When do you buy property abroad?

Buying property abroad is a common practice. Take any celebrity or less famous business people, and you’ll see they have apartments, mansions and even castles all around the globe. Foreign real estate is prestigious and beneficial. At least, that’s what most people think.

But can you really consider any foreign property to be a good investment? The answer depends on the purpose of such deals.

Who buys property abroad and why?

1. To move abroad

Obviously, one of the most common reasons to buy a house or an apartment in another country is to move there.

Sometimes people find a good job abroad and expect to stay there for a long period of time. In this case, buying rather than renting is a good choice, particularly as they can sell the property later and get back most or all the money.

In other cases, people buy apartments for their kids when they enter foreign universities. Again, it’s may be more beneficial than renting. Lastly, some people simply decide to move to another country for whatever reasons from better living standards to climate.

Is it investment?

From a certain point of view, it is. Since property tends to get more expensive over long periods of time, what was priced at $100.000 ten years ago may cost $130.000 today. Or even more! That’s the profit you can have after selling the property.

However, you can’t get any rental income here since you live in this property. Besides, people usually choose the location based on whatever reasons except for the object’s investment potential. So such a purchase will not make you rich.

2. To get a vacation home

Another popular reason for buying property abroad is to have a place where you can relax during holidays. For this purpose, people buy castles, villas, hotel rooms and serviced apartments.

In some cases, such objects have no investment potential since the owner uses them for a short period of time once or twice and leaves for the rest of the year. Such properties require regular maintenance expenditures. They often serve as non-performing assets.

However, there are ways to combine personal and financial interests by turning them into residual income sources. Many hotels and operators offer apartments for sell. It’s a popular investment scheme enabling you to get rental income from a hotel and use the room for your personal needs once a year.

3. Purely for investment

Lastly, there are people who buy property abroad to make money. And that’s what you traditionally call investment. Such assets can include residential and commercial real estate as well as retail and industrial property. In fact, anything goes as long as it can bring you either stable rental income (apartments, offices, retail space, etc.) or profit from reselling (off-plan properties and objects in fast developing communities).

Unlike other categories of buyers, investors take into account specific factors when making decisions such as prices, average returns on investment, economic trends, local laws and taxes, etc. Real estate investment is like business where you need a good plan, farseeing, diversification and of course a little luck.