| Uncertain Overseas Property Markets? 5 Ways to Protect Yourself |
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Uncertain Overseas property markets? – 5 Ways to protect yourself
We’ve all heard uncomfortable stories about overseas property purchases that went badly wrong. But it’s really only a very small number of cases which hit the headlines; the vast majority of overseas investors are happily enjoying the benefits of their foreign properties. So how can you make sure you join this last group, and avoid any undesirable scenarios?
1) Due Diligence
The simple answer is that there’s no substitute for doing your homework. Due diligence is the research process which ensures that you’ve taken the appropriate level of care and attention over any given transaction. For an overseas property purchase, this needs to be done on three levels: you need to be very familiar with the country you’re buying in; you need to know exactly what the property is and you need to find out everything you can about the developer.
If you’ve never done it before, it may sound daunting, but there are steps you can take to make the whole process easier and to minimise risk at the same time.
2) The Legals
A priority is to get some independent legal advice. Don’t rely on a solicitor recommended by the developer or agent; choose someone who will put your interests first and who can speak the local language, if you don’t. Your solicitor can ensure that you have absolute evidence of clear title (ownership) before you part with your money, who can review your contract and include penalty clauses should the developer not meet progress deadlines. He can probably advise on financial arrangements too, such as bank guarantees and escrow accounts (use of 3rd party accounts).
You can do a lot of background research yourself into the country, the property and the developer. Up-to-date information about different countries is readily available on the internet, and a website like www.property-venture.com is a good place to start making sense of it.
3) Visit the place
Visit your chosen property more than once if you can, look at the surrounding area, speak to the neighbours and check property prices in the immediate vicinity to make sure you’re not being overcharged. Don’t make any assumptions about what’s included in the property price: ask lots of questions and get the answers in writing.
4) Robust, credible developer
Get evidence that the developer is properly financed and be wary of start-up developers – without a track record it’s difficult to know that they are who they claim to be, that the property is theirs to sell or even that they’ll finish the property to the standards that you expect.
5) Protection
It’s worth considering title insurance, which will protect your investment in some countries for a one-off payment, should any unwelcome surprises emerge at a later date. There are exclusions to these policies, as with any insurance, but it can be useful in providing additional cover
Many, many people make a success of overseas property investment and you can too if you’re prepared to put in the effort beforehand. Two more golden rules: expect some red tape and factor in the associated costs; and never, ever hand over all your money up front.
You can never completely eliminate risk, but if your research has been thorough and you’ve used the tools available to manage risk, you should be able to make an informed decision that you’re comfortable with, and start enjoying your own overseas property.
Posted 27th May 2009
Property Venture® is an independent, UK-based agent. We help time-strapped investors and holiday home buyers, buy abroad by guiding through the buying process, so reducing the hassle. Overseas members of NAEA. This means we have been subjected to the membership criteria and have signed up to follow the professional Code of Conduct established to help you, the potential buyer or investor, to buy property with confidence.
Copyright Property Venture® 2009
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