nightmare!!

[merkat]

Hi all,

i've been doing research for the past year or so on a place to invest abroad...thing is i'm not on the property ladder in the UK im 22 and was finding it difficult to find somewhere in the right location in the UK for me to buy that i could afford...so ive decided that i want to invest in other countries...i'm not after a get rich quick scheme or anything like that but would like to produce some equity...my only struggle i think will be using my head not my heart as i'm very passionate about property. I live at home still and am happy to do so for a while yet whilst i build my portfolio.

Now i know all you experts get asked all the time 'where shall i invest' and believe me it's a question i ask myself everyday...i've gone from romania (1 year ago) to montenegro to portugal to canada but i think i just need to be brave and go with one!

That is my nightmare i can't decided...i presume you all had help at one stage when you were starting...do you know of anyone or any company that would be willing to help and advise me? Thanks in advance

Fi x

 

[Investy]

Dont ask any company for advice, they will merely point you to thier wares. You dont ask the barber if you need a haircut.

I went on a similar physchological journey and felt like I was going round in circles so I sat down and did a list of everything I wanted and tried to find a location to fit.

The following I think are the most important points for money making;

1) Everyone will promise you renting will be abreeze, it wont be in most cases. So number one - how EXACTLY will you let your place?
I wanted rental agents on site to ensure rentals would be hassle free.

2) How long is the rental season. You will find people on forums like this complaining thier Bugarian beach property only let for 8 weeks last year. You will find many in over supplied Spain lucky to get a couple of months rent.

SO HOW WILL YOU EXTENT THE RENT SEASON?

I would say the key draws that will underpin rentals are;
a) on or close (very close - no car hire involved) to a good beach
b) ON (not near, on) a golf course - and not a planned one - a real one
c) Easy to repatriate funds. Imagine your kids in 15 years time if you die - how EXACTLY will they get the money
d) SPECIAL FEATURES - I dont mean 'luxury', everything is 'luxury' supposedly, I mean something extra like an ON SITE marina
e) Healthcare - if you want a decent return the host area must have decent health care facilities to attract families with young kids

f) Distance - I think you want to be no more than 3 hours flight. People may fly 4 hours to Turkey in summer but what about thier long weeked in Decemeber - less than 3 hours is a magic number

g) Quality - that means for example a real grass garden not a patch of earth that so many developments end up delivering

h) leisure facilities - you need lots of these to maximise rentals and get repeat business


3) COMPETITION - the reason so many French and Spannish properties are'nt good investments in terms of rent yield is they are much of a muchness with boundless competitors in the area

4) SAFETY - the big one. Nothing is ever guaranteed despite what the guarnatees and bonds say, and even big American Banks like Bear Sterns can go pop.
I would stick to large operators (or smaller ones with big backers / Government support).
Dont go for those that want lots of your money prior to delivering the final property - why should you shoulder the risk!

5) DONT BUIY IN MARKETS THAT HAVE HAD A RECENT BOOM ALREADY - thats bad timing and like the tail end charlies in the great gold rush

In the end you will never find perfection


Ive invested in a few places and like Saidia, Morocco the best as it ticked more of the above boxes than any other investment I found - but that doesnt mean there wont be hassles and worries
It has many unique features such as 11 onsite internation hotels - thats a very rare selling point and is very important as those big boys will drive people to the site with established marketing protocols. Also gave me more confidence such a large number of big names felt willing to set up here.
Reportedly the biggest marina in the med also

 

[Investy]

I forgot to say - you mentioned you want to build equity, I too said this at the beginning but have found its better to focus on yield as growth is unpredictable and very much subjected to buffeting by the mass supply of property being built.

High yields will drive high capital appreciation anyway so best to focus on yield as its a little easier to get a feel for but you must find developments that have more than just gof, a mini market and a gym - that wont be enough. FACILITIES WILL DRIVE THE TOURISTS TO YOUR PROPERTY

 

[merkat]

Wow alot to consider, thankyou very much for all that information will go through it throughly, gives me a headache sometimes and searching on the internet seems like i've seen it before etc. x

 

[The Soup Dragon]

Hi merkat. I sympathise with your position, the sheer volume of opportunities out there is staggering and you’ll no doubt be finding it hard to determine what’s best for you when there are so many different tax laws etc. that apply in the different countries you are considering.

It’s hard to tell from the limited information you have provided, but I’d say you have made a good start. There will always be good opportunities out there, so don’t worry about not yet having taken the plunge. You need to become comfortable with the opportunity that you finally decide to pursue and you have been wise not to succumb to any pressure that agents have tried to apply.

Becoming comfortable with the investment, and risks it brings, is key. My recommendation isn’t to contact a single person or agency. You must remember that they will only put forward opportunities that they provide. That’s how they get their commission and earn their living. Instead learn to use them and only buy through them if you found them useful.

Here are some general pointers for investment:

- Get in touch with others that are considering the same areas as yourself (and also those that are buying there / have discounted investing there.) They will have information that you will find useful. They may be about to visit location and be willing to make some checks for you. (It’s in their interests to perform due diligence too.)

