Hi,
I am the greenest of all here so if I don’t make much sense be patient[
]
Anyway, has any of you guys ever considered looking into overseas property markets? I noticed few peopel trying in NZ and having pretty much positive experiences but what about Europe?
I know it sounds silly but as many other after finished Steve McKnight’s “0-135 in 3.5 yrs” I also got all excited that there is a light on the end of the tunel. However after number of hours searching for something passing the “11secs test” I did not have much luck.
Therefore after while I tried, just for fun, apply the same concept to another market. It took me a while but on the end I realized that basic concepts outlined in the book are applicable on pretty much any business market. Yes I tried NZ and it looked easier to find +ve cashflow properties there and then, coming from that part of the world, I tried to look in East Europe.
For those who don’t watch the situation there much:
Few post-comunist countries, that btw are showing quite reasonable economic growth over last few years, will be invitied to EU in May 04. Now if you look at property prices around that area you will see that property prices in these countries is incomparably low to their future EU counterparts. Why?
Well in countries being squshed by comunists for so many years people are not that rich in there. Basically only few can really buy they own house and even mortgage repayments were, until recently affordable to rather high than average income earners. Therefore the property demands, as I see it, are pretty low and market prices VERY reasonable.
While not EU member, there are restrictions on foreign investors owning a property so I expect rather big capital growth once the countries become EU members (ie open markets to richer western neighbours) allowing regular western european invest there for few bucks.
Now back to +ve cashflow – if you quickly look at the property markets there, my wild guess is that you will find 9 out of 10 properties complying with Steve’s 11secs rule; personaly after while I considered property returning 10% p.a (!not CoCR I mean 10% of its actual market value!) pretty average performer.
So if this is not a huge potential what is then?Anyway, not to bore you any longer, do you guys have any thoughts, ideas or traps I am not aware of here?
Thanks
Dan
Hi all, I am in the Uk and am putting together contacts etc for property purchase in Aus. I would be interested in a reciprocal arrangement for property in the UK/Europe. So, if you need contacts over here let me know on [email protected]
Investing in other markets than one’s own does provide some risks as well as advantages such as :
1. Unless you live there it will be difficult to manage the property efficiently or for that matter to locate a suitable investment property.
2. Currency risk. The economy of some of these countries you seem to refer to is in tatters so there is a distinct possibility that in terms of your own currency at home the actual value of the overseas property actually goes down.
Then again in Aussie terms the overseas country’s currency may increase in value. So we suddenly find ourselves in asituation where another area has come into play which we have to take into account.3. Some of these countries have a lot of crime and violent (mafia type) people. You may lose control of your property to ‘the wrong’ type of person and not being able to regain possession.
4. you may not enjoy the same kind of protection by the laws as in the country where you presently reside.
5. Some countries are politically unstable. Do you really expose yourselves to all kinds of risks which flow forth out of a county in upheaval ?
6. Possibly hard to near impossible to get a mortgage loan.
7. You may experience language problems.
8. Different type of laws compared to the system you presently are exposed to.
9. Where you live now you can use your spare time to locate the right kind of properties. To buy in far away places likely means you cannot work there so you lose income whilst you are looking for suitable properties.
10. some countries (for example Turkey) I understand you cannot own property being a foreigner.
11. I know someone who whilst living in Turkey
owned a multi million dollar vacant development registered in his wife’s name (who was Turkish nationality whilst he wasn’t and he could therefore actually own property in his own name). well this development site was ‘stolen’ from him by Mafia type people who obtained a replacement copy of the title deed and thence sold it. My friend couldn’t in this situation recover the land.That person’s story isn’t finished. His share broker took off with a couple of hundred (US) dollars’ worth of shares belonging to him. (about 800 other people found themselves in the same boat). In the mean time the perpretators of these heists disappeared to another country.
However I have to admit that this kind of thing could possibly happen even in Australia I guess.
