let property. Bricks and mortar are often a very sound investment. However, t before you get carried away with all that money you are going to earn, make sure that you consider it from all angles. Here are seven tips:
Obviously you need to consider your finances carefully when purchasing a buy-to-let to ensure that you can cover any mortgage repayments, if required, and get the best deal. It is important to remember that many deals come with fixed or capped rates for a certain period but after this, your investment will be subject to fluctuations in interest rates. You need to be confident that you are not going to find yourself in a position where you can’t cover the repayments.
Before the global financial crisis of the late noughties, many entered the buy-to-let market on the back of a seemingly endlessly rising property market which offered high returns in the short term. The sobering situation of property markets in many parts of the world over the last few years proves that properties can, and do, fall in value. Do not overstretch yourself and run the risk of finding yourself in negative equity.
As a buy-to-let investor you have to use your head over your heart. You may love that quirky, characterful house but will potential tenants feel the same? This is an investment and you must buy what is going to maximise your returns. Study the market where you wish to buy, speak to letting agents and find what kind of property is the most in demand. For example, if there is a high student population in the area would you be best buying a property which will appeal to that market?
As a buy-to-let investor with finance in place, you are an attractive prospect to vendors and are in a strong position to negotiate on price. Make sure you do. In many parts of the world the property market is currently very depressed, meaning that this is a great time to bag a bargain.
A buy-to-let can be a great source of regular rental income but when doing your figures you need to factor in the costs involved in property ownership. Depending on where you invest, as the owner you may be subject to certain property taxes. All properties require some level of ongoing maintenance even if it is just a paint job every few years. If you buy in a shared building, you may be liable to pay fees to a managing agent as well as insurance and maintenance of common parts. You need to ensure you have all the facts at your fingertips before committing.
If you are buying in a different country to where you live, it will be impossible for you to manage the property yourself. You will need someone to find tenants, get contracts signed and sort out the inevitable issues that arise such as broken-down boilers and manage maintenance work. A friend or a relative may be willing to do this, but it is an onerous task and you will be indebted to them! You may be more comfortable with getting a professional to do this but again, you need to factor in their fees.
Buying a property in a different country can throw up the occasional difficulty which may leave you floundering, especially if you are just starting in the property investment game. Difficulties can be eased by having an experienced pair of hands to guide you through the process and help resolve problems.
Infinity has extensive experience of assisting expats in Asia purchase property outside the region and a global network of contacts to help smooth the process of buying real estate. If you are interested in buying investment property anywhere in the world, why not get in touch for an obligation free consultation.
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