Money

How to Make a Successful Investment Property Purchase

There are no two ways about it – historically speaking those who have made a long-term commitment to bricks and mortar have done okay for themselves!  We all know this fact which is why we all look to property for our financial successes.  But at times like this when all the talk is about falling prices, foreclosures and lack of mortgage credit, many people are left wondering what to do next and whether they can actually make a successful investment property purchase anywhere in the world.

In this article we’ll explore some fundamental facts about what makes a successful investment property purchase.  You can then take the information away and apply it to your own research into where to buy a property abroad for income and gain benefits.  Please bear in mind that this article is about buying property abroad for investment purposes – it is not about the UK housing market!

Have you ever wondered why so much time, effort and money goes in to the marketing of property abroad in resort locations?  It’s seldom you hear about luxury villas and apartments for sale in Nicosia in Cyprus for example, but you’ll hear tonnes about selling such property on the coast of Cyprus where many people like to holiday.  You hear about houses for sale in the south of France, you don’t hear about luxury apartments for sale in Frankfurt or Mainz in Germany.  Why is that?  Is there no demand in these other locations for property?

Well, in part the reason is that the vast majority of people being advertised to are in the market for a holiday home, and in part because there has been such strong and increasing investor interest in so-called ‘resort property’ – i.e., accommodation in locations where there is specifically tourism demand.  Now, if you want to make a successful investment property purchase abroad and you want to tap into the impact of tourism, there are a number of fundamental facts that you have to keep in mind.

First things first, genuine long-term opportunity for resort property exists only in locations where there is a) considerable tourism interest and b) where there are fewer speculators and more landlords and home buyers.  So, when you hear of the latest holiday home hotspot where buyers are purchasing off plan and flipping their properties for capital gains profits, you need to look more closely at the market in question and see whether there is genuine interest from holiday makers that will last, and whether there are long-term buyers entering the market as well as those interested in a quick buck.

I.e., you need to determine whether a resort has longevity – whether interest levels are sustainable.  Take the Spanish coast and Florida as two interesting examples…with prices in Spain having gone through the roof and now everyone talking about the market maybe crashing and burning and with foreclosures at record levels in Florida you might think these are the two worst areas for property investment success right now.

But how wrong you could be!

There are genuine, fundamental, undeniable and unshakeable reasons why people want to holiday in Spain – accessibility, climate, infrastructure, familiarity and the Med – and Florida – Disneyworld etc.  These reasons represent what are called ‘demand motivators’ and it is these ‘demand motivators’ that you need to ensure are in place when you look at any market with a view to buying in.

Are there sufficient demand motivators in Sunny Beach in Bulgaria to ensure that all the property that has been built and is being let out by landlord owners will return a profit?  Probably no.
Are there sufficient demand motivators in Paphos in Cyprus to ensure that it will remain a strong investment hotspot despite silly property prices, the expensive effect of the euro and a tightening of mortgage criteria in Cyprus?  Probably yes.

If you want to buy a property abroad in a location that is popular or increasing in popularity with tourists – apply common sense to the market.  Will it remain popular, has it got the fundamentals in place such as the Mediterranean Sea or the Caribbean Ocean and the climate, the sights and attractions to ensure demand motivators exist to guarantee the long-term success of the destination.

If you’re not sure then don’t buy!

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