People buy real estate abroad for a number of reasons. For some, it is a way to save on hotel costs when they go on holiday. For others, it is part of their investment portfolio and a strategy to save for retirement, while others rent their property out and use the money to supplement their income.
But owning and managing property abroad comes with its own set of pitfalls. Without proper maintenance, a property abroad can go from a lucrative investment to financial liability. These are five tips for managing real estate overseas. For more information on UK real estate for foreign investors, click the link provided.
Before You Buy
Seek Independent Legal Advice
Ownership laws are by no means universal and buying a property abroad subjects you to a host of legal barriers, loopholes, and clauses to navigate. Independent legal advice from the country you are buying in will help you avoid the common legal pitfalls and ensure you are adequately represented in ongoing negotiations.
Make Arrangements for Additional Fees
Buying real estate overseas involves additional costs that may not apply to domestic property purchases. You will need to have sufficient funds to absorb these fees and costs.
They may include:
- Translation services for important documents
- Local taxes
- Legal fees to make a will (this is a compulsory component of purchasing real estate in many countries)
Hire a Property Management Team
A property management service will be responsible for finding tenants, ensuring legal compliance, collecting rent and deposits, managing utility bills, and collecting compensation for damages upon check-out.
While an owner can feasibly do these things themselves, the distance poses additional challenges. Also, many owners prefer to pay a property management company to coordinate these matters rather than invest the time themselves.
Compile Income and Expense Statements
If your real estate abroad was purchased as an investment, it should be treated as such. Therefore, it is imperative to compile monthly and annual income expense statements. These statements will help you identify your return on investment. They will also indicate areas where you may be able to reduce maintenance costs to increase returns.
Set Up Direct Debits
Remembering to make all the necessary utility, tax and services payments can quickly become a headache. It sounds basic, but many real estate owners still do not use direct debits to manage their recurring expenses.
A direct debit will ensure that your bills are paid on time and avoid any late fees that might eat into your profits or dent your investment returns. Direct debits will only be an option if you have a local bank account. If you do not, a property management service will likely be able to take care of any bills for you—for a fee.
These are the five tips for anyone looking to purchase and manage real estate overseas. Don’t let your holiday home or financial investment become a source of anxiety and distress. Keep these five tips in mind for handsome returns and minimal stress.