With the summer over, now is the time buyers who have considered making a foreign property purchase start to look at making this a reality.
Stephen Anderson, Managing Director of Algarve-based Infinito Real, told the Algarve Golf & Property Magazine that he believes there are common, costly and time-consuming mistakes which many novice investors make.
Budget - Before starting to look at properties, either on the internet or by arranging a viewing, set a budget and know how much you can afford. Too many times investors come looking for their dream property but haven’t looked to see if the amount they can afford matches that of their expectations, and this often leaves them disappointed. There is more than just the cost of the property, so consider all fees, mortgage arrangements and furnishings as part of this budget so you do not use your entire budget on the property leaving you with a hefty bill for all the extras.
Location - Consider where you want your property to be located. If you want something in the middle of nowhere look at the ramifications of this in accordance with the purpose of your purchase. For example, if the property is for your own use, a holiday retreat for some peace and quiet, no problem. However, if you are looking for a buy-to-let investment, you can’t expect to cover 20 weeks of rental throughout the summer if it is not near local facilities. Many people feel that being near an airport is an important factor but in the main tourist spots of Portugal, you are never more than an hour from an airport, Faro for the Algarve and Lisbon for the Silver Coast.
Property Profile - Make a list of priorities in order of importance, i.e. private swimming pool, near to the beach, strong rental opportunities, sea views, child facilities, and then consider what you would be prepared to sacrifice. Without an unlimited budget, it’s rare you will find everything you desire, so there has to be some compromise. Highest on the ‘wish list’ is usually sea views, but this is something which can bump the cost up quite significantly. This is especially true in the Algarve where there is only about 150km of coast line and the surrounding land is very flat so frontline properties are more scarce, and therefore come with a hefty price tag.
Research – Look at the competition and know your market. Make sure you are paying the market value and not what you have been told is the market value. Always visit a property before making a purchase and do not rely on an advertisement ‘selling the dream’. It has to be your dream and suited to your individual requirements and this can only be judged by seeing it yourself.
The future - Consider re-selling as an important factor. Many buyers only look at the immediate purchase, but even if you have no plans to re-sell in the near future, this should always be considered as circumstances can change. Lots of people who bought in ‘the boom’ were lured to buying new properties which looked great, but were built on estates with numerous other properties exactly the same. This has left them with much competition and a lack of rental demand, therefore limiting the properties ‘saleability’ going forward.
“The most important thing to remember is, buying a foreign property is very different to buying, say, a property in the UK. It is essential to do your research, know the area and talk to other people who have bought in the same region to get advice. Then making a purchase can lead to a sustainable and profitable investment,” said Stephen Anderson.
This article first appeared in Algarve Golf & Property Magazine – www.algarvegolfandproperty.com.