Contributed by Adam Samuel who writes for the Foreign Investment Property Blog.
Endless media attention on the subject of second homes abroad and property renovation have certainly helped fuel people’s desires to buy Overseas Property. Many have bought in the established markets of Spain, Portugal, France and Cyprus over the past few years, but a new wave of buyers are entering the emerging markets as buy-to-sell or buy-to-let investors. This trend has been growing as domestic markets have priced out many first time buyers and individuals are turning to property as an alternative investment to stocks and shares.
Nubricks, the Overseas Property Blog, has a successful podcast series and has released a fly to let podcast that analyses the phenomenon of “Fly to Let”, a term coined to describe the process of buying real estate abroad to rent out. In the UK, many investors are looking to acquire real estate in Europe and further afield for two reasons. Firstly, investors are keen to tap into the rising value derived from Europe’s emerging EU countries, with the prospect of benefiting from capital gains, as the value of their real estate increases in line with improvements to infrastructure and developments. Secondly, to generate an secondary income from rental yield.
The first tactic includes a buying-off plan and flipping to make high returns. This is only practised successfully by a minority, as the fundamental key is monitoring the market to decide when to buy and sell. Buying to rent out however can prove to be an easier undertaking, offering the prospect of offsetting rental income against mortgage payments and costs, helping owners derive some value from their investment.
‘Buy to Let’ or ‘Fly to Let’ as it’s known when buying abroad can essentially be applied to two types of property markets. The first type of property is residential real estate in emerging markets. It is often limited to major cities, which have the infrastructure and business to attract transient ex-pat workers or affluent local residents seeking temporary accommodation. The second type of market is the holiday or vacation home market where real estate is bought to rent out to holidaymakers. Many view a vacation property as having a dual function in terms of lifestyle and investment.
Fly to Sell is the risky strategy and is generally seen as buying an off plan property with a view to flipping it either before or just after completion. Investors who use this strategy can reap the rewards, but timing is very important and a second buyer/investor is always needed to turn a profit.
Also, be sure to consider the following:
Legal and financial
Property in Egypt touted as a very new emerging market has a small selection of places and properties to invest in.
Brazil investment property; in particular the northern coast has hit the Nubricks radar recently and has a steady increase in demand from investors.
Morocco Property is an up and coming investment destination and in particular Marrakech has an established tourism hub attracting potential clients for a buy to let property.
For more information on property abroad visit http://www.nubricks.com