Investing in Overseas Property

Not open for further replies.


Frequent Poster
There are any number of reasons to invest overseas, and probably twice as many pitfalls or reasons not to. So what do you need to have at hand or do or look out for when buying abroad?

1. Visit the country at least once having already read up, researched and refined your criteria. Far too many people go on a wing and a prayer and end up disappointed or buying a pig in the poke. Also,

2. Don't believe the hype. What looks lovely on some type of programme like Househunters in the Sun, might not suit you in the slightest. Many programmes like this get their expenses paid by agencies who end up touting their properties. This confines the area shown and far too often the "tv prices" are half or what the normal or actual cost of properties in the area are. Also, how often do we hear, at the end of the programme, x and y decided against buying the property they liked, but would like to look again some time.

3. Exhibitions. Fast becoming a waste of time for both sides, lots of tyre kicking and glossy brochures. The internet is a gem to research areas, especially look at non-property websites from the country you're interested in, from tourism to business to sport, there will be certainly english language portals and each will give you a idea of what makes the place tick.

4. The biggest fallacies doing the rounds:
a) Guaranteed rental return (far far too often this is built into the price you're paying, so you're actually paying over the odds but being made feel you're doing well out of the deal).
b) Long rental seasons (for eg in Croatia it is always touted this 5-7 month season, which is largely mythical. This year tourism has been walloped by poor marketing and the World Cup, in most of the new locations bank on 3 months, and make sure to push for your own rentals too!).
c) Certain to rise in price (as they say with shares and investments, prices can rise as well as fall).

5. Be clear on what you want from the property. There is nothing more dangerous than going to buy a property for rental and then finding that you can't get enough access to it. Also going to buy an investment property that you only want for personal use, but also wanting rent returns, very often are two totally different things. From what colleagues have told me, it's better to be clear from the outset for what you want the property for, an either - or, or a mild mix of both.

6. Go with a realistic budget. There is nothing worse than to travel around looking at properties that are well within, or well outside, your actual budget. It makes the job of the agent impossible and your own confidence will take a knocking. Have a good idea of local prices, be realistic and add in the factors in number 7 below.

7. Always take the price of the property and add in an immediate 10%.
Break it down as follows:
Sales Tax
Legal and Processing Fees
Contingency Money
This immediately brings a €60,000 closer to €70,000, which might destroy your budget altogether. Remember you will probably also need to buy furniture, maybe a kitchen or bathroom, or if you're renovating, cost overruns, unexpected problems or extra paperwork.

8. Don't believe the "We have someone very interested and have to move fast" line. It may well be the case, but to call a bluff ask what the price offered is. Be relaxed and top it by €100 and wait for a reaction. If none, then the interested party might never have existed.

9. Always adopt: "What's meant to be will happen". There are plenty of properties and plenty of locations, and if you feel that you're dragging your heels, it's probably because something is telling you it's not quite right. Call it your "spidey sense".

10. If you get far enough and are happy to buy, don't sign a single scrap of paper without a notarised translation first in front of you. Even go so far as going home without signing, you can always sign at the embassy of the country concerned or at a recognised lawyer/notary. There is no rush and if suddenly the deal collapses because you've asked for time to wait or to go home, then you've had a lucky escape.

11. Make sure your agent is recognised, whether with the local chamber of commerce, national professional association or embassy. Do note that many countries outside the EU (Bulgaria, Croatia, Turkey) will not be covered by groups like the CEI, and don't depend on ad hoc groupings like FOPDAC or WREN for total security. A lesson learned from a number of Iris buyers in Croatia was that the "recognised" agency didn't keep up to date or concern themselves with local details, instead left the work to local agents and waited for a cut from sales. It saw buyers "buy" apartments that were illegally built, illegally located and under 2 mortgages.

12. Bigger isn't always better. I know it's stupid to say size doesn't matter, we all know that :), but walking into large offices with busy staff and flash service is not for everyone and often not all it seems. Buying abroad does deserve personal attention, building up a rapport with the agent and staff, and feeling that you can trust the person you're dealing with. Being shown 20 properties in every day is the overseas property agents method of brainwashing, and there's a trick to it. View 1-2 nice ones early on, then blast in the mediocre ones, and round off with a couple of tasty ones that look good towards sunset. While it's important to see many properties for a more informed choice, an good and honest agent will have taken on board your specifications and cater the viewings to them (see 6 and 7 above).

