It is almost impossible to go through a week without coming across an advertisement for exiting overseas property investment opportunities. At nearly the same rate, we also see news reports of yet another oversea project going down.
The fact is, there exist legitimate oversea opportunities which means there are still shady ones out there. As a savvy investor in Singapore, it’s your responsibility to put your hard earned money where its safe and that takes long and hard thinking. If you are planning to do this for the first time, here are 4 promises that almost every newbie get trapped with when it comes to overseas investment.
Expansion and development plans
You will notice that talks for property investment are accompanied but details and lavish pans of future government infrastructure or large-scale commercial projects coming up. These projects will, therefore, lead to your overseas property being worth much more in less than a decade. The thing is, unlike in Singapore where investor is almost certain that development plans will be completed thanks to prior planning by the government, some countries overseas can change plans overnight. For example, a planned airport might be shifted hundreds of kilometers leaving you at risk of making a loss even before your project is complete.
It is always comforting to know that you can quickly sell your property back to the developer if needed. Most of the developers mean their word during project development that they quickly shift if they run into financial difficulties themselves. To avoid this pitfall check the record of your developer and their crucial stakeholder. You need to be almost sure that they have the economic resilience to weather don any financial difficulty as a company.
When looking at the development projected returns tables, you need to know how they come to these figures. One thing to look is if they take into account taxes and fees paid when purchasing the overseas property and the currency exchange rate. From an expert point of view does the development return realistic? Having taken that into account, how are the returns compared to putting your money in other financial instruments, e.g., CPF?
Some of the reviewing does not need expert help. For example, check to see if the locals themselves are investing in the development. If not, you need to know why as there might be a good reason behind it.
Development selling fast
Well, we all want to make money, and a lucrative investment is an answer. In the talk about the deal, you will notice that developer are always in a hurry to close the deal and their ticket to that is that there are limited opportunities and they are running out, fast. If you get drifted, you might end putting your money in an overseas development plan that had plenty of red flags.
To avoid being a victim of the above ‘promises’ take time to research and consider an alternative investment with a clear head. Tip, don’t make your decision based on the long queues of sign up seen in convention centers.