Through hardship to the stars

The dream of owning your own home in a piece of paradise may turn out to be unrealizable, because when buying overseas real estate there are many pitfalls that are invisible at first glance. If you don’t do your own research and take the necessary precautions, you may end up face to face with a purchased home that has been grossly overpriced, does not generate rental income and cannot be resold. Benefit or Risk? It is tempting to make a purchase in one of the countries of Eastern Europe, where spacious houses can still be purchased for symbolic money. But, seduced by an attractive price, one should not forget about a number of possible problems, such as an ineffective land registration system and lack of legal guarantees, language difficulties and difficulties in finding qualified labor for repairs. A cautious buyer should focus on stable markets where property prices are unlikely to decline - thanks to a stable economy, a developed service market and a well-established infrastructure. Here you can easily carry out all the necessary steps - from renovating the object to finding a good lawyer. Do not forget the common truths - about the need to use the services of reputable agents and competent developers who can guarantee you good rental income. Finally, wherever you make a purchase, it is always important to be aware of the latest information, as the situation can change quite quickly. For example, in August of this year, the British think tank Assetz announced that South Africa, which has recently been viewed as an excellent region for real estate acquisition, has become risky for investment. Although the income from real estate gains in 2004 reached 24.6% here, the South African market has shown a downward trend in this indicator. In 2005, real estate rental incomes in South Africa fell to 4.5% following a doubling in property prices. If we take into account the high interest rates on mortgages (about 9%), then the income from rent will be so low that it will not be able to bring profit to investors. Moreover, they will have to pay the mortgage and management costs out of their own pockets. “The problem in South Africa is an oversupply of low-cost apartment blocks and a decline in rental demand,” said Stuart Lowe, managing director of Assetz. "Florida also remains a risk zone, where too rapid price increases are now being cooled by rising mortgage interest rates." To assess the investment attractiveness of real estate markets, Assetz has created the Property Investment Tracker system based on key investment criteria. The calculation takes into account the average cost of real estate, typical legal costs, increase or decrease in interest rates, minimum down payment, rental income of real estate, cost of its operation, etc. Anyone who decided to invest in overseas property should conduct a similar study himself ... Well, if there is no time for this, we recommend that you familiarize yourself with the conclusions of Assetz. Stable Markets Obviously, the most developed countries offer the maximum stability for investment. Choosing between investments in real estate of equal value, for example, in Spain, Slovenia and Sri Lanka, most would certainly choose Spain. Today, many well-known regions are already so oversaturated with foreign buyers or have such a high level of prices that the chances of getting a good rent or a successful resale are diminishing day by day. This applies, for example, to the Costa del Sol and the Costa Blanca in Spain, the Algarve in Portugal, and many coastal regions of France. Therefore, it is very important to carefully study the market in order to find niches not yet occupied. Linda Travella, head of the Italian real estate agency Casa Travella, believes that her two and three bedroom apartments with stunning views of Lake Como are ideal investment properties. The cost of the apartments ranges from $ 270,000-380,000. “You can count on very good rental income,” she says. - There is a very stable market here, and you will get a good profit, regardless of whether you rent the property to Italians or foreign tenants. At the same time, in the summer you can get about $ 800 per week in the high season, and in the winter you can come here to ski. " Linda Travella also offers to invest in the southern part of the Le Marche province in Italy. Here, for example, are offered for sale apartments worth from $ 90,000 in a former fortress, located 30 km inland from Grottamare. This is a rare chance to find a historic building at such a low price and so close to the sea that you can get good rent. If you are attracted to Spain, then you should pay attention to the coastal resort of Javea in the southeastern part of the country. It differs from most other Spanish resorts in that the population increases in winter and in the winter months is approximately 40,000 people. This led to the development of local infrastructure - schools, health centers, shops and recreation areas. As a result, many Spaniards seek to get a job here, respectively, the demand and prices for residential real estate are constantly growing. And this process continues. It is worth noting the luxury residential complex Villas del Vent, which is under construction just 5 km from the sandy beaches of Javea, next to which the Javea Golf Club golf courses are located. The cost of a three-bedroom mansion here is from $ 470,000. France. Leaseback Although analysts expect some slowdown in the growth rate of property values in France next year, in 2005 this indicator was stable and averaged 7%. One of the ways to ensure the safety of investments is to use a leaseback scheme, which involves the purchase of real estate and its subsequent lease. The leaseback scheme allows you to purchase a fully furnished apartment and then rent it back to a construction company for a guaranteed and fixed fee. The term of the contract is usually about nine years, all this time the house will be cared for, and it will not be empty. As a rule, during the term of the contract, the owner can use his property for free for several weeks a year. At the same time, he is exempted from paying VAT in the amount of 19.6%, which is usually applied when buying new real estate. For example, Savills International leaseback properties in Lagrange and Montauroux in Provence. The cost of Provencal cottages with from one to four bedrooms ranges from $ 114,000. Another proposal is a new residential complex in Orcieres-Merlette, in the Hautes-Alpes department. The complex overlooking the Champsaur valley consists of 63 apartments with one to five bedrooms and an indoor pool. Alpine skiing is possible nearby. Prices - from $ 150,000. Highly profitable regions It is worthwhile to carefully study individual regions within the country, even if it does not generally make a favorable impression on investors. For example, in Greece, residential property prices remained almost unchanged over the previous year, and the average rental income averaged only 4.2%. But the real estate market in Crete has very different indicators, and now it will probably be a good choice for investment. Crete Property Consultants offers two-storey houses starting at $ 45,000 in the traditional Cretan village of Agios Stephanos, with stunning sea views. It is located just 5 km from the beaches of Makrigialos and its rich infrastructure. Split the Costs In some housing estates, it is possible to buy a stake where you buy a quarter or half of the individual property in the complex. At the Vale D'Oliveiras resort in the Algarve, Savills International offers quarterly (three months), freehold shares in furnished one and two-bedroom apartments starting at $ 90,000. Residents of the complex have access to all the services usually offered by the best hotels, including shops , clubhouse and swimming pools.