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Advice to Property Investors

The purpose of this section

Clients are increasingly interested in property investment and they are increasingly building portfolios of property in countries all over the world - even in countries which they might not have considered five or ten years ago.

This process continues despite the recession and despite the collapse of property markets in many parts of the world. Many people believe that, long term, real estate investments present one of the best investment opportunities available and that present market conditions offer the opportunity of acquiring high quality assets cheaply.

Clients are, however, increasingly aware of the fact that it is only well chosen property investments that are likely to make them any money. They have grown out of the foolish belief that any real estate is bound to be a winner.

This page and the documents referred to on it are designed to give some initial pointers to things that you should take into account when thinking of property investment.

Where and what to buy

When it comes to buying investment property, in our view, there are only three things to bear in mind:

1.   There is no 'one size fits all'.

What will be the best investment for you will be different from what would be the best investment for your brother, your best friend, your next door neighbour or anybody else that you care to think of. This is because everything depends upon your personal circumstances:

  • your age
  • your family situation
  • the period over which you want to make the investment
  • whether you want to make personal use of the property
  • your attitude to risk and reward
  • your attitude to borrowing
  • where you are and intend to be a tax resident
  • etc.

You could only invest on a rational and informed basis if you understand these issues and enough about the market place to know how it will affect them. This means that you need to do research - lots of research. You can do this by reading the specialist press, surfing the internet and by attending seminars. We run highly respected seminars for property investors. See our seminar programme. You could also usefully buy and read one or more of the books on the subject, especially books by people who are not trying to sell you property! You can also talk to local property agents, though remember that they are generally only paid if you buy something and so their interests are different from yours.

It is also a good idea to take some specific property investment advice. This is a service available through the International Law Partnership Ltd. See our leaflet on this page. The cost of this is usually repaid many times over by the improved performance of your investment property.

2.   Only the best property in each category will make you the best money

This does not mean that you need to buy the most expensive property. But you do need to buy the best property within the category you have identified. If you have decided that the best option for you is a one bedroom apartment to let to visiting academics, you need to buy the best such apartment with the best access to the university, the best facilities, the best views etc. This will not, necessarily, be the most expensive such property on sale but it is not likely to be the cheapest.

3.   There is no point making lots of money from your property if you have to give it all to the tax man. So it is important to buy property in a country where the tax regime is benign and to structure your purchase in a way that is as tax efficient as possible, both in that country and in the country where you live. This can make a huge difference to the effective performance of your investment.

Funding your purchase

Your decision as to how to fund your investment will have a major impact on its performance. Many of our clients wish to borrow at least part of the purchase price. For years, we have been trying to discourage them from borrowing too much! Rarely can they expect to repay the full cost of a mortgage exceeding fifty or sixty percent of the price of the property from the rental income they are likely to receive from it. Of course, other clients do not wish to borrow at all. This should affect the property that they choose to buy.

In some countries, mortgages are still fairly easy to obtain. In others they are impossible or next to impossible. We can tell you about mortgage availability in the place thatit of interest to yuo and for the type of property that is of interest to you and then, if you wish introduce you to a mortgage broker who can help you apply for a mortgage.

Legal Issues

When buying any investment property your first concern should be to secure good legal title to a property which you will be allowed to let (rent out) in the way in which you would like. Do not assume that all the property you see will be able to deliver on these two key fronts.

See our guide to Buying a Property for some of the general issues to be considered by someone buying property and, where available, our special country specific supplements

In every country, there are some specific issues that need to be considered by the buyer of investment property which may not be relevent in other countries. See out country specific supplements as to these issues.

Summary

You need to decide whether international property - and, if so, which type of property - deserves a place in your investment portfolio. Then you need to locate a property where you are going to be able to obtain good title and where there are no restrictions on your letting it in the way in which you wish.

A property investment is usually an investment of a significant amount of cash and so it is prudent to get good legal advice in relation to the purchase.

Next steps

Please look at the Legal Guides, videos, MP3 seminars and other materials set out to the right of this page.

If you would like us to help you, please complete our Client Pack and send it back to us. We will contact you to clarify your requirements and then introduce you to the person most appropriate to deal with your case.

If you do not find the information that you need, please send us an email explaining your problem and we will contact you.

© The International Law Partnership Ltd. Page last revised 04 Feb 2010

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