The point is that there may not be the same kind of rules in place in a different country.The main point of the above is that in some countries they don’t (as yet) have the same kind of regulations (to protect one) in place as in Australia).
11. Do you really want to spend a big part of your life in a cold and miserable climate ?
Some advantages ?
A. Well you could obtain some reduction of risk (both currency and other factors) by spreading your investments out over different countries.
I would guess that the subject is really a very hypothetical exercise for us as how many of the people on this website would actually be in a position to pursue investing in another country on a largish scale ?
BTW my understanding is that property in france is relatively cheap.
Then again, going there means that one eventually will be living in a Muslim country (dealing with new kind of laws and customs).Now if france was only France it may be a different matter. france is on the way down even though its leaders are desperately trying to
re-establish france’s earlier glory and importance. Yes, you are quite right, obviously I don’t like the frogs anymore.B. If you are about to run away from the law (or your wife or your creditors [
] ) where you live now you could of course try to find a suitable country which can serve as both a safe haven where not only you cannot be touched but where you also could do some real estate investing.I have no doubt there are some other pros and cons as well.
Pisces133
>>registered in his wife’s name (who was Turkish nationality whilst he wasn’t and he could therefore actually own property in his own name). <<
Sorry I made a typing mistake. Even tough my friend is married to a Turkish citizen he cannot own property in his own name (so the above paragraph should have read ‘ ………… he couldn’t therefore actually own property in his own name’ )
However I have just thought of another risk guys.
If you were to invest in a country where you cannot own property in your own name and if you placed the property therefore in your partner’s name because he or she can own the property because of his or her’s nationality that partner can leave you and take the property with him or her !!! [
] []Pisces133
Thanks for ideas PeterM. Yes I see your point (actually quite a few of them) and I understand that handle a property portfolio in different country could be difficult, but it’s like always with investment – with greater risk comes greater profit or not?
Another question crossin my mind was – have you been to any of these young market economics lately? Say in last 3-4 years? I would not say that the economics there are in that big mess anymore, frankly over last few years they are showing quite decent growths.
Certainly there are perhaps some issues we are not use to over here, but one thing needs to be kept in mind – countries like Poland, Hungary, Czech republic, Slovakia and few more who will joind EU shortly went over last decade through rather drastic process of changing/adjusting their laws, norms and standards to EU countries. Only that way they could have been promised an entry to EU, its resources etc. So effectivelly the law in say property investing should be pretty much the same as if you would invest in for example UK, Germany…(you name a big EU country you consider stable and effective).
And, as I see it, I would not have that much more concern of some unlawful happening to my property in UK than I would have in OZ. Then if the rules are same in UK as there are in say Hungary how much more risk am I running into?
Thanks for ideas.
Dan
Dan wrote:
Then if the rules are same in UK as there are in say Hungary how much more risk am I running into?Good laws alone is not enough.
Some dictatorships had marvellous constitutions that ‘guaranteed’ the rights of all, but in fact individual rights were not valued.
The security of a nation for investing encompasses such things as:
1. Political stability
2. Rule of law
3. A sound economy
4. General respect for private property
5. An impartial police force, bureaucracy and judicial system
6. A comparatively stable currency
7. Political institutions and governments have broad legitimacy across society
8. A unified populaton without seperatist tendencies (which leads to unrest and terrorism)
9. Availability of infrastructure to manage the property (eg managing agents, banks and tradespeople) – no good if the heating breaks down in mid-winter!
10. A political system that has checks on government power
11. Laws that require fair compensation for property resumedThen there are the usual due diligence things (plus some others like earthquakes for countries around the Mediterranean).
Note that some parts of Europe have negative population growth and a rapidly ageing population (more so than here).
I’ve never been to E. Europe, but my mind pictures cities full of hunchbacked elderly women in headscarves with few families or children. Their kids might have gone west.
This has implications for long-term occupancy rates and type of housing needed.
Regards, Peter
peterp wrote:I’ve never been to E. Europe, but my mind pictures cities full of hunchbacked elderly women in headscarves with few families or children. Their kids might have gone west.
