International property investment advice from our expert Alan Forsyth
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Posted on 10 January 2007
Set Your Property Investment Goals
Hi,
Hope are well…..and had a great Christmas and New Year!
I was in Scotland visiting family and had a great time.
I also fitted in a meeting with some developers with an excellent project coming up in Kaunas, Lithuania. Lithuania has had some excellent press recently, with Knight Frank forecasting over 20% capital growth in 2007, putting it at number one in Europe.
Borrowing is excellent for foreigners, with Scandinavian banks willing to lend 80-85% loan to value, at rates of around 4% interest. Buying costs are low at only around 3.5%, compared to some countries with buying costs of nearer 10%.
With the locals all keen to buy their own properties, and mortgages so new, capital growth potential is excellent over the next 5 years.
We are finalising the figures of this deal in Kaunas – look out for it over the next 6 weeks, I am confident it will be very popular.
Strategy
This is a time of year people set goals and resolutions – and it is a well known fact that those who write their goals down are far more likely to achieve them. I write and review mine on a regular basis.
When it comes to property investing, most people are looking to either increase their net income, or increase their capital. To do this you look to identify areas that are likely to increase in value ie are affordable to locals, and attractive to investors. You also want to invest where you can leverage your funds to maximise the opportunities – this is one of the reasons that emerging markets which on paper can look the best bet as capital growth can look very good, are not as attractive as you tie up far too much money.
In our first year sourcing properties for investors we had one gentleman who was looking to double his capital as soon as possible. By leveraging his funds, and helping him choose areas of the UK and Eastern Europe that were likely to see strong capital growth over the next 5 years, he managed to increase his capital from £120,000 to over £250,000 in 16 months!
This can easily be done by planning a strategy, and we work with many investors on this basis. To talk through a personal strategy and planning, email us at info@property-investment-tips.com or call us at 0115 947 4155.
Opportunity Cost
Another important area to look at when considering your strategy is opportunity cost. This is an area that confuses a lot of investors, but is critical to how quickly you can grow your portfolio and net worth.
Email us at info@property-investment-tips.com if you would like more information about this.
Tourist destinations
I have mentioned before I am always nervous before recommending tourist resorts to property investors. Why? Because I am at times unsure on the resale market, as not many if any locals buy here, and often the rental market can be pretty competitive or unproven. They can be very well marketed, and we are asked on a weekly basis by developers to recommend their resort in a new location, but I prefer either investing in areas where there is year round rentals and the locals are buying to live in themselves ie in cities or towns, or in resorts with a proven rental market – ideally all year round – rather than a 2 month season! This ensures you have an exit strategy and a rental market. So for example in Bulgaria I would prefer to invest in Sofia rather than the beach resorts.
When you are buying any property always check the local rental market, and check with whoever is recommending it what they have put in place to ensure rental once you complete – I have seen many people complete on property on resorts, with supposed huge demand from golfers or holiday makers, and find nothing in place on completion, and low demand for rentals.
This greatly affects the returns you will get on your funds.
A safer and far more attractive bet I would say is investing wherever the local market are buying or renting.
Ok, that’s all for this week – have a great week,
Regards
Alan
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About Alan:
Alan Forsyth is a full time property investor from the UK. He runs the website www.property-investment-tips.com which gives free, independent investing tips to investors. This site, www.property-investment-deals.com is designed to run alongside his original website, and will give in more detail his recommended property deals, and full details/pictures of any new deal on offer.