If you’re considering how to invest your money, you may be attracted to overseas property by claims of better capital growth and higher rental yields than buy-to-let property in the UK.
There’s also the added advantage of having your own holiday home which you can visit when it’s not being let out. Buying overseas using an international property finder is always a good decision to make as you can ensure you do it right. Overseas property deals are not easy to come by so make it your priority.
However, there are many responsibilities that come with letting a home and it may be harder to fulfil those responsibilities for overseas properties. It could also be tougher to get to grips with the different laws and taxes surrounding property ownership in a foreign country. If you want your overseas property to be a good investment, it’s important to think long-term. Property experts will constantly highlight new markets they deem to be investment hotspots and you may be able to find bargains in countries where prices have fallen dramatically, but it’s often wiser to buy in more established markets. This will be a safer long-term investment and it’s likely to be easier to find a good mortgage deal if you need one. Make sure your property is in an easily accessible location with good local amenities and in an area popular with tourists. Don’t forget to take into account the holiday season in the area – many tourist destinations virtually shut down when it comes to the end of the season.
Find out what the going rate is to rent similar properties in the area to get a realistic idea of how much you could make. Or, even better, if the property you’re considering buying is already being rented out, find out how much the current owner charges and how many weeks per year the property is occupied for. Attracting business and managing the property yourself could be difficult, especially if you’re in the UK most of the time. It can be a good idea to market your property through a local estate agent but you will need to take its fees into account, especially if you want the agent to manage the property. Cheaper marketing options include dedicated holiday lettings websites.
Word of mouth through family and friends is another good way to find potential paying guests
You must pay income tax on rent you receive. You can deduct some expenses from your rental income to reduce taxable profits, but only those that relate to your lettings business (not to personal use). You will also need to make sure the property is up to a certain standard. Factor in cleaning costs, maintenance costs and the possibility of void periods when deciding whether overseas property investment is for you.
Make the right decision and you won’t regret your new investment.