6 Tips for Buying an Overseas Property
Many South Africans believe that buying property overseas is an unattainable dream.
The weak Rand is making it difficult to maintain a lifestyle locally so buying in a different country must be even worse.
The truth is that many South Africans are opting for overseas investments because of the instability of the Rand.
Buying property overseas is a great way to build up your portfolio and to enjoy the returns of the investment.
Some countries also offer foreign residency to South Africans willing to make the move.
Before you empty the bank and buy property overseas here are a few tips to consider.
1) Get your team together locally and overseas
As with any property purchase, you will need a team of skilled individuals to help you buy an overseas property.
The majority of your team will be based in the country you want to invest in and these include solicitors, estate agents, and property accountants.
You can also consult a local attorney who will manage the buying process from South Africa.
Be sure to discuss the necessary requirements with them and do enough research on how the loan approval process works in the country where you are buying.
2) Check your affordability
Loan approvals may not be the same in other countries and this is something that you need to research before the house-hunting starts.
The loan you can afford in South Africa might not be enough to buy a property in a different country. The processes and requirements might also be different.
You will then have to look into maintenance and rental agreements if you are not planning on moving there yourself.
Will you have enough capital to pay the bond until you find a tenant?
You might even have to appoint a caretaker to do maintenance and this will require extra expenses in the month.
3) Appoint a property management team for your overseas property
Appointing a caretaker might just be the most important thing you do if you are not planning on emigrating.
There are real estate agencies that manage the property for you at a small fee in your absence.
This team will then also offer an extra layer of security because they will be looking after your investment.
4) Research the area
When looking for property overseas it is important that you thoroughly research the area.
You want your investment to grow and property bought in the wrong location can be detrimental.
If you are buying in a European country, look at regeneration cities. These are cities that have received awards and where the tenant demand is high.
These cities also have public transport systems that make commuting for tenants easy.
You also need to look at the type of building you are buying.
Older, established buildings that have been renovated are not as quick to show structural faults as newer developments.
If you can buy in a gated community that would be the best bet because your security concerns will be taken care of.
5) An overseas property as a holiday home
You might be thinking of buying a property overseas that you can use as a holiday home.
If you are planning on spending a few months in a year in South Africa and the rest of the year overseas, this is the perfect solution.
However, your overseas property will still be empty when you are not there.
You can consult an attorney that will help you understand the rules and regulations of owning a holiday home and how you can effectively rent it out when you are away.
Some countries require additional taxes to be paid if this is the case so do enough research before making this decision.
6) Consider your tax responsibilities
If you buy property in a different country, there are several tax responsibilities that you need to take into account.
Do enough research on property taxation laws in the country of your choice before deciding to buy.
Your local accountant can give you more information specific to the country that you are thinking of investing in.
In some instances, you might have to declare the rental earnings that you earn offshore.
Final thoughts
Buying an overseas property will diversify your property portfolio and it gives you an additional stream of income that is not dependent on the Rand.
It is also a great placeholder if you are thinking of emigrating overseas.
You won't have to worry about accommodation if you decide to take the leap.
Article sourced from ImmoAfrica