If you are considering broadening your investment in bricks and mortar to include properties overseas, there are a number of key questions that you need to be asking yourself before you go ahead and buy.
In many respects, investing in property wherever in the world it happens to be, often requires following the same set of rules and following a proven strategy that should help to lessen your level of risk and hopefully improve your rental yield and capital gains.
Whether you are looking at offering property to let in Wolverhampton or buying a coastal hideaway for renting out, here is a look at how to increase your chances of enjoying financial success.
Confirm the rental appeal
Solid investments in sought-after and well regarded locations are always likely to create strong rental demand.
Be sure to take a detailed look at comparable properties in your chosen area and verify the rental payments they are able to achieve. Preserving your wealth and increasing it over a period of time begins with a regular rental income and allows the capital growth aspect to take care of itself over a period of time, rather than having to cash out early because a place is costing your money to keep due to rental voids.
Use a Property Management professional
If you are investing in a property that is nowhere near where you live most of the time, that fact alone can be one of several good reasons why you need to hire a professional property management company, one that can take care of things on your behalf.
Self-managing your property portfolio is certainly achievable and may seem appealing from a cost point of view, but a good quality and respected property management agent or company can often justify their fees when you look at the service and facilities they can offer you.
A property manager acting for you will have local connections for getting repairs and maintenance done efficiently and within budget and they can also vet and manage tenants who are in your property in return for a monthly or annual fee.
Know when to sell
One of the key components that defines a successful property investor is the ability to know when to sell their investment and when to hold on.
Markets tend to move in cycles and there are inevitable peaks and troughs in market sentiment as well as valuations. If you see property prices rising beyond expected valuations, that might be the signal to cash out and put your money into another location, where valuations are not so high but have the potential to increase.
Sentimentality can often end up costing you money so always have in mind a strategy or a trigger-point where you think it would be a good time to sell.
Use your property to grow your portfolio
You may have bought a property with cash or part-finance, but it is still an asset that could give you the opportunity to raise capital against it and use the funds to buy another property to add to your portfolio.
Regularly evaluate the current valuation and the mortgage rate you are paying if applicable, so that you can potentially re-negotiate a better rate and use your existing asset to borrow against as a way of growing your portfolio.
Take proper taxation advice
Capital gains and losses are only on paper until you actually come to sell a property, which is why timing and good taxation advice are so important when it comes to successful property investing.
Make sure you appoint an advisor who has good knowledge of the taxation laws and can advise you of any changes that might affect you. A change in capital gains tax rules for overseas investments can have a big impact and might easily influence your timing on when to cash out and move on or whether you need to re-structure your deal in some other way.
Successful international property management is undoubtedly one of the ways in which you can increase your wealth, but you need to follow a proven strategy and be prepared to listen to others at times, if you are going to get the best possible returns.
When you look at the gains enjoyed by overseas investors who bought into London in recent years, and the some of the opportunities in great locations around the world, there are plenty of risk and reward scenarios to consider.
Long-term benefits can be achievable if you include property investment as part of your overall investment strategy and wealth-creation initiatives.