Investing your money is no small issue, and it will undoubtedly have an impact on the rest of your life. A sound investment could not only make your retirement as comfortable as possible, but it could also be very lucrative and leave you with more than you need. On the other hand, a risky investment that falls flat could leave you with nothing, and as a soon-to-be retiree – there is nothing more terrifying.
Therefore, it’s easy to understand why investment options have to be carefully considered and weighed up before taking the leap. Should you go for high-risk, possibly lucrative stocks, bonds or shares? Or something a little more safe and concrete, but perhaps without as large a cash incentive?
Why international property investment is a great choice:
International property investment is a sound choice when it comes to investment options. In today’s volatile economy there are no guarantees with stocks, bonds and shares – and those that are highly lucrative are normally very risky. Property is a hard asset that is more likely to keep its value than other riskier options.
An international property investment also allows you to diversify your property portfolio; prices are usually lower than in the UK, and it gives you a holiday home for your family and retirement.
How does an international investment property investment fit into your financial strategy?
Having a financial strategy for retirement is absolutely essential to ensure that you are saving enough for your golden years, and this includes investing in a property. You should always have a plan in place when looking at international property investment, and here’s how to start:
What is the purpose of your property?
If you are buying property abroad, you should already have in mind exactly why you are buying the property and what you are looking for. These are the options for foreign property investment that you need to consider:
- Vacation/Retirement home: You buy the property for family holidays or to move into when you retire.
- Permanent home: You are buying the property to move into permanently.
- Commercial property: Property that is bought either for your own office space or to rent out to other companies or businesses.
- Other: Other options to look at are guesthouses, student accommodation, and hotels.
Look at your financial goals
Before buying a property abroad, we suggest that you seek the counsel of a financial advisor, as well as asking yourself the following questions before buying:
- What other investments do I currently have or hope to acquire in the future?
- What’s the status of my retirement savings?
- What is my liquidity like – i.e. your ability to quickly come up with cash to meet short- term obligations?
- If cash flow is unpredictable, will I be able to handle the obligations of ownership in the long run?
- Do I expect my investment property to provide me with income when I retire?
- Do I want an immediate income from my property (e.g. rental income) or long-term appreciation?
Prepare to be a landlord
Buying property abroad comes with huge responsibilities, and you need to decide whether you are going to be able to handle problem tenants, maintenance issues and costs, collecting rent, refurbishments, and the myriad other issues that generally come with owning a property.
Decide on positive cash flow vs capital growth
Generally, there are two ways to make money on a foreign property investment – the first comes in the form of a positive cash flow and the other is capital growth. You should decide on how you are going to make money from your property early on in your plan.
Positive cash flow is when you make a profit from the rental each month on the property, i.e. you are charging more that the property is costing you. This is great for those looking for extra monthly income, especially during retirement.
Capital growth is when you buy the property, fix it up and sit on it in the hope that the value is going to increase – when you can then sell for a profit. This can be risky and you need to know how to read the property market and trends such as gentrification.
If you would like to know more about foreign property investment, we suggest you download our guide A Foreign Property Investment Guide. It covers all the details and information that is absolutely essential when purchasing property abroad. If you have decided that foreign property investment is for you – then have a look at our villas for sale in Calpe, and find yourself the perfect home in the sun.