13. What's often forgotten is the scale of investment that could be made. This isn't panic buying, there is plenty to go around and once you know what you're looking for, with all factors put into the equation, you'll find your gem.

14. Non-property factors:
Political stability (certain regions are immensely attractive but a closer look at the surrounds and politics can cause doubt: eg UAE - neighbours to the disinegrating Saudi Arabia, Iraq up the road and in the midst of civil war; Turkey - huge disparity in representation from the very rural east and coastal west, including ongoing civil strife with ethnic Kurds, god forbid the US invade Syria which will result in a huge refugee crisis, and not forgetting the forgotten areas devastated by earthquakes).

Socio-Economic stability (can be linked with the above point, but can also apply to exisiting economic or ethnic strife)

Access availability (why buy a property that cannot be accessed for 6 months of the year without 6 stopovers and a night in Ghana, also the costs of visiting your potential purchase needs to be factored in, and many times what looks inaccessible and expensive at first suddenly looks better when a little ingenuity is applied, especially thanks to the low cost carriers available).

June 2007 Update
It's almost a year since I posted this and after smackingmy head against the wall when this wouldn't save, I finally figured outt he problem was our office p.c. So here goes for the final and complete time.

Depending on the country of purchase you may have to pay CGT on the sale of your property to Irish Revenue. For applicable information has been a mine of information. They don't, however, give completely clear information on certain countries (I asked about Bosnia, Serbia and Russia).

It is important to remember when buying your house number 7 above, and one extra fact. If you're paying tax on purchase, also factor in the exit tax on sale. It's no good making €20,000 profit if a large chunk is taken from your hands in taxes both home and away.

Local tourist taxes - be certain that if you are renting that (if doing it privately) you keep your tax payments in order. In many countries even family members coming to stay means registering at the local tourist office/police station, and paying a tax on their stay. Failure to do so could rebound on the owner in the shape of fines or in one case in Dubrovnik recently, seizure of property. In fairness the fault lay with the letting company (one of the more reliable international companies) who charged the tax but never paid it tot he proper authorities.

Each one of us can count the number of next big things without even thinking of it. Weekly we are assailed with Sunday's new hotspot, where the profits are, growth numbers, sure fire winners etc etc etc. Now flip a couple of supplements to the Holiday section, a little more glossy and photo filled, but equally attractive. Yes, now we can all visit the "new pearl", "Hidden treasure", "unspoiled landscape", "step back in time" and so forth. Sunday supplements do what they say on the tin, supplement - the takings of the newspaper. The number of times my colleagues have been approached to spend vast sums on advertising, to pay for a family holiday for a journo, to pay over the odds for a stand at an expo, is mirrored by a former colleagues despair at how she has been inundated by British and Irish journos all angling for a free holiday in return for an article.

The moral is, big and glossy, flowery words and weekend titillation are not for everyone. Consider the large amount of money being spent on advertising and then how much of this is strapped onto the property you feel will provide the massive rental income to pay off your top up or new mortgage. You are charged for that pageful of photos and information nabbed from the CIA website.

Know the economics of where you're buying
This is a point that I've had to make to a number of people looking to buy both here in Croatia but also in neighbouring countries and Germany. When you arrive for your viewing trip, ask questions. Ask as many people as possible (from the friendly waiter to the person "guiding" you to the local bank. Below are some tips:
What is the local wage for a skilled builder? Unskilled assistant?
How much is to build er sq m locally?
How much does the local planning process cost?
How much does a sq m of local building land cost?
Go minimum and maximum on each. Then do the maths.
If you're paying €2,500per m2 for an apartment, and the outlay cost for building, planning and land cost adds up to under €1,000 - are you not overpaying? Where is the €1,500 going? If the agent is getting a cut should you then have to pay an extra comission? A good rule of thumb is that you should not pay over €500-650 per sq m on top of max build and acquistion price. There are a number of good quality builds in good locations that are intelligently priced, and equally a number of overpriced lemons that will leave you stung in the end. If your deposit is paying for your apartment to be built then you've got to look at the deal again.

