In this article Jonnie Irwin carries on giving his top tips for people looking to purchase property abroad. You can read part 1 of this interview here.
How Seasonal is the Area?
Of course the main driver behind most Northern Europeans' desire to buy abroad is the promise of better weather but it's not just about chasing the sun.
Part of your research should include access to facilities for yourselves and renters, including good family-friendly beaches or swimming pools on site, but also supermarkets and other shops, family amusements, cultural places of interest, plus emergency facilities such as a pharmacy, health centre of hospital.
If you are renting out your home always leave guests a detailed 'what's on and where' guide, especially helpful for people with families if there is bad weather - this will take the gloom out of their stay and they'll be grateful and kinder in their reviews on websites such as trip advisor.
Set a Realistic Budget
Before you even look at a house you need to set a budget, and stick to it. You need to allow for ALL the hidden costs of purchase including independent legal advice, survey costs, notary and closing fees, stamp duty, accountancy and tax-planning fees, as well as moving costs.
The list goes on but the prudent investor assesses all of their costs first in order to ascertain what they can accurately afford to buy.
Always allow a contingency of at least 2 per cent after all costs have been totalled to give you some breathing space for the unexpected.
FX Traders Will Get You the Best Deal
Sounds odd but by investing abroad you're inadvertently making a currency play. At the time of going to press sterling is still looking strong against the euro - giving sterling buyers an 18 to 20 per cent currency discount on euro priced properties - albeit at not quite the high it was in January/February.
FX traders can advise on all aspects of foreign currency whereby you can book the money you want to trade in by up to 12 months. This safeguards your spending power, it can actually make you money if timed right.
I always advise to speak to currency experts as soon as you start looking for property - don't wait until you've found one, as the markets might have moved against you.
Rental Guarantees - How do they Work?
With many developers offering guaranteed yields of 5 to 6 per cent over two years it's tempting to think you'll get the same return after that period ends. Allow a healthy dose of scepticism about any kind of promises (and check that the person or company making the promise is likely to be able to keep such a promise - this is the due diligence on management companies your lawyer should undertake).
Personally, I'd try to rent the place myself and negotiate the cost of the forgone yield off the price, because you should realise that these yields are built into the sales price.
Ask the Experts
With a strong pound and people once again able to move equity from their own homes in the UK there seems to a lot of cash moving to foreign purchases again. Just because you're not asked to jump through the hoops set by lenders doesn't mean you shouldn't play by the same rules.
There is no property I have seen in the world, no matter how cheap, that I wouldn't obtain independent legal advice on and get surveyed. Lawyers and surveyors are a necessary expense who not only safeguard your interests but also give you peace of mind for the future.
Try Not to Get Carried Away
Owning somewhere abroad should be an exciting and rewarding investment but it's easy to get carried away with the fluffy stuff. There's no right or wrong but try to weigh up the pros and cons of each property once you've come away from it.
For example, new-builds should be less hassle but period properties have the charm but often higher running costs. A pool is more expensive to run but may help you rent the property out. Isolation maybe the idyll you want now but what about in 10 years' time? Do you want somewhere that is reliant on you being able to own or drive a car?
Come to A Place in the Sun Live!
"It's a genuinely exciting market at the moment and with so much information available at our exhibitions it's a great place to start your search."
(Originally published in the A Place in the Sun magazine - Issue 122)