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As Irish property prices
continue to rise, albeit a little more slowly, and the cost of
transacting business in this market remains exorbitant, Irish
purchasers are continuing their love affair with overseas
property. You will possibly have encountered adverts for a
plethora of shows at this stage as you search of information on
your wildly elusive “dream home” or investment property abroad.
As there is an influx of property exhibitions in the late June
period we felt it was as good a time as any to broach the
subject of what you can actually expect to achieve at an
exhibition. You can use the Exhibitions link on any of the pages
on the site to see what is on and where over the coming period.
You may at this stage
have visited a number of shows and are still undecided as to
your course of action. Alternatively this may be your first
foray into the marketplace. If so you may well be wondering what
you have let yourself in for and what exactly you should do to
ensure you make this exhibition a step along the way to your
overseas aspirations rather than another futile wander around
listening to meaningless sales waffle.
First of all, agents
don’t bite so there’s no need to be wary of them. They are there
for the express purpose of imparting their knowledge to you.
With some well constructed queries you may be surprised what you
find out about an area or development. You may have to dig a
little to get beyond the sales spiel but it’s worth the effort
to uncover the information that really counts.
The first very important
distinction to make is whether you are looking for an investment
property or a holiday home. The two are very different beasts
and finding one product that covers both criteria is like
looking for the proverbial needle in a haystack. It is a bit of
a generalisation but to save yourself some time you should
probably look past the resort areas, i.e. beach, golf, ski, etc.
if you are looking for an ongoing return to pay down a mortgage
of more than 50%. The obvious exception to this rule are
leaseback schemes which guarantee you an annual return on your
investment but make sure that the return is net and index linked
or your valuable income will be very swiftly devoured by
inflation. Also remember that there are other things to be wary
of with leaseback schemes such as higher entry costs, penalties
for selling the property or not renewing the lease, a smaller
sales pool to aim for on exit, inflexible French tax and
inheritance laws and lower yields due to rising property prices.
If an agent isn’t prepared to offer you any cautionary advice
you should deal elsewhere, every area and development has
negative aspects of which you need to be aware, it may well be
that this one isn’t suitable for your requirements and a good
agent should make you aware of this rather than trying to fit
you to a product that doesn’t suit.
You should have a list
of criteria by which you are going to judge one development or
agent against another. Ask similar questions on any stands that
you feel have potential to fit your investment criteria and this
will offer a level playing field to compare your options. Some
of the obvious candidates are overall entry costs, taxation
levels and double taxation treaties, ability to mortgage and
cost of same, realistic available returns, potential capital
appreciation, ease and cost of access, weather, etc. You will
obviously have other criteria which will mark a particular
property or development as worthy of consideration or not. You
should mark each criterion on a scale of one to ten on each
potential stand, this will give you a feel for which areas and
developments are in the running. If nothing else it will at
least give empirical results backing up your decision to
investigate one product in more detail than another. You may
need to weight the criteria to make sure that the items of most
importance to you are valued highest in the results.
Do remember that these shows, from an
exhibitor’s point of view, are there for the express purpose of
gathering information on those potentially interested in
purchasing overseas. The exhibitors have gone to significant
expense to provide appealing stands with informative
documentation in multiple media formats. If you show even a
modicum of interest you should expect a follow up. If you are
not interested let them know this and do not leave your details
unless you actually wish to receive further information, it will
save everyone a lot of hassle afterwards. If you are interested
in something try to be as specific as possible so that the
follow up information provided will actually assist you in your
investment decision.
Another important fact to remember is that
brochures are, in the main, actually meant to tell you
absolutely nothing. They are there to generate a general feeling
about an area or development, put forward the positives and
totally ignore the negatives. As long as you are aware of this
and use a visit to a show and the material collected as pieces
in your information gathering process, you will be well on the
way to making an informed purchase decision. Specifically look
for the negatives that are in every product, if there was a
perfect investment there would be no need for this show,
everyone would buy the same thing. The brochures and agents will
be more than happy to provide the positives without any hinting,
the value to you is in how many of the less appealing aspects
you can uncover.
Many agents or developers will offer
subsidised inspection visits to visit their area and view their
properties. These are a good economical way to view property if
an area is of sufficient interest to justify a visit, some
agent’s visits are better than others so it is difficult to
generalise. It is a good idea, however, to have a very good idea
of an area before taking such an inspection trip. You should
really visit an area for at least a week to get a feel for it on
the ground before taking an inspection trip where you may then
be seriously considering a purchase. Expect to be put under
pressure if you take a cheap inspection visit offer with the
intention of using the trip to get an initial impression of the
area in question. These trips are heavily subsidised by agents
and developers so they can’t afford to have day trippers using
them. Don’t take one of these trips unless you are at least 75%
sure you are ready to purchase from this specific agent.
Finally, don’t buy from plans in an area
about which you know very little. Most agents can be very
persuasive in convincing you that they have a superb product
that is becoming very scarce. The truth of the matter is that
there is always another product, development or area which is
worth investing in, this is the way it has been since the human
race started building and investing in property. If an area is
worth putting a deposit on at a show, it is certainly worthy of
a longer term visit to check the area out in full. By all means
ask a developer or agent to hold a property for you until you
have an opportunity to do this, preferably on your own, but
purchasing from plans in an area you can’t pronounce, never mind
find on a map makes absolutely no sense.
Overall it is all down
to groundwork. An exhibition can be an excellent way to put in
the beginnings of the foundation toward finding your investment
opportunity abroad. It serves no further purpose than this and
as long as you treat it as the early stage in the investigative
process then you should be well on the way to making a
successful purchase overseas.
Diarmaid Condon is an independent overseas
property advisor with significant agency experience. He writes a
weekly overseas column for the Sunday Business Post and can be
contacted through his website at
www.diarmaidcondon.com.
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