Despite the many uncertainties that Covid has left, the one thing we can be sure of is that people will always need a roof over their heads. This said, property investments will always be a profitable undertaking; however, it is not for those looking to make a quick return.
Here are a few guidelines on how to enter the world of international property investments:
Firstly, ensure that investing in a property is the right fit for you and your long-term financial goals.
What you need to understand is that undertaking an investment property is a minimum 5-year commitment. There are several factors that come into play when choosing this type of property and generally it is divided into 3 types of investments:
- Vacant Land
Buying vacant land requires a large amount of knowledge and skill to ensure that your investment actually materializes into a profit. As there are no rental income opportunities, it is a gamble on whether or not the land may be snatched up for a larger development. It is not advisable for any first-time investors as the risk far outweighs the potential reward.
- Commercial / Industrial Properties
Commercial and Industrial properties are primarily aimed at business operations such as offices and factories. It is much easier to find long term tenants for a commercial property and thus a have a more positive cash flow into the investment. Additionally, tenants are usually responsible for the maintenance on the property, ultimately, saving you the owner costs.
However, the negative side is that:
- Your tenant is never guaranteed and only as stable as the industry and the management of the company.
- Valuations on commercial properties are often predominantly calculated on its rental yield, which could affect the property’s value.
- Generally, banks will only lend 60-75% of the value of the property.
- Residential Properties
This is by far the most popular type of REI (Real Estate Investment) and it encompasses every type of dwelling from an apartment to a holiday home. Residential properties offer the highest returns and most stable income in the form of rentals.
When it comes to choosing your residential property investment, you need to consider the following factors:
- Are you wanting to simply diversify your existing investment portfolio? If so, then you may be spoilt for choice.
- If you are looking to invest in property to obtain a residential visa, then your choice becomes a bit more complex.
- There are several other factors, such as, minimising taxation by purchasing property where there is a low tax jurisdiction.
- Is the property being purchased for future personal use or simply to yield a rental income; this will greatly affect the emotional decision-making aspect of the investment.
- Are you able to financially carry the property or bond costs should a rental income fall through?
The most optimal way to avoid any unforeseen issues when looking to invest in international properties, is to enlist the help of expert advisors who can walk you through each step of the process and assist you in setting up a solid investment plan.
The rest will be up to you; the key foundation to success is to stick to your plan and follow it through to the end.
“Every accomplishment starts with a decision to try” – IIMG
Author: Angelina Angileri @IIMG Marketing