If I could put my finger on the one common denominator that separates successful international real estate investors from those who end up regretting their purchasing decisions, it would be taking the time to gather information. This discipline is particularly important if you are the type of investor who often makes emotional purchasing decisions. If you tend to lead with your heart rather than your head it can be very difficult to slow down when you’re standing looking at the most beautiful ocean view you have ever seen and your real estate agent is telling you that another buyer is interested.
But you must resist the temptation to rush into a purchase. In order to make the right decision you need to equip yourself with information from a range of different sources. It’s not enough just to follow the lead of your real estate investor, you’ve got to triangulate that information with details that you pick up in other places and from other sources. You can learn a great deal for example by chatting to local expatriates, by reading international real estate websites (such as this one on Costa Rica for example) and by meeting with local investment analysts.
Try not to factor in future improvements into your purchasing decision. It’s likely that your real estate agents will tell you about the new road, the new airport, the planned hotel etc. But even though these are all positives, try not to focus too much on them. It’s safest to assume that they won’t be in place even after several years have passed. Then ask yourself if the investment still looks like a good one.
Once you have gathered enough information to determine that the property you are buying offers good value, it’s time to start your due diligence process. For this you’re going to need to hire a good quality real estate lawyer. My experience with overseas property investing has been mainly in Nicaragua and Costa Rica where Spanish is the official language so I made sure that my real estate lawyer was able to speak fluent English.
Another suggestion that I think makes sense when purchasing property overseas is to not only ask your lawyer to review the title deed but link the information back to a physical plan of the property. In some countries the mapping of properties is a little haphazard so making this link to the actual property on the ground is an important additional step. It is also prudent to purchase title insurance so that you are protected going forward. Title insurance companies will provide your real estate lawyer with a list of due diligence checks that they will need to do on so this adds an extra level of review over the legal work.
Take particular care when purchasing off plan to make sure that you can get the appropriate permissions for any building work that you intend to carry out. If that building is being conducted by the developer make sure that he or she has those commissions and is able to build the agreed construction.
