What are the main mistakes of novice investors who want to invest in foreign real estate? I will share my vision based on the thousands of inquiries that come to us from investors from all over the world.
At first, almost all requests come down to one thing: «Show us the objects.» Investors can be understood: everyone wants to quickly see a specific offer that he will fall in love with and want to buy. However, starting right away with objects is not the most constructive approach.
Actually, investors make the first mistake when they want everything at once: not only to have income from real estate, but also to get a “golden visa” with it and use real estate on their own when they come on vacation.
All our experience shows that even any two of these motivations is almost impossible to combine in one object. I advise you not to chase the «goldfish» that will fulfill all your desires, but to dwell on one thing.
Do you want a property for yourself? Buy what you like and do not go deep into investment attractiveness. If you are interested in real estate for obtaining a passport, consult with lawyers and tax consultants. If you are counting on income from investments, take your mind off the prospects of your own residence or a “golden visa”.
Clients who pursue an investment goal often make a second mistake: they cannot decide what they are trying to achieve — to save capital or increase it.
If you expect to earn more — welcome to value-added projects (development, redevelopment). When renovating apartments in Athens, building in Berlin and other European cities, our clients receive from 7 to 18% per annum (depending on the project), but keep in mind: there is a risk of capital loss.
If you still hope to kill two birds with one stone — to save and increase capital — I can advise you to consider the scenario of buying an existing rental business with the prospect of renovation and / or increase rental income. An alternative balanced option is to diversify your investment portfolio: invest 75% in a simple rental business, and 25% in value-added projects.
And finally, even if you have decided on the purpose of investment, at this stage it is still too early to study specific objects. This is the third mistake, due to which inexperienced investors can unreasonably be disappointed in foreign real estate.
First decide on the strategy and structure of the project. Answer key questions:
In what currency do you want to receive income?
In which location and what type of object do you want to purchase?
Are you going to buy the object completely for your money?
How do you plan to structure the deal in terms of income and inheritance taxes?
How actively are you ready to participate in managing your investment?
To what extent do you want to control the project?Do you prefer full control?
What are your plans for the future? For example: resell the object in a few years or keep it in the future
When you have a more or less clear picture of the market, it makes sense to move on to the next stage, but this is still not the choice of an object.
In fact, now you should form a team that will allow you to realize the purchase and investment management, in particular:
open a bank account,
find a lawyer who will accompany the transaction,
find someone who will work for you as a broker,
Here at this stage, proceed to view the objects, because now you are ready to purchase.