There are many ways of investing in property overseas but often investors are not clear enough about what they are looking for.

Defining your investment goals - what you want to get out of your investment - at the outset is vital. Once you have narrowed down your goals, the whole process becomes easier.

Here are five goals for international property investing:

1. Buying for capital gain

In emerging markets it’s common for investors seeking capital growth to purchase in ‘undiscovered locations’ before foreign buyers arrive in numbers. The investor will sell the property when the objective of capital growth has been achieved. The purchase may be in a remote area, but only if there are clear indications that infrastructure improvements will follow. If buying within a development, they tend to purchase early in the roll-out of the master-plan, and look to secure ‘founder’ or ‘charter membership’ deals as a result.

2. Buying for personal use

Investors in this category are looking for a vacation home they can escape to for a break. They tend to choose locations with a good climate, access to amenities and where the lifestyle contrasts with their primary residence. The property can be let out to cover costs for part of the year, but a rental income is not the top priority. This investor type tends to be already affluent and own more than one home, often in different parts of the world. The property may be passed down to children or sold prior to retirement.

3. Buying for rental income

Although in some markets in Central America it is possible to target the the local rental market, most foreign investors focus on attracting the foreign vacationer or retiree and choose properties to suit this market segment. They tend to seek out key tourism centers and look at rate of sale of surrounding properties, access to amenities for potential renters as well as security and safety aspects.

4. Buying for retirement overseas

Investors in this category are typically 5-6 years from retirement and want to find a property that will provide them with a high quality of life, will appreciate in value and provide some holiday rental income before they move full-time. Retirement investors place considerable emphasis on the issues of security, availability of health facilities, access and proximity to shopping centers.

5. Buying to re-invent your life abroad

Some investors are motivated by starting a new life abroad, perhaps to escape the effects of the downturn or to opt out of a 9-5 lifestyle. Some may be downshifting while others will be embarking on new businesses abroad. Many will be motivated by a lower cost of living and the experience of a new culture and lifestyle offered in developing countries. Some may actively seek out properties that offer a contributory income, such as a B&B.

Defining your strategy, and then sticking to it, has never been more important than now. The markets are shifting, priorities are changing and there are some great deals to be negotiated.

Without a clear understanding of the kind of property that could best meet your investment goals, you could be in danger of mistaking the wrong property for the right one.

What type of property investor are you?

 

This entry was posted on Wednesday, February 4th, 2009 at 4:35 pm and is filed under Investment Strategies. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.