International property expert and founder of Hurst & Wills, Lisa Bathurst, puts to rest seven common myths around owning an investment property abroad. With more than 15 years’ experience helping people make good property investments in the United Kingdom and Europe, Bathurst has seen it all. Here she deals with misconceptions that may be preventing you from making a sound, international investment.
Myth 1: Investing offshore is only for people with millions of rands
“This is simply not true,” says Bathurst. “Hurst & Wills offers luxury student accommodation apartments, which are sound investments, at a total cost of R1,2 million. Thanks to our experience and contacts in the UK, we also have access to financing. This means that you can invest for half of that amount and have your tenants buy the rest, or you can purchase luxury residential buy-to-let apartments in a prime UK city. In reality there are plenty of options that cost far less than you think,” says Bathurst.
Myth 2: I need to buy cash-only as I’ll never get a bond overseas
“This is also not necessarily true,” says Bathurst. “We have secured bonds for many of our clients. The myth here is that you need a foreign passport or you need to earn millions of rands a year to get a bond abroad, and this is not true. We have successfully helped clients buy properties by putting down a 25% deposit with an interest rate as low as 2.5%, and having their tenants pay the rest,” she says.
Myth 3: I’m worried about exchanging money and losing out on the exchange rate
“The exchange rate can be a tricky one to navigate but you don’t need to lose out,” says Bathurst. “We recommend that our clients send their cash using a reputable FX company and send it in batches, that way you can hedge. Most of our properties can be purchased in instalments and we can assist clients with tailored payment plans. In some cases, a client only needs to send 10% overseas and then has several months, sometimes up to two years, to send the rest.”
Myth 4: It'll be difficult to find tenants and maintain when I’m thousands of km away
“All of our property investments come with hands-off, fully-managed options,” says Bathurst. “Many come fully furnished with curtains and TVs. Most of our builds come with a 10-year warranty so that solves the maintenance and fixing aspect, and we even have properties that get an annual lick of paint included,” she says. “The properties can be managed by yourself if you choose to, though why would you? Otherwise, we work with partners who will vet your tenants, check them in, instruct maintenance and collect rent.”
Myth 5: It'll be complicated from a tax perspective
“We are not tax experts so always seek your own independent advice from your tax and accounting specialists. However, as a general rule, buying a property or two overseas is fairly simple from a tax point of view,” says Bathurst. “SA has a double tax treaty with many countries, so you never pay too much tax. You may have to fill in a form at the tax services in that country, but this can often be done online or using one of our preferred partners who will charge you a nominal fee,” she says.
Myth 6: What if I need to access the cash in my property investment?
“Life is unpredictable. We know that things can change and that you want to know that you can access your cash if you need it,” she says. “You can bring you rental income over from overseas anytime, with a click of a button using our FX partners. Should you need a larger sum, there is an option to refinance or mortgage the property and take out some equity. Alternatively, selling the property should be simple enough as long as you have bought at the right price and more importantly, in the right location. Of course property is less liquid than the stock market, but we make sure that our recommended properties offer a good monthly income and a viable exit strategy,” she says.
Myth 7: Student accommodation is very popular, but I don’t trust students renting my property
“Modern student accommodation overseas is nothing like the university accommodation we remember. The Purpose-Built Student Accommodation, or PBSA as the UK refers to it, is a result of government initiatives to provide safe, appropriate student digs close to universities. These purpose-built buildings are more like luxury flats with media rooms, rooftop gardens, coffee kiosks and laundry. Students are prepared to pay a premium to rent them. They take pride in their apartments. The rent is guaranteed, and most projects include maintenance as part of the deal. So, you’ll never have a student headache, or have to worry about the apartment’s condition,” she says.
“Investing in an international property is easier and more accessible than you think,” she says. “However, it is always best to use a professional, independent property company, like Hurst & Wills. We are not tied to one developer or one development, we are independent and make sure you, our client, gets the best possible investment in line with your wealth strategy,” says Bathurst.