Agencies are businesses too!
Ultimately the real estate agent is selling a product. Unless they have been sloppy in their operations then they will know the product very well. Property is the same as shoes, underwear and cars - it's your decision whether to buy or not and the salesperson really much hopes you will. If you are willing to buy what they have told you without doing your homework, then you are at fault. You need to know what you are putting your money into. If you are told that there will be 3 golf courses next door to you - yet have not seen the plans and concrete information, then you need to think twice.

A lot of agencies are slated, and often by those who have had no dealings with them in the least. A lot of this is down to jealousy, rivalry or just the need to hear one's own voice speaking in pseudo-authority. Even on forums such as this, take the info with a grain of intelligence and have a look at the posters motives. If they are constantly promoting one location and not claiming to have any interest in your hard earned cash, then it's up to ou to discover if it's for real or not. Alternatively slamming one place while claiming extensive knowledge of it and of better places, you have to think for yourself.

A very good friend of mine bought recently in Bulgaria. He'd wanted some place to go on regular holidays and to send clients, family and friends. He bought at a good price, location and knew what he wanted from it, and he's happy. However others will look at the same development for rental returns or capital appreciation without having visited. The place is beautiful but not for everyone. Similiarly Montenegro. For some it's not to be touched, but others who've been there and done their homework know what they want and go for it. Berlin gets promoted as a hot spot and punters rush to find out how they can buy, yet a month before never considered Germany as an spot for investment. The country always returns well, but finding a good spot dictates knowing the place and at least travelling around and finding a bit about it.

Know your destination
I know I've said this already in the old post and again now, but it needs to be impressed upon us all. A lot can be gained from internet searches before you go. From guide books. From history books. If you go on holidays to a new place, would you not find out a little about the destination and lie of the land? You'll read good and bad, informed and uninformed, complete and incomplete reports, but if you're looking to invest €100,000 in some foreign land you need everything you can get!

Independent Advisors
How independent is independent? If they offer advise on tax, legalities etc, then if they can prove to you that they know what they're about, then listen to what they say. If there's a charge for information that you otherwise won't have access to or due to language barriers won't be able to find on your own, then it's not a crime to pay. Irish customers particularly (I speak more from business investment than property but hear from colleagues) feel that the Advisor should be grateful to pass along the information. But if there is a clear structure and benefit to be gained then keeping the Advisor in your scope is a very important for your future transactions.

Independent in terms of property is, as mentioned above, very difficult. Much of the advice you can get (if not financial, tax or legal related) is freely available with an internet connection or by boots on the ground. 2 of 3 independent advisors our company dealt with were very good, professional and honest, but ultimately they make their money from you purchasing through them or at least paying them for local info. Much of this they get from contacting local agencies who might not be as professional, good or honest as your advisor. This happened with one of the biggest scandals regarding Irish buyers in Croatia where a number of buyers found that their "Irish agent" had done little more than take on a local agency who were rather unscrupulous in their dealings and cost the buyers their deposits in their "beachfront" development, which was 1500m from the sea. It wasn't indicative of the country but of lazy habits that damaged an entire rgions reputation in the market. Likewise an independent British agency sold a "state of the art" business complex in shares to investors in the Moscow suburb of Khimki. They had been assured by the local company that it was kosher yet since 2004 more than 30investors have been unable to recover their 50% deposits in an development that will never be built.

Use your head
Common sense is a hard held thing. But until the final contract is signed and all the money paid over you have the opportunity to step away. If you are in the process of buying, have paid your deposits etc, and then get cold feet, then your agent is not obliged to solve your problem. And if they do then expect to pay something for their extra service. Common sense in the pre-purchase and purchasing stages will save you sleepless nights and lots of expenses.

You can get all the advice you can pay for and all the barstool experts, as well as forum huggers, telling you you're mad to buy in such and such location. But if you know you have clear ownership, you want it for certain reasons that nobody else seems to understand or that something about the place just feels right. Then you will do it and be safe in the knowledge that you added up the pros and cons and made your own mind up. Property, cars and women/men are all things that we will go full out for even when others tell us they know better. But a little pre-planning and homework will make your goal just that little less stressful.
Last edited:


Frequent Poster
Brendan, update is complete, just let me know if there is anything else that should be added!
Not open for further replies.