Has anyone made any profit from overseas property residential or commercial?

[MichaelDes]

Has anyone actually made any money from the sale of overseas residential or commercial property after tax, anywhere?

If so when did you buy, what are the fundamentals to the area and has the location any uniqueness? Does anyone even have property returning positive cash flow, especially in residential?

Over the last 12 months more times than not there are tales of woe, of half truths at sales pitches, legal problems with developers not finishing properly or going bust. Or lack of rental to cover loan or none at all.

Good or bad what are the experiences and where are these elusive profitable areas?

 

[Mrs.B]

Re: Has anyone made any profit for oversea's property?

Great question MichaelDes.

We have 2 appts in the UK (purchased 2000 and 2001).
Monthly rental currently covers mortgage on both (IO on 1) however management fees, maintenance costs plus my time outlay still keep us in the Red to the tune of 15% p.a. No prolonged rental voids as yet.

That's 7 years later!

Gross Yield on prices paid (as who knows what they're worth now) are 6.8% and 6.1% (IO only).

 

[Perplexed]

Re: Has anyone made any profit from oversea's property?

I have apts abroad in Budapest & Berlin both bought in 2006.

B'pest has a gross rental yield of approx 7%.

Berlin has a gross yield of approx 5.9%.

With maintenance & mgt charges, tax to be paid etc they're not showing a profit but are paying for themselves so I'm happy enough. Mine is a long term plan & both are in very good areas, Budapest on Andrassy Ut & Berlin in Wilmersdorf. If the market takes off in either country they'll be well placed for good appreciation & I'm content to sit it out .

 

[Ancutza]

Re: Has anyone made any profit from oversea's property?

Bought a site in October 1997 and sold it 6 weeks ago for a shade under 10-times the purchase price.

 

[z106]

Re: Has anyone made any profit from oversea's property?

Bought a site in October 1997 and sold it 6 weeks ago for a shade under 10-times the purchase price.

Nice one - where was that ?

 

[budapest]

Re: Has anyone made any profit from oversea's property?

Most professional investors I know personally have made good profits/returns in overseas markets over the past few years. They rarely post on boards like this as they are happy with their investments.

For example, a property purchased a few years ago in Budapest is generating a 10% return after tax (no management charge, low tax due to Hungarian company) and is currently valued at 50% more than the purchase price. This has all taken place in what has been a relatively flat market for the past five years.

In my opinion, professional investors don't follow the crowd, which is in fact what most smaller investors do. Instead, they look for opportunities and build up balanced portfolios of properties with high returns in locations, which offer strong future potential. The main requirement for most smaller investors seems to be unrealistic capital appreciation expectation within the first few years after purchase. Rental return often doesn't even come into the equation.

 

[Ancutza]

Romania

 

[vergica]

Re: Has anyone made any profit from oversea's property?

What Ancutza is telling is perfectly true. The properties in Romania went crazy and in less than 10 years their values multiplied by 10 times...in US $
I know that for sure...

Do not expect the same rule to apply going forward...
What I found out in this market is that when something is coming out ( the fact) is already too late for others to take any advantage..

Myself just lucky not to sell my property in Romania 10 years back...as I didn't expect this turn around..

 

[riviera]

Re: Has anyone made any profit from oversea's property?

Most professional investors I know personally have made good profits/returns in overseas markets over the past few years.

This corresponds well with my experiences. The professional property investors I know as still buying strong. They are our best clients now.

 

[mercman]

I have done in Commercial properties in the US, UK, Holland and Poland. But its now time to sit back, hold on to what I have and await developments. I used to trade Residential in London but it became a nightmare and the same in Manchester.

 

[MichaelDes]

Update to this one. What's the state of play now? On a scale of one to ten with ten being good fundamentals and ride out the storm, to one being no fundamentals and run for your life. What's the current state? Many experts always say the main attributes to successful OPI are Research (cycle of the property market, economy, shortage of housing etc), Financial, Legal and Rental. So maybe it should be gauged against this.