- Speak to agents that aren’t promoting where you are looking. They will give you negatives that you may not have considered in an attempt to persuade you to consider where they have opportunities.

- Your principal goal is to perform your due diligence as thoroughly as possible. Identify and write down all the risks associated with a possible purchase and see which ones you can mitigate for. It is always possible to reduce risk, but it won’t happen by accident.

- Once you have performed enough due diligence you should visit the area. Best to go under your own steam. That way you aren’t seeing the place with rose tinted spectacles. If you do go with an agent then do not be pressurised into a sale. Always visit the site a second time without an agent. (You will have questions that you forget to ask at the time, but will be able to get answers from a second site visit or will spot things you hadn’t before that you will now enquire about.)

- Consider spreading your risk rather than placing all your eggs in the one basket. You may think that’s not possible with your budget, but it might be. Buying jointly halves costs and may help.

- Don’t take agent’s word for cost of the property. Developer may be willing to take sizeable discount to make first few sales or be willing to knock a lot off the asking price if payments are front loaded.

- Consider possibility of developer going bust. I’m sure you have seen threads on this in here and other forums.

- Check contract several times before you sign it and don’t part with any money till you are happy with everything. Pin down as many details as possible. You don’t want anything vague in the contract. If property comes with swimming pool then get dimensions of pool in. (But don’t take this too far – you don’t need a complete inventory of cutlery etc if place is coming fully furnished.) Think about what is missing from the contract. It is very easy to see what’s in the contract, but not so easy to see what has been omitted. Think about he glossy brochures and sales blurb. Are details they provided in the contract? If you don’t pin down what you are buying then you won’t get it. (Developer will only deliver what has been agreed in the contract – it is not in their interests to spend extra money delivering anything more.)

I’ve only scratched on the surface with tips – enough to get the ball rolling.

 

[The Soup Dragon]

See you got the ball rolling before me Investy.

Merkat. One area where my post and Investy's may appear to contradict each other is with reference to paying a high proportion of purchase price up front. There is a risk that any developer goes bust and this needs factored into your calculations. It isn't easy finding opportunities with genuiine discounts (don't beleive the literature in large Email distributions made my agents and property sites.) But consider this:

Buy apartment for 100k Euros. 30k up front followed by 70k at completion.
Buy same apartment for 60k Euros. 50k up front with 10k at completion.

Which would you rather do? The answer lies in your assessment of the risk of developer going bust.

Such opportunities are hard to find. You will need to do some serious leg work to find them and be bold enough to negotiate hard. Some on hear may think that it isn't possible as they know % profit made by developers can be very low. However, the % profit they make varies from country to country and where there are larger profit margins there may be more scope for healthy discounts. I know one or two people that have succeeded in doing this, though time will tell if it proved a good decision (properties won't be complete for another couple of years - time for a developer to go bust.)

 

[merkat]

double wow!! ok i'm going to have a busy night i can tell!!! all exciting though i suppose! Thanks alot really appreciate your responses.

 

[Investy]

Soup, I know you invested in a project I have. I've been wondering how we can check the company accounts for Property Logic to see if they are borrowing any money from Banks?

 

[mickthepropertyguru]

Hello Merkat
I think it will be very hard if your aim is to invest and build a port folio in order at some stage to buy a house in the UK with £50K.
I would forget about the places that the masses have gone to because in the end the competition will force down the prices in all of these places and rental may be difficult to get epically in sunshine destnations.

Be very careful about who you buy through as some people that have bought in excellent areas like growing cities still haven't made a gain 2 years on as they didn't due enough homework and shop around and payed 20% or 30% above market value. Most of these people would have gone on an inspection trip.

I think land may be your best option but the euro isn't in your favor at the moment.
You could possibly invest in Tirane (off plan) but i have yet to see a development that ticks my boxes and i have looked very hard.
To be honest in the present climate i would wait because prices in The UK and Ireland are coming down in many places and in a year or two they may fall enough for you to get on the ladder. Deposits and down payments in the UK i thought were pretty low and mortgages aren't that hard to get.

I have recently gone into an investment in shares of land and i think it may be by far the best option. ie: Getting into a syndicate Company that buys land , gets all the planning permission and sells it to a developer. You don't have any furniture costs, maintenance costs, insurance costs and rental worries. It carries just as much risk as buying off plan but usually the land is very cheap at the start anyway and it can only go up with getting the different levels of planning permission.
It think Brazil might be a good option, you may be able to get a nice site or apartment somewhere but Brazil will take longer some time to mature as it has such a vast coast line.

I was in your position only a few years ago and i invested all i had which was about 17k with a friend in a studio in an emerging market and it went well and started the ball rolling but i was lucky.

Strangely enough the longer you wait before buying sometimes the better the investment opportunities seem to get !
My advise is work, save get a place in to live in first then purchase abroad because if you lose this £50k and it happens every day to investors it may set you back a few years. If you have to invest, team up with a close friend and invest £80k(40k each or less ) as this will greatly improve scope and you will have some back up.
Investing is the best thing in the world until you loose money
When i was 22 i wouldn't have listened to my own advise either but do yourself a favor and stay away from Property companies that have huge budgets and appear on tv a lot

 

[The Soup Dragon]

Investy. Property Logic are registered in Spain. The following site may be of use …… but its not free.

