Investing in overseas property is a great way to earn a passive income and slowly build on your wealth – in addition to your regular wage.
Although property prices have fallen in Australia recently, statistics show that Aussies would consider looking outside of the country for investing in property.
Research taken from a national survey of 1000 respondents, commissioned by WorldFirst, reveals that more than 50 percent of participants would invest in overseas property, rather than Australia, providing they had the tools and resources to do so.
If this strikes your interest too, make sure you do your research before you take any action.
Here are some tips to get you started:
Seek local advice (i.e. financial advisors, local lawyers, international bodies)
First thing’s first, create a list of experts who will help streamline the purchase. These may include a local accountant, solicitor, overseas buyer’s agent, and specialist money transfer service – who will understand the market thoroughly and be able to help you research, and maximise the return on investment.
Gain a local understanding of the property purchase process in that market, and management fees, taxes, insurance, maintenance costs and currency exchange rates.
Watch that dollar
Keep your eye on movements with the Aussie dollar. Ideally, you’ll make the transfer when the AUD is performing well, meaning you’ll be able to spend more on your investment.
To get some guidance on the best time to send money overseas, speak to a foreign exchange provider, like WorldFirst, who can provide commentary on market conditions.
Ditch the banks
When it comes to purchasing overseas property, consider how you’ll physically make the payment. Many people opt to send the money overseas through their bank because it’s convenient and familiar. What they may not realise, however, is that a big chunk of their money transfer is being swallowed up in hidden fees and bad exchange rates.
For example, if you were to transfer AUD 150,000 to euros, you’d get an extra 4,500 euros than if you were to use one of the Big Four Banks.
Check out WorldFirst’s exchange rate comparison tool to see how much you could save on your transfer.
Lock in a great rate today to use in the future
So, you’ve rented out your new abode to some (fingers crossed) star tenants who pay their rent on time. You may choose to collect these funds after every transaction, or alternatively choose to let a solid amount of money build up over time and repatriate the bigger sum in one go.
If you do choose to wait, and the exchange rate is favourable right now, consider taking out a forward contract – an option that allows you to ‘fix’ your exchange rates for up to two years. This means you can make regular and consistent payments at current exchange rates, regardless of future changes in those rates.
Disclaimer: These comments are the views and opinions of the author and should not be construed as advice. You should act using your own information and judgement. Whilst information has been obtained from and is based upon multiple sources the author believes to be reliable, we do not guarantee its accuracy and it may be incomplete or condensed. All opinions and estimates constitute the author’s own judgement as of the date of the briefing and are subject to change without notice. Please consider FX derivatives are high risk, provide volatile returns and do not guarantee profits. We have no commercial affiliation with any organisation or commercial interest regarding the venues mentioned in this article. The information is only provided as gathered and should be verified before, using your own judgement.