This is the second part of the top 10 mistakes that frequently occur when someone decides to buy a property abroad. In this article you will find more points of interest and what to look out for and rethink before you go ahead and purchase a property abroad.
1.Guaranteed rentals: buyer beware
In the case of off-plan properties, developers may take charge of finding tenants and guaranteeing all rental payments for a specified number of years. Rental guarantee issues can range from simple misunderstandings about what developers actually offer investors, to outright scams. In general, there are two types of rentals: net guarantees cover costs such as management fees, services charges and ground rent; gross rental guarantees do not. In addition, some developers include the amount of the guaranteed rental into the purchase price. It’s therefore a good idea to research the market and discover the going rental rates before accepting an offer.
2. Different currencies
Exchange rate fluctuations can cause you to lose large amounts of money, particularly if you’re transferring funds from your local currency to finance a property purchase abroad. You can avoid this by agreeing a favourable exchange rate beforehand with a money exchange broker. Another point to consider is that a mortgage may be quoted in the local currency, so monitoring exchange rate fluctuations could make you save, or lose, money.
3.. Legal assistance
Never, ever sign a document unless you understand everything that’s written on the paper. A qualified lawyer will examine all documents (reservation contracts, private sale contracts) and make sure the contents are correct. Seek professionals from reputable law firms. This will save you a lot of headaches.
4.. Taxes – yes, them again
Tax regimes differ from country to country, so again it helps to enlist the advice of experts in the field. Broadly speaking, tax is payable on any rental income, and of course as the legally registered owner of a property you’ll have to pay capital gains tax on profit made in the event you resell.
5.. Keep an eye on developments
Though you might not think it, overseas developers, agents and lawyers cannot always be relied upon to keep property buyers up-to-date on the progress of a construction or transaction. A hands-on approach is necessary here: pick up the phone and ask how things are coming along.
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The goal of property investment is high returns. Achieving this requires solid research: that’s the key. The internet is a good starting place, and when it comes to overseas properties, visiting the site personally is almost always a must.
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