Damian Power is managing director of Power Overseas Property. Prior to forming Power Overseas Property, Power spent 10 years as financial controller of one of Ireland’s leading multinational companies.
Power got into property investment on a personal level five years ago, and sees property investments as financial instruments where the figures determine the validity of the investment. Power is also a fellow of the Institute of Chartered Accountants in Ireland and a member of the Institute of Professional Auctioneers and Valuers in Ireland.
NuWire: Can you talk about what made you decide to get started in investment real estate and particularly international real estate?
Power: I suppose I stumbled into real estate really; I’m an accountant by trade.
I was working as a financial controller…in Ireland and basically what happened—kind of a very long story short is that I was looking to invest some money in Ireland, had a look at the property market here, decided property prices were too expensive in Ireland and that the yields weren’t there.
So I started looking elsewhere. By pure coincidence, a friend of mine from home here who is actually a solicitor as well pointed me in the direction of a friend of his in Budapest…five years ago now.
I went over and met him and was very impressed with Budapest at the time, very impressed with the city itself and couldn’t believe the price of property there.
I bought a property in Budapest at the time and just literally casually said to them, “Look, I have a few friends that might be interested in this. And if I send them over, will you look after them?” And he said, “No problem.” And it kind of snowballed from there.
NuWire: Why is it that you find international real estate investment so intriguing?
Power: There’s huge potential there, for a start. There are an awful lot of different markets, an awful lot of different things that you can take into account. So ultimately what makes it intriguing and exciting for me is that it’s all based on your own decision, based on what you think and what you can get out of the market. The variety is there. You get a different product coming across your desk pretty much every day from somebody somewhere.
That’s really what makes it so interesting…no two days are the same.
NuWire: Can you talk about some of the more successful international real estate deals…that you’ve perhaps invested in and been a part of?
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Power: From my own perspective, the properties that I’ve invested in personally, and that have gone up in value I don’t consider them as of yet to be successful…being that I haven’t sold them.
The success of the deal is when you sell it…when you actually make the money.
[People] say they bought something off plan last year that’s gone up 30 percent, they’ve made a lot of money. They haven’t; until they actually sell it, they haven’t made a penny. And that is something which people don’t seem to understand at all. You need to be in a market where you can sell your product.
NuWire: Have you participated in any investments in countries that you haven’t been able to get financing in?
Power: Yes….Some of the eastern European countries like Slovakia, Turkey, Bulgaria, would be places where generally speaking, you can’t get financed. What you do is you would leverage your property in Ireland or wherever you’re based yourself and go in as a cash buyer. Down the line, I think that would be a good thing because you would have a property, an unencumbered property in the country.
NuWire: What would you say is the most challenging part about international real estate investments?
Power: Without question it is picking the right location and getting the right advice, day one.
NuWire: How do you choose which area specifically and which types of properties that you invest in? Are there certain things you look for in every investment?
Power: I suppose, coming from an accounting background, to me it’s all about figures. I don’t care where it is and I don’t care what it looks like. What I really am concerned about is economics of the country, how the prices compare with the GDP, the Gross Domestic Product of the country, i.e., how much every man, woman and child earns in that country.
I particularly like capital cities. I like good locations in capital cities where prices are cheap. Cheap relative to the economy of that country; not necessarily cheap in terms of someone saying that it’s going to be €30,000 or €40,000, for instance, to buy a property. That might sound cheap in relation to Ireland, but it might not be cheap in relation to the actual country [in which] you’re buying.
I like comparing to averages in other capital cities.
The other issue I would always be concerned about is exit strategies. How do you get out of it? There is no point in the world in you saying that you’ve made three, four, five times your money if you can’t sell it, because you’ll never get the money.
If it’s investment, it’s a lot about giving yourself the best chance for the money that you have. To me, that’s capital cities and a good location. That’s buying at the right price today with an exit strategy down the line.
NuWire: Which real estate markets currently are you most excited about?
Power: The two places that really excite me at the moment are Berlin and France. No question.
From pure investment perspective, Berlin is great. I think the prices are cheap in relation to the country, Germany. They’re cheap in relation to the fact that Berlin is the capital city whereas other big cities, being Frankfurt, Hamburg, whatever, in Germany [have] higher prices. And they are very cheap in relation to other EU capital cities. In my mind there is no reason why a property in Berlin should be any cheaper than a property in Rome or Madrid or Vienna.
What I like about Berlin is you have security in that you have tenants already in place. You have exit strategies in that in 10 years time you could sell to either an investor and there’s already a tenant in the property, therefore the investor is happy to buy it, or you sell to a local person if you’re in a good area in the city, then you have a market for local people.
You won’t get rich on rent in Berlin, but capital appreciation will be there.
France is a little bit different. I like a number of things about France. France gives you three options, whereas normally you have the option…to sell it or to rent it, France has a third option that you can use it yourself down the line.
You can go in with very little of your own money, get the rent to pay back your [financing] and wait for the capital appreciation.
NuWire: What advice would you have for someone who’s looking to get started investing in international real estate?
Power: Generally speaking, I suppose the most important thing for people is to have very clearly defined in their own heads before they invest what they are doing it for. You would be amazed at the amount of people who do not know why they are buying something.
Is it because you want the holiday home? Is it because you want an investment? Is it because you want to make a little bit of money but actually use it for three or four weeks a year yourself? Or is it just something that you want purely to make money, sell in 10 years, put your kids in college or whatever? Once people understand that, they will stand a much better chance of actually getting it, of achieving it.