With all the respect I think that if you want to assess a situation/maket you should not limit yourself by relying on some old fahioned stereotypes. As that managerial saying goes: “think outside the square” or better yet how Steve McKnight puts it in his book “…. you need to do things differently…”, but you probably know that anyway.
What I want to say is that if I do my research and have all the signs and indications pointing to some more or less obvious direction I make my decision based on that.
Your thoughts?
Thanks.
Dan
Dan76 wrote:
‘With all the respect I think that if you want to assess a situation/maket you should not limit yourself by relying on some old fahioned stereotypes.’
I agree. I was just pointing out that Europe isn’t exactly the population growth capital of the world.
http://www.unhabitat.org/habrdd/trends/europe.html
suggests that European population might have already peaked.
More detailed info by country appears at:
http://www.unece.org/stats/trend/trend_h.htm
That’s not to say that there are opportunities even while the population is dropping. But if population is dropping to such an extent that the number of households is also dropping then there may be more houses than people know what to do with. Vacancy may loom!
Urbanisation will create some opportunities as people move into the cities. Also what will happen to all those ageing apartment blocks? Will they be renovated or demolished?
Is there a growing middle class who will demand better housing? Will they mostly rent (as in Germany or Switzerland) or buy as in Australia or the US?
Then what about coastal, forested or alpine areas – though the population as a whole is dropping these areas might still grow for their lifestyle attractions.
The major Aust capital cities have had steady population growth for a century or more. Those that performed worst (Adelaide & Hobart) seem to have had more volatile gyrations than places like Sydney, Brisbane and Perth (according to Residex graphs). There is still an assumption that the Australian population will keep growing (at least in the major cities and coastal areas) and real prices will over the long term rise, or at least hold their value.
Property investing in an area where population is falling will be ‘interesting’. It might be cashflow positive, but the more the population is falling (and there’s uncertainty about the future) the more returns investors should demand before they buy to cover the risk. Add to that contingencies for current variations, and the returns would have to be pretty big for many to take the risk. But good luck to those who do!
Regards, Peter
Hi Dan,
My suggesting is to take each country as it comes. Do your homework and if your happy with the situation there try it. I recently spent 40 minutes in a REA’s office in a foreign country cashed up and ready to buy. They spent 30 minutes explaining to me that foreigners don’t buy property let alone IP’s. I left shaking my head and no deal was done. One of the banks in this country only wanted a minimun of 60% deposit before they would lend. The Australian finance system is one of the easiest in the world to get around when buying property. Try to find an Australian bank in the country you want to invest in or an international bank fron the UK or states. If you plan on living in the country and then decide to move back to OZ you may be asked to refinance with another lender. There are investors in nearly every country making money through real estate, so why can’t you? Finally, never risk what you can’t afford to lose.
C2
“Is it true the more you owe the more you grow until the bank steps in?”Hi guys,
you have certainly made me thinking.
peterp:
I looked at the links you provided and I agree with you that the population growth could be one of the major concerns there.
Personally I suggest, that opening the gates to immigration into Europe will be most likely the ultimate solution to this as ageing community will need someone to work and pay taxes. However I admit this is just a pure speculation on my behalf and it does compare to the facts you have shown me especially when it comes to investment.c2:
Of course I am very much concern about all the possible risks and this was the reason why I started this conversation here. At any occasion U am not the a person running blindly into some uncertainity, but there are times when one needs to look around open minded. Especially tryiong oto enter a property market, which has most probably just finished one of its biggest bull trends in last decade:(
The bottom line here being that, I think I have already mentioned this, I do have quite reasonable number of ties and contacts to that part of the world market and with its CoCR of 25%+ it is really tempting.Guys, thanks for guidance.
Dan
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] ) where you live now you could of course try to find a suitable country which can serve as both a safe haven where not only you cannot be touched but where you also could do some real estate investing.
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