Top tips for new Foreign Property Investors

Real estate – it’s the latest bandwagon that everyone wants to jump on to make a fast buck. But it’s really not that easy! Here at BuyingForeignProperty, we have put together a list of the 7 top tips every new investment property buyer should read.

1. It’s not like TV!
There are lots of property programs on TV. They tend to gloss over all the hard work and make the figures seem as easy as pie. In reality, the work is a lot more gruelling than is shown, and the figures can be confusing and a bit messy. The figures will also often not factor in things such as tax – both local tax and tax in your home country. If you plan to do a lot of investing, you will also need to cultivate industry relationships and ensure you have top-notch project management and business skills to ensure that your property investments are handled correctly.

2. Walk before you run

Property is a lucrative market, however that does not mean you will make your millions on your first property. Investing takes time and training. There are many mistakes you can make, so it is usually better to start small and work your way up – it is better for a small investment to go sour than a large one, and at the start of your property journey, you are more likely to have a sour deal.

Always be pessimistic in your costs – assume that you won’t always have people renting your house; that the rennovations will take an extra month to complete; that you will need an extra 10% on your budget. This way, you are prepared for most things and you should be able to keep to a resonable budget and timescale.

3. Long term wealth
Property is best viewed as a long term investment. Sometimes, short term can be good, particularly if the country’s economy is picking up at a rapid rate and house prices are rising quickly. The long term view can be good because you know that you are getting a certain amount of money per month for the property as well as being able to sell the house off in a few years time for far more than you bought it for. Remember that passive investment can make you better returns in the long run than buying property, renovating and selling them quickly.

4. Trust

Use people who you trust – accounts, solicitors, banks, handymen; They are worth their weight in gold when you can find people that you can trust. Interview many of them and ensure that they are really what you need. Do not be tempted to necessarily go for the cheap option – more expensive people are often worth it in the long run, particularly if you are buying multiple properties in the same country, or if a deal goes wrong.

5. Plan
Planning is the key to property investment wealth. Draw up a business plan and endeavour to stick to it. Most investors will have a tried and tested plan which works for them – borrow or develop your own. Make sure everything is written into your plan – every expense and every nuance no matter how small. Analyse your data and think “worse case scenario” so that you can anticipate and avoid the worst. Being prepared is the key to a successful real estate investor.

6. Action
It’s all very well having a fantastic business plan but you need to action it! If you see a deal which looks good, put the plan into action! You usually can back out of a deal if it is not too far in if you decide it isn’t the deal for you. If you don’t action your plans, you won’t get rich!

7. Talk yourself out of the deal
Look at every negative aspect of the deal and property. Plan for the worst because anything better is good! Do not let your feelings get in the way of your deal – sometimes people can become attached to properties, and this is usually a sure-fire way of losing money. Try and talk yourself out of the business deal. When you know the negatives, try to find away around them so that you minimise the risk. If you haven’t managed to talk yourself out of the deal, go for it!

Property investment can pay huge dividends both in the long term and the short term. However, there is also the potential for immense losses. It’s important to educate yourself and know the market well before you take the plunge. Good luck!

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