Foreign Property - my 2c worth

connundrum

I've seen many threads started here with everyone asking about where is the best place to invest so I thought I'd throw my piece in. To explain my background - I worked for RTE's House Hunters in the Sun for a period, I am currently the sales and marketing manager for an unnamed foreign property company, and I am in the middle of constructing an information based website for people looking to buy abroad.

I write this with one eye on Bulgaria as it seems to be the most asked about destination, but all of what I say could be asked of any other area too.

As I explaned on another thread, the UK Observer and the Irish Indo have tipped Sunny Beach (Bulgaria) as being the hotspot for European tourism in 2007/2008. Be aware that Sunny Beach has a very short peak tourism period (May - Sept max) but in my experience the rental returns are being maximized for the period (once the property is located smartly). Regardless of where you buy, you should always research the climate! I've had 10+ people who have wanted to buy an apartment in S. Beach with a view to living there year round - these people were extremely surprised to find out that some cove's actually freeze over in January!

To buy with a view to renting and gaining capital appreciation, one will have to look at location carefully. I have seen so many people who have bought on the outskirts of a holiday region only to be surprised that their property isn't being rented and it isn't increasing in price. You wouldn't buy property in Longford and expect Dublin growth/rent rates!! When you buy, be prepared to sit on it for longer than you may want to. If the region where you buy suddenly experiences a sharp downturn in tourism numbers then you must be prepared to fork out mortgage repayments from your own pocket.

Some developers will try and pull a fast one by adding the cost of 'guarunteed rental' onto the actual selling price of the property, be aware that this may happen but also be aware that it is not general practice. Developers who offer a guarunteed rental option may have a deal set up with a travel operator (Sunway/Budget etc), and are therefore guarunteed certain numbers per annum. It is in the developer's interest to have your apartment rented out, as they stand to make more money in maintenance charges and it will up the value of the development if it is constantly occupied.

High Risk v Low Risk - Before buying, consider whether you would see the area as being high or low risk, taking certain headings into your thoughts.. economic situation (Hungary) political situation (Hungary/Turkey) location and access (Cape Verde) etc.

jdivision wrote:

Do you realise you lose your first time buyers status if you buy abroad, restricting your future ownership options on second hand homes here.

Very important point. Added to that I would point out that one should check into the tax and ownership details.. what capital gains tax am I liable for? Am I liable to pay tax on my rental income? How quickly can I sell on my property? Is my property freehold or leasehold? What are the maintenance charges? etc

Above all you should know that no matter what area you decide to buy in, people will have opinions on it - both good and bad. I remember talking to a client who pulled out of a sale because his sister in law told him that the food in Bulgaria wasn't that great (). Take all opinions on board, but ultimately make the decision on your own. Don't be pressured into buying because everyone else seems to be doing it, and don't follow the crowd to one particular destination just because it seems safer to do so.

And one last thing... research research research!!

edit: feel free to add your own points/input.