International Company Reports and Searches Spain

Of course, you could just ask Property Logic – they may be happy to provide details.

mickthepropertyguru. Please keep us posted with how your Romanian investment goes. It came at the wrong time for me, both in terms of having funds ready and having time to perform due diligence, but is the sort of opportunity that appeals to me.

 

[DC]

Yes, it is tough, at 22 it can be overwhelming. But you will get the gest after a while.

Fundamentals.
Mortgages (other peoples money)
Income (rental)
Capital Growth (where do you think will go up and why)
Government (taxes , how much they going to steal)
Running costs (how much management going to take)

Jig those 5 around and you should get some good analysis. And go for it.

 

[ovidiu]

try Romania

Hi all,

i've been doing research for the past year or so on a place to invest abroad...thing is i'm not on the property ladder in the UK im 22 and was finding it difficult to find somewhere in the right location in the UK for me to buy that i could afford...so ive decided that i want to invest in other countries...i'm not after a get rich quick scheme or anything like that but would like to produce some equity...my only struggle i think will be using my head not my heart as i'm very passionate about property. I live at home still and am happy to do so for a while yet whilst i build my portfolio.

Now i know all you experts get asked all the time 'where shall i invest' and believe me it's a question i ask myself everyday...i've gone from romania (1 year ago) to montenegro to portugal to canada but i think i just need to be brave and go with one!

That is my nightmare i can't decided...i presume you all had help at one stage when you were starting...do you know of anyone or any company that would be willing to help and advise me? Thanks in advance

Fi x

hey,

try Romania. You wont get rich in 1 year but in 3 for shure.
oo, have somebody recomand you a company to work there. Don't do it yourself.
take care

 

[BPR]

Look at the economic fundamentals

While most of what is being said in this thread is relevant, I think you guys are leaving out some critical issues that come before the specifics of finding the right real estate to buy in.

First, look at the nature of the business cycle and apply this to countries.

What direction is the country headed? What's its level of debt to income? What are it's products, what are its prospects for increased GDP growth?

Where is the country at in the business cycle, and how long, historically, have the business cycles run in that country?

If a business is located in a country going into recession, has a lot of debt, is struggling to sell it's products and doesn't have much hope of increasing sales... would you buy it's stock?

A country is more or less the same if one is thinking of buying real estate.

In the stock market, buying blue chip stocks isn't going to result in wild increases in equity, but dividends should be good and they shouldn't fluctuate in price much. They're stable and reliable, but they aren't going to yield a lot of profit.

The real profit is in the growth sectors and finding the companies that provide critical services or products within that sector. Get in at the beginning and it's a wild ride.

Pick the right country and the right area, and it's difficult not to make money because the market trends are going to result in substantial increases in property values. Look at the local people with money and the local people who are making money, and look at where they're buying property. That's a good indication of where the real growth trends are moving.

I looked at a lot of countries before deciding to move to Venezuela, and specifically Margarita Island.

GDP growth is about 10% per year and VE is the world's 5th largest oil exporter. They are using this oil revenue to build infrastructure like crazy, and business is booming. With the large percentage of poor people, there is huge growth potential domestically for all manner of consumer goods and services as these people improve their lot in life.

With currency exchange controls and a history of governmental mismanagement with respect to the economy, most Venezuelans with money invest their money in real estate... and Margarita Island is one of their preferred spots for property investments.

Due to crime and insecurity on the mainland, Margarita Island is getting a net in-migration of people from the mainland, and the majority of these people are businesspeople with money.

With oil revenues project to grow and the government spending money like drunken sailors in port (especially on programs for the poor),a lot of business people in this country are getting rich. Small businesses are expanding and a significant percentage of business owners are suddenly making money like never before. They like their country and they have the money, so they start buying property on Margarita. Sooner or later they move here.

According to a lot of "experienced" foreign real estate investors, I did it all wrong. They look at Venezuela and listen to the propaganda about property seizures, etc., and decide that it's too risky. Everyone was telling me that I was crazy for moving here years ago, and wow- were they ever wrong.

It wasn't luck, it was a good analysis. The same type of analysis can be applied to just about anywhere, and it works.

 

[jvizman]

just get started!

I say just get started! you obvioulys already know alot about what and how it should be done. the rest will have to be learned as we all have learned it! With good ones and bad ones (investments)! i must say that i personally have learned more about making money by losing money!!! strange but true for me atleast! dive in and get started! As far as overseas goes i am in costa rica. i am semi retired down here and working with real estate. but it is correct not to ask a barber if you need a hair cut decide first you need one then see what style suits you the best! In other words guide you agent to help you find your dream property! also do not just take his/her word for it do some investigation yourself, is my adivce. i am a buyers agent so i only work for people that call me and ask for my help! it is a great job!!! i have made a lot of friends and get well paid to do it with very little head aches!

Jorge