Buying to Let Abroad? You Must Read This Blog Post First!
He sent me this note the other day. All people thinking of fly to let, especially those thinking about Spain, should read before they take the plunge. Read on.....
"I have tried the investing abroad route with limited (no!) success.
We have had 5 experiments in Spain consisting of 2 finka (detached villa) refurbishments, 1 apartment refurbishment and 1 new build villa and 1 off plan apartment.
I aimed to refurbish one to keep, rent out and use myself and the rest were for resale for profit. I have now a good team in place of solicitor/builder/pool man/gardener/general runabout person who speaks spanish but have no inclination to go further at this point.
The earth gets promised and the numbers appeared to stack up but nothing happens after that, I know the market is quiet, and understand several reasons for that but it is annoying.
Big Costs
One Estate Agent even came and looked/photographed the properties and then presented me with a bill for €2000 simply for putting them on his books – still awaiting the promised court case for his invoice not being paid! Evidently some people actually pay these bills! It seems to be everyone has his nose in the trough.
The off plan property looked a good investment and I have to pay for this before end March (suposedly ready Dec 05).
However despite written assurances that the builders had sold all apartments, I find they have kept 12 out of 30 (turns out this is the building contractors payment for his efforts), which he is now marketing below our purchase price and we have 7% purchase tax on top.
The whole experiment is costing approx £40K per annum in interest and running costs so if we could sell the at cost then we would be happy.
I have just found the distance, language and different systems to be more hassle than its worth. I am glad we tried because if not, who knows, but on reflection my time effort and money would have been better employed in the UK. It used to be fun getting the 6am plane for work but……..
For every £1 made in rental income in the UK, I am only getting €1 in Spain for exactly the same £100,000 invested so only 2/3rds the income. Capital growth may be the answer to my problems, but how long before it comes. The historical data is not there as it is in the UK. Also the advent of the Euro caused a vast increase in property prices, so maybe a five year lull before things pick up, perhaps the wrong time to invest in hindsight.
Why Bother?
My wife and my view on the emerging markets currently being touted is why bother. If Spain which is a 30 year old market for investment is not worth it, where someone else has done all the hard work why go through all the hassle when the infrastructure/organisation is not in place to the same extent
Access is a major issue too.
Spain/France/Italy are all under 6 hours door to door . My in laws have purchased in Bulgaria and it is 9 hours door to door – so no quick trips for a long weekend
lack of local airports to developments a factor,
lack of competition from lo-cost airlines
low wage structure in the country, so low local appeal for the property, thus only aiming for holiday lets on a 4 month market
I could go on but you get the idea"
I agree with his sentiments.
Its my opinion that the added risk of overseas property investments are very high.
We have written extensively about what these risks are and how these manifest themselves, at other posts. Click on the categories / lavels at the bottom of this post to read more.
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Labels: buy to let abroad, overseas buy to let, overseas property investment
This entry was posted by lettingfocus, on
Friday, February 16, 2007.
