Investing in properties outside of your own country can be lucrative, especially if you’ve exhausted all possible and desirable investment options in your own country. However, overseas property investment doesn’t guarantee success, and many investors make costly mistakes that leave them still recovering years down the track.
If you want to make sure you’re as well-informed as possible before jumping into a property purchase, take note of the common mistakes below.
Not Performing Thorough Research
Purchasing property in a country you don’t live in can require a great deal of research. You need to understand what houses are selling for, what specific areas are like, and the reputations of the companies with which you’ll be working.
For example, if you hire home builders in Bellarine Peninsula to build a new investment property, you’d want to make sure they are highly regarded in the community for peace of mind before handing over your hard-earned money.
Not Knowing the Property Purchasing Laws
Every country has different property purchasing laws, and pleading ignorance will not help if you contravene one. So, learn as much as you can about your legal requirements to ensure you remain on the right side of the law.
For example, you can purchase homes in the United States if you’re a foreigner, and you might even qualify for financing. However, under new laws in Australia, non-resident buyers can only purchase new dwellings and off-the-plan properties under construction. If you want vacant land, you must have plans to develop it.
Not Understanding Property Tax Requirements
If you plan to buy or sell property in another country, there’s a high chance that you’ll be required to pay taxes when you buy, during your ownership period, and when you sell.
Homeowner tax obligations can differ for each country, and you might be required to pay more taxes than residents of the country in which you’re purchasing property. The average American homeowner pays over $2,400 each year to cover property taxes, whereas property owners in Australia pay council rates based on their home’s worth.
Forgetting to Consider Exchange Rates
It’s easy to forget that every country has its own currency and that one of your dollars is not necessarily worth the same in another country. For example, if you were an American property investor looking to purchase a $500,000 property in Australia, this equates to more than AUD$700,000 (at the time of writing in 2022).
Securing a fair exchange rate is crucial for maximizing your investment. You may like to consider booking a rate with a money broker to save as much as possible during your property transaction.
Not Having Local Contacts
The property purchasing process can be challenging enough when you’re in the same town or city as the house you want to purchase, let alone when you’re on the other side of the world. You can’t perform walk-through tours, explore the neighborhood, or check out any local attractions to get a feel for the area.
If you have friends near where you plan to buy, consider calling upon them to be your eyes and ears during the property transaction. Alternatively, try connecting with businesses and property experts who can check out properties on your behalf. Fortunately, the technology we now have at our disposal makes it easier than ever to perform straightforward property transactions.
Investing in properties overseas can be a profitable experience, but it can also be challenging, and it comes with many risks. Thankfully, you can mitigate some of those risks by avoiding the mistakes above. You should then enjoy a smoother and less stressful property purchasing experience.
