This post is featured on behalf of Stacey White.
Buying your own property is, to many twenty-somethings, seen as a milestone on their way to adulthood. We talk a lot about the benefits of owning your own home, of being able not to pay rent and rather spend your hard-earned money on paying down your mortgage. While purchasing a home is a huge accomplishment, it’s not necessarily for everyone, and that’s okay.
You don’t have to own your own apartment to be seen as an adult or even successful, and an increasing number of young renters are starting to sniff at the property market abroad instead. Not just because they’d like a nice holiday home when they travel overseas; the international market can, in fact, be a bit kinder on your wallet than those apartments at home.
Here is a quick and easy guide to whether you should invest in real estate abroad or if you’d be better off by putting your money in a market you already know.
#1 Some cities provide better buy-to-let incomes.
Investors in the UK who put all their money in buy-to-let properties are struggling with the tax changes which were imposed last year, and they slowly realize the benefits of purchasing property abroad. In Netherlands, for example, you’d be able to harvest 6% income yield or more compared to the grim figures in the UK — even Belgium and Hungary have better returns to show off than we currently do.
Research conducted by WorldFirst shows that the average yield in the UK is more than 4% lower than in 20 other European countries, so you should have more than enough to choose from if you decide on investing abroad.
It means that you’d be left with a bigger slice of the cake when looking over your finances — and you avoid the latest changes to your rental income which prevents you from deducting the cost of your mortgage interest when calculating your tax bill.
If you’re looking for the highest yield, you should head straight to Netherlands, though, as they’re currently able to offer the best one of all the European countries.
#2 It doubles as a holiday home.
Young prospective homeowners who would like to buy property abroad tend to focus on the golden opportunity of having multiple homes around the world. Simply rent it out when you’re not there and make use of it yourself when you’d like to travel.
It can be tricky to maintain the apartment when you’re not around, though, and it’s a good idea to leave this part in the hands of a local real estate company. They’ll be able to take care of the maintenance aspect and find new tenants for you, but remember to calculate the costs of this as well.
Although Netherlands is able to offer the highest yield, it’s not necessarily the first place that comes to mind when you’re thinking about holiday homes. Financing property there is also not the easiest as there are not as many banks lending on buy-to-let as it is in Spain and Portugal, for example, but you can have a look at International finance and see if they’re able to sort you out before you make up your mind.
Countries such as Spain, France, Portugal, and Italy are still able to give you more bang for your bucks than the UK is currently giving, so don’t despair if you can’t finance a purchase in Netherlands. You have, as mentioned, twenty other European countries to choose from that will up your income on a property purchase.
Areas with a proven rental market tend to fall in better taste with the mortgage lenders, by the way, so avoid falling in love with those exotic up-and-coming investments as you might not be able to get it financed.
#3 You can use local knowledge.
Many prospective property owners opt out of investing abroad simply because they’re not too confident with the rules and regulations. The market at home may be dismal, but at least you’re able to understand it, right?
Make use of the local resources and avoid allowing fear to get in your way — as mention, you can easily let a real estate agency in the area you’re investing in take care of the tenants and maintenance. The same applies to lawyers, and you can absolutely get in touch with a local one as well as one based here at home who has knowledge about the market abroad.
A UK-based lawyer has information about the financial system in the UK and the international one, so you’ll be well-rounded and properly informed before you sign any documents.
If you’re considering purchasing a property abroad, for whatever reason, these are a few things to consider before you take the leap into international real estate.