With the UK property market struggling and mortgages difficult to come by, buying a property overseas to rent out might seem like the perfect way to own a home and to make some income. It can be, but like anything in life, it has its risks. To do well in the overseas property market, you need to put in some careful planning and calculation, rather than getting carried away with the romance of owning your own little piece of paradise.
What do you want from overseas property?
Think about whether you want to see your property as an investment first, or as a holiday home first. Do some thorough research about when the peak season is in the area you plan to buy in, and how much rental income you need to cover your costs and then to make a profit. Properties in popular holiday areas might seem like the best investment bet, and often are, but be wary of resorts that are already flooded with new holiday developments. Rather than approaching agents saying you want to buy, go incognito and find out how prices fluctuate at different times of year. If you want a year-round season, then city properties and those in some ski resorts will let all year.
If you want your property to be mainly a holiday home, with rental income helping you to cover the costs, consider when you want to stay there yourself. If that’s at peak season, then factor in the lost income for that period into your financial calculations. This will be different for everyone, depending on their needs and and finances.
Hidden Costs
Remember that there are hidden costs involved in renting any property, and these can be different from renting properties out abroad. If you are living in the UK, you will need to find a local agent who can help you with maintenance issues and tenant changeovers. Consider how you’ll market your property – there are websites that allow owners to advertise directly to holiday tenants, but even they will charge fees. You can also set up your own website, but again, this will cost you money to do. Also think about the cost of overseas landlords insurance. Don’t skimp on this one: if something goes wrong and you’re several hours flight away, you need to know you can fund the costs of fixing it easily.
Enjoy…
Finally, enjoy. While there is often a lot of work involved in buying and letting a property abroad, the dream of having a home of your own in the sun (or perhaps the snow) that can make you money is one well worth pursuing.