Taking your property investment offshore

Private Property South Africa
The Roosting Venus

There’s something about an oyster that conjures up glamorous locations, setting suns and foreign lands. You may of course find an oyster bar in Benoni, but chances are it just won’t have the pull of an oyster bar in Barcelona.

That may not be quite why they say the world is your oyster, but whatever the reason, the Other Half and I have spent much time discussing it – and the obvious afterthought - the value of offshore investment.

Besides oyster bars, the reasons to invest off-shore are many, and kick off with offering a step into the international market – a way to stave off the currency issues that come with a depreciating Rand - to diversify ones investment portfolio and to get a degree of international financial leverage.

While there are various purchase strategies possible when it comes to purchasing abroad, (buy-to-hold, buy-to-sell, fix-and-flip, and buy-to-let being the most obvious) to do this, without necessarily emigrating, it’s easiest to look towards buy-to-let and invest in a location where there is a large and affluent tenant pool. (That said there are some countries that offer their own variations – local sale and property investment structures which should also be considered).

Whatever the way that you choose to invest in offshore property, some advice suits all:

  • Thoroughly investigate the market. Property markets in different countries go through their own cycles, so for those buying to invest it’s important to understand current values in the country of your choice – the ideal being to buy near the bottom and sell near the top of a cycle.

  • Make sure the price is right and find out what local and international expenses there are that are not included in the purchase price.

  • Watch exchange rates. Transferring large sums via a specialist foreign exchange firm and hedging against rate rises can save costs considerably.

  • Be aware of tax implications – these will include local tax implications when buying AND selling as well as international ones. Consider options such as joint ownership with a spouse or through a company and factor in capital gains tax and inheritance tax too.

  • Use a reputable estate agent for some degree of protection and invaluable advice.Buying directly from an owner can sometimes make for a great deal, but you may have no recourse.

  • Get legal assistance. Make sure you have the services of an independent lawyer when entering into a property deal. A lawyer’s advice can be invaluable if legal wrangles occur.

  • Get your questions answered – in writing. Oral confirmation isn’t enough should a legal altercation occur. And don’t be pressured into signing anything or handing over money until you are completely satisfied the deal meets all your due diligence requirements.

  • Understand every word. Have your documents translated before you sign anything relating to a potential purchase.

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