Also what off plan companies/developers are no longer in business, or have failed to meet their obligations.

Property Mogul Sam Zell recently points to low cost housing in Egypt, Mexico, Brazil and China (notice nothing fancy like apartments or upmarket units).

Maybe do it like football scores - Dubai (2) Germany (7).

 

[Martin77]

I've made money on overseas property investment (but not directly by buying property.) Thanks partially to AAM I avoided investing in tourist resorts.

I've had a proportion of my overall investment portfolio invested in shares and bonds of several publicly traded property companies. The main one invests and exploits large commercial retail units in mainland Europe (no connection to me and I won't name them as per posting rules that ban discussion of individual shares)

The share valuation has pretty much followed the rest of the market bubble. But the dividend has been pretty consistent, and more importantly, it has been generated out of rental income from long term contracts.

I bought a lot of these shares in around 2000 but I sold out long before the valuation peak as I thought it was unsustainable. Could probably have done better but I also largely avoided the downside.

I am now buying again as long term dividend yields (not necessarily share price valuations) look pretty attractive to me. My way of looking at things at the moment has been inspired by Warren Buffett / John Bogle's recent comments on investing (although of course I dont pretend to be anywhere near their league). Look at the cash flow yield, which accounts for approx half of any gains, the quality of the balance sheet, and think long term.

I'm not here to puff any particular property fund shares or anything else, but just to let you know that there are alternative ways to invest in overseas property that have generated long term (10 years +) positive cash flow without a lot of work.

Here's the approx historic numbers. All are approximate, such as year end share price. Your actual result will depend on the precise day you bought any shares and what your local tax regime is.

year: Approx share price: dividend: yield: approx nett yield after tax and all costs
1999 26.5 2.05 7.74% 6.54%
2000 27 2.16 8.00% 6.80%
2001 25 2.28 9.12% 7.92%
2002 26 2.32 8.92% 7.72%
2003 30.7 2.32 7.56% 6.36%
2004 43.1 2.39 5.55% 4.35%
2005 45.9 2.45 5.34% 4.14%
2006 61.9 2.53 4.09% 2.89%
2007 55.4 2.6 4.69% 3.49%
2008 31 2.64 8.52% 7.32%

I think this could be a good base line for comparison purposes for people to look to see if they are happy with their own investments.

 

[GDE]

I am now buying again as long term dividend yields (not necessarily share price valuations) look pretty attractive to me. My way of looking at things at the moment has been inspired by Warren Buffett / John Bogle's recent comments on investing

Speaking of Buffett, I just read Warren Buffett and the interpretation of financial statements. An excellent read to help you evaluate company reports etc before you would invest

 

[OverseasCafe]

I invested in property outside Gothenburg in Sweden at the end of 2006 and again at the beginning of 2007. The first property was 50% resi, 50% commercial, the second entirely commercial. Gearing was 83% on the first and 80% on the second, variable for the first three years then reverting to fixed, which is fine as Swedish rates have dropped significantly in the interim. Returns to date have been 8% net after Swedish tax so the investments are paying for themselves and throwing off a significant cash surplus.

Capital values on the buildings haven't increased any, which is hardly surprising in the current environment, but they haven't decreased any either. Of course you can really only ascertain capital values when a sale has been made but I've no intention of selling these for a very long time so the 'snapshot' capital value isn't of any great interest unless I go to re-finance the investment to pull out some capital. This isn't likely to happen for a few years.

I've just returned from a reccie in the UK and would see this as a market with significant potential if a recovery is initiated later this year. December's retail figures were released today which were worse than expected but Spring rentals are coming through since yesterday and, based on that, it should be easier to gauge where the market there actually stands. It is expected that the bailiffs will be very busy over the coming weeks though.

