Investment in foreign property is increasingly on the rise as prices overseas can be comparatively low and often offer good long term growth. People are purchasing abroad for a variety of reasons: to move countries; to buy a vacation home; and for purely investment purposes. Investors are generally on the look out for key areas which are predicted to surge in value.
Within Europe the warmer Mediterranean countries are the most popular for foreign investment as people look to move to a place in the sun, or invest in real estate which can offer both a rental return and long term capital growth. Europeans have the right to buy in other European countries whilst often Americans can buy but are restricted in the number of months they may stay unless the relevant visas are acquired. The typical travel visa only allows for a ninety day visit.
One of the key things to be aware of when investing outside ones own currency is how currency fluctuations can cause rapid shifts in price. Many British who invested in property by purchasing off plan with a deposit and then agreed to stage payments have been caught out as they agreed the deal in Euros. When the value of the Euro and the pound levelled out they needed far more pounds to pay their stage payments in Euros. Thus it is always wise if different currencies are involved to either establish the price in your own currency, or pre-order the foreign currency at a set price.
In many European countries buyers have a choice in purchasing old run down properties which require renovation, or buying new. Often having a property built can work out as less expensive than the cost of renovating an older one, and buyers should be very careful if purchasing old real estate that the seller is the sole owner and indeed has the right to sell. Inheritance laws in some European countries mean that several members of a family may all have inherited a part share in a property and buyers can waste fruitless months only to find that a brother who owns a fifth share in a property refuses to sell.
If you are planning to invest in real estate in a foreign country then once you have decided on the property you should engage a good local lawyer to check all the paperwork and ensure that the land is owned outright by the developer or seller. Many buyers lost out in Spain when they invested in property by developers who had illegal planning permission obtained through a network of corrupt officials.
These are some of the key things you should be aware of when investing in real estate in a foreign country. Be cautious and plan specifically regarding currency conversions if not investing in your own currency. Be sure the seller has the legal right to sell and that the land is owned outright, and do your homework well regarding the area to determine if your investment is likely to see capital growth in the long term.