THE INVESTMENT PROCESS

Buying property abroad is a more complicated process than purchasing here in the U.K. The more initial preparation and research you carry out, the easier the process will be throughout the transaction and beyond. Remember you should always be led by your requirements and not by an agent’s current stock. Much of the initial material you will require is available free of charge by registering at www.dareproperty.com and remember, we are here to help you every step of the way.

1. DEFINE YOUR OBJECTIVES. The suitability of any property to your needs will depend upon a number of factors, which you should be clear about from the outset. Are you looking for a holiday home or is it a pure investment? Is regular rental income important or are you investing for the medium to long term for capital growth? How long do you intend to keep the property for?

2. SET A BUDGET. When looking through glossy brochures, it is easy to stretch your initial budget. Never invest more than you can afford to as you need to be certain that you can afford to pay the mortgage during any void period when the property might be empty and you should never rely on making a quick sale. Beware agents who claim you can sell before completion or “flip” at a healthy profit, sometimes it is true but you will not be the only investor trying to do so.

3. RESEARCH. We cannot stress enough the importance of carrying out your own research. Remember most agents are paid to sell you property and you need to be confident that the information you are being provided with is accurate and independent. A lot of research is available on the internet and good agents will always put you in touch with reputable independent letting agents etc. who can verify market data for you.

4. SHORT LIST LOCATIONS. The chances are you will have started with a certain country or countries in mind but your research may have led you to other opportunities. Much like buying a car, do not be afraid to question agents who specialise in one particular market why your money should be invested there rather than elsewhere.

5. FUNDING. Not all investors wish to borrow to purchase property and for those that do, the interest rate paid and the amount it is possible to borrow have a large influence on the returns received. At this stage, you need to know whether mortgages are available in the countries you have short listed, the qualifying criteria and application process, all costs, length of mortgages, whether they are repayment or interest only and current and predicted future rates of interest.

6. ANALYSE PROPERTIES THAT MATCH YOUR CRITERIA. We recommend that you work out a simple five year cash flow to compare your short listed properties and we will always give you the information required for you to do so. This will show you the total estimated cost of purchasing and holding the property, estimated annual returns and using a range of assumed capital growth rates, the potential profit on exit.

7. VERIFY PROVISION OF ALL SERVICES. Having ascertained the availability of mortgages, it is important to ensure the whole team is in place for each of the properties under consideration. This includes an English speaking lawyer, a managing and letting agent, furniture package if appropriate and confirmation of the snagging process.

8. SELECT PROPERTY. You should now be in a position to confidently select which of the opportunities best fits your requirements. Again, a good agent will be able to explain their rationale for recommending a particular property for you.

9. RESERVATION. The exact reservation process varies enormously but you will normally be expected to pay a deposit to secure the property. Make sure it is clears whether or not this deposit is refundable or not and under what circumstances you would be reimbursed. We would strongly recommend that you never pay a reservation deposit without having seen the purchase contract and having a lawyer in place.

10. SIGN CONTRACT. Again, the exact procedure varies but you can expect to be given a set period of time from the date of reservation to sign the contract and to pay the first stage payment. This may necessitate a visit to the Slovak Embassy in London and your agent should advise you accordingly.

11. STAGE PAYMENTS. For new build off-plan properties, one of the attractions is the ability to pay in stages as construction proceeds. Clearly, the less paid prior to completion the better the return you will receive on your equity. When transferring funds overseas, we would recommend you use a foreign exchange agent such as Moneycorp, who can secure preferential rates of exchange for you.

It is crucial that you understand how you are protected in the event that the developer goes bust or that the property is never completed.

12. DRAW DOWN MORTGAGE. Although not always possible, in an ideal world the amount you pay prior to completion does not exceed the level of equity you are investing i.e. if the stage payments are say 5%, 15%, 10% and then 70% on completion and you are borrowing 70%, you would not need to draw down the mortgage before completion.

13. COMPLETION. When your property is completed, arrangements need to be made for the handing over of keys, connection of all utilities, furnishing and snagging. Make sure you know how these issues will be handled well in advance of the completion date.

14. LETTING AND MANAGEMENT. As each day you own the property is costing you money until the unit is let, the sooner you instruct letting agents the better. Your sales agent may recommend certain letting agents and there may be a saving on normal commissions. Remember though that if several investors have bought in the same development, you will be competing with them and the same agency can end up with dozens of identical properties to let. Take advice early on with regard to expected levels of furnishing and other local market practices.