The current rate of Sterling against the Euro is a major attraction for European buyers who have been very active over the past few months, particularly at auctions. Alsopps said they have had their best two auctions for three years in December and February selling 95% of the stock on offer. Prices have dropped off enough to offer 6-8% net yields which haven't been seen in the UK for nearly a decade.

Had an interesting conversation with an Irish guy who sourced UK product for Irish funds and major Irish developers over the past few years. He claims that every Irish developer with whom he's dealt in that period (and there were a few pretty high profile ones on the list) are insolvent, the banks just don't want to call in the loans as it will crystallise their losses and confirm just how bad the situation is. No surprise I guess, but a bit of a jolt to hear just the same.

 

[Bronte]

Hi,

nothing is selling at present in the uk or anyware else for that matter. .

This is not true. I've noticed a few 'sold' signs recently (last 3 weeks and it's peak selling season being March) Too early for me to call it the beginnings of a recovery but there is activity.

I've bought and sold my PPR abroad and made a large profit.

 

[mercman]

I've bought and sold my PPR abroad and made a large profit.

You didn't state when you purchased it. If you bought in the UK in 1991/92, yep you have made a fortune/ still. For the purpose of this thread, commercial property is still literally dead. Some lots under 5 million, Stg or Euro are moving very very slowly, but the bigger lots are dead in the water. Resi is knackered so matter where you go.

 

[OverseasCafe]

Timithypaul,

I take it from this statement that you have a selection of property to back up the supposition that 'property is dead everware'.

I think the auction rooms of the UK would seek to differ with you, both commercial and resi.

http://www.allsop.co.uk/articledetail2.aspx?nid=316

Can you show me proof of any commercial lease agreements going through the courts in Sweden. I'm pretty heavily involved there and have seen no evidence of this. Sweden is, in fact, weathering the current storm far better than most of Europe. Prices hadn't bubbled there in the recent past so capital values haven't taking the beating they have elsewhere.

 

[Bronte]

Yes property is dead everyware

This is too much of a sweeping statement. Commerical property I'm not an expert, I'm only referring to residential.

 

[Ancutza]

I think it would be better, and more accurate, to say that property is 'dead-er' at the moment than it was, say, 3 years ago.

This doesn't mean that it's at a standstill. Myself and a friend are currently negotiating a purchase. Hopefully it will go through in the next few weeks.

What IS dead and dead-er than a dead dingo's donger is the over-inflated market that held sway up-and-until 12 months ago. Those that have some liquidity are picking up some good deals all over the place.

Property is still being bought and sold but, thankfully, without the hype!

 

[Martin77]

Sorry but I don't call a solid 6.8% yield after tax or higher "dead in the water" by any stretch of the imagination. I don't particularly care about capital values as I am a yield/ value investor (an endangered species in recent history). Capital value to me only determines the yield at the entry point. I'm looking long term. If you're continuing to make a good yield, why would you sell out at a time of low valuations?

Speculation on capital value growth and flipping may well be dead for a long time, but I'm actually more bullish than ever on investing to achieve a good cash flow yield at the moment (including property).

A lot of leading indicators and charts are showing a turn. Just ask the technical analysts to look at weekly and monthly charts on Kiwi dollar, Aussie dollar, S&P500, FTSE whatever at the end of this quarter. It ain't going to be a straight line recovery by any means and we may even retest and break through the lows once more, but I'd much rather be buying real assets now at ten year lows rather than at the levels 12-18 months ago. And anyone who cares to read my previous posts will see I have been consistently long cash and bearish for a long long time.

It may be too early to call a turn and I'll take my time going in, especially because property tends to lag any recovery (like unemployment), but there are more and more serious analysts who are converting:
Ueber Bear Michael Browne from Sofaer Global Research See stops being bearish after 19 months
Phil Roberts of Barcap. explains the charts
Ian Scott from Nomura mentions seeing value in UK REITS.
Plus have a look at the cost of remortgage rates e.g. which should help underpin the market (4-5% APR fixed for 5 years even on buy to let)

But that's the beauty of a market: there's always more than one view.