Is buying property abroad a good investment?

Owning a second home abroad is quite commonplace, either as an investment opportunity or purely for oneself to enjoy living in another country and environment for part of the year.

You may be considering this option yourself and wondering what the benefits are.  Is it a good investment opportunity or not?

Let’s take a look.

Is buying property abroad a good investment

Firstly, don’t forget, it might be more about your personal investment

Buying a property abroad doesn’t have to just be a monetary investment for now or the future; depending on your goals it might be more about having a home from home in a place you love, a place that’s of value to you

It can be just as much about personally investing in a property for somewhere you want to call home (when you’re not in your home country) and somewhere you love to spend part of your life.  Maybe even a place to retire to when the time comes!

For example, if you absolutely love golf then you can invest in Properties la Manga Club with luxury properties situated on a top golf resort in Spain.  They have several types of property for the purpose of investment for rental or for personal enjoyment, or of course both.  They come with private parking, pools and gardens.  There are villas for sale and also plots on which you can design and build your own house.

Imagine every holiday, packing your bags to go and play golf and live in a home you own for the duration.  What a dream!

Think about what you want from a property abroad.  Is it more of a second home for yourself or a money-making venture?

Once you have decided this, it will help you to choose the right property abroad for your requirements and to decide how much you want to spend, or whether it’s actually an investment you need to grow/make money from or something of value for yourself.

Is buying property abroad a good investment

Reasons why investing in property abroad can be a good idea

  • Your own personal holiday home

One of the main advantages, of course, is you get your very own holiday accommodation that you can visit when it’s vacant.

  • It’s more affordable

In many European countries property prices are much lower like-for-like than UK properties, making it a much more affordable way to own a property.

  • Rental income

When you are not holidaying in your second home, you can rent it out.  Your holiday home can provide you with a nice passive income each month.  As you’re not there to manage it yourself, you will need to enlist the help of a holiday let company to manage cleaning, maintenance and bookings.

  • Possibility of favourable capital growth

Providing this is a long term investment, then buying property is very likely to give good capital growth over many years.

  • A head start on your retirement

Whether you want to live in the property yourself upon retirement or use it as a way to generate your retirement fund, it can be a great investment to secure your future finances.

Is buying property abroad a good investment

Understand the risks

Buying property abroad, particularly in not too far European countries, can be really appealing as many of them are much cheaper than their counterpart properties in the UK.  This can make it seem like a really good deal to buy abroad.  But, just like the UK housing market, property prices can rise and fall.  It’s important to understand the risks of buying property abroad too.

  • You might lose money when it’s time to sell

This means, just like any other investment, you are not guaranteed for the price of your property investment to rise over time.  Providing the area you buy a property in thrives and is desirable, then you are likely to make good on your investment.  But there is always an element of risk with an uncertain future economy and even the recent pandemic has shown us just how fragile travel and tourism markets can be.

  • Fluctuating currency exchange rates can affect the price

There are also fluctuations in currency exchange rates which can be either good or bad when you buy property abroad.  The price you agree to buy a house at will be in the currency of the country the house is in, and depending on how long the exchange takes, currency exchange rates will likely change and it might not be in your favour!

  • Different rules when it comes to tax

There are also many different tax obligations and laws in each country.  It’s not the same as the UK. You’ll need to seek specialist advice in the country you are buying in. In the United States, for example, you can easily speak to an online tax expert or CPA via TurboTax Live right from your investment property in Sacramento, Cleveland, Annapolis, or anywhere else in the country. Make sure you use a reputable law firm who can speak English and can explain everything to you, whilst also communicating in their native language to the relevant authorities.  Ensure they have no ties to the vendor and only your interests at heart.

Rules around inheritance and tax are also different in other countries.  For example, in France property will automatically be inherited by your children and not your spouse.  Therefore, you may need to update your will.

Is buying property abroad a good investment

Final thoughts

Buying a property abroad can be a great monetary investment, but it might also be just as great a personal investment.  Make sure you do your research, seek legal advice and understand the laws of the country and area you want to buy property in.

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