Top Tips for Buying Property Abroad

Top Tips for a Successful Property Purchase

With more and more Brits looking to buy property abroad, ExpatMoneyChannel’s Hannah Beecham got an exclusive interview with Jonnie Irwin, presenter of Channel 4’s A Place in the Sun - Home or Away? Below Jonnie gives his top tips for a successful purchase. Or watch the full interview on Expat TV on the right.  

H.B. What is the first step people should take when considering buying abroad?

J.I. You need to ask yourself why you want to buy. It’s very easy to be inspired by picture postcard locations and thoughts of rental income, but the most important question is why? Are you looking for capital appreciation? If so, are you looking for a 10% return or do you prefer more conservative growth and a steady rental income? Have you got an exit strategy? You need to identify your plan by asking yourself as many questions as possible before you start flicking through the property brochures.

H.B. What is the biggest mistake people make?

J.I. Property is a highly emotive subject. Any investment involves risk, so you need to take the emotion out of it if you wish to succeed. People will often look at a location but don’t investigate how many flights, for example, there are to the region. The biggest mistake is not preparing or taking independent advice from experts. If, for example, I am going to buy a property in Spain, I will get an expert Spanish lawyer to help me out.

H.B. A lot of Brits have suffered from the downturn in the Spanish property market. Should people be avoiding this country now?

J.I. In my book, everywhere is an opportunity. Just because prices have gone down doesn’t mean it will continue to go down and it doesn’t mean it is a bad country. What it means is you need to look into that economy more carefully to assess when it might start its recovery. There has been a lot of political turmoil and land grab scenarios in Spain, much of which is due to people not getting the right advice. Prices have come right down and if you look at the Costas, where many Brits who can’t afford to wait for any recovery and are coming back home, there are some amazing bargains so long as you are buying to hold for a long time.

H.B. Are there any property hotspots you favour at the moment?

J.I. Hotspots can be slightly misleading as it all depends on why you are buying in the first place. If you are prepared to put money into a high risk less-established market, then you may be looking at places like Brazil, where property is cheaper, but the risk is higher. However, if you want a steady income stream then you need to look at buying in more established countries where there is good tourism and lots of flights. You will end up paying more money for your property, but you take less risk.

H.B. More and more people are considering building their own property. Is this a realistic plan?

J.I. Building your own property is a huge leap. It is very exciting and potentially more rewarding, but you have to be honest and ask yourself can I do this? What experience do I have and how fluent am I in the language? Also, how much time can I afford to go over there and look after the project? I would never discourage people from building their own property, so I would say yes with the proviso that you know what you are taking on. So much can go wrong, but so much can go right and at the end of the day you will hopefully have the ideal property in an ideal part of the world. Let’s face it, nothing good is every easy and it’s hard enough to build a property in the UK, never mind abroad. So to anyone who is thinking of building their own property and they don’t have any experience or can’t spend too much time on site, then perhaps the first step would be a refurbishment and then build your own property two or three steps down the line.

H.B. Do you have any essential tips for funding a property?

J.I. A lot of people get it the wrong way around. They look at a properties, then the area, then they decide to buy and then start looking at the funding. However the first thing you should do is look at the funding. You need to assess how much money you have to spend by going to a bank or a financial adviser. That way you know how much your budget is, where you are getting the money from and how much it will cost to borrow that money. Once you have your budget you need to take out any overheads such as tax, solicitor and surveyors’ fees. This generally works out at about 10%, which will leave you with your residual budget to work with. Then you need to look at how you are going to convert your money from sterling to another currency. You should use a currency broker for this as you may not physically buy the property for another 12 months, but you can order your currency now if required. So if the advice from an expert says sterling is strong now but it is going to get weaker over the next 8 months, then buying your currency and holding it until your purchase goes through could mean, for example, you are £5k to £10K better off.