Overseas Property

Overseas Property Finance

Alternative Finance

A mortgage is not the only way to finance an overseas property purchase, a brief run-down is below. David Stanley Redfern offer independent financial advice. To find the best option for you call: +44 (0)800 634 2377.

• Cash >
• Buy to let >
• Company Purchases >
• Shared Investments >
• Pension Schemes >
• Investment fund purchases >

Cash

Cash is perhaps the most obvious form of alternative finance, but how suitable it is depends on the investor.

Some will say that overseas property investments are best funded by using funds other than your own, a bank's for example. This is because it leaves more of your own funds to make further investments thus earning a higher return.

On the other hand, if your are not in the market for making multiple overseas property purchases, and you have the funds available to finance your single purchase in cash, then it is beneficial to use your savings, as you pay a higher percentage on debt than you earn on your savings.

back to top >

Buy to let

Financing a purchase on the strength of the likely rental income it will bring is a popular form of finance.

However the banks and lenders will always make their own assessment of what that income will be -- and it will be a conservative one. Therefore it is unlikely that you will get anywhere close to 100% finance.

This is also a very limited option in the market of overseas property investment, because many of the most favorable markets, the so called emerging markets, may not have this type of financing available.

back to top >

Company Purchases

A method that should perhaps only be considered if no alternative is available, company purchase is exactly what it sounds like, the use of an investors own company to finance a property purchase.

This can be a good idea if said company is a properly managed investment company. But it is to be thought about carefully as any property purchased will become a commercial asset of the company, and double taxation could be incurred when taking money out of the company.

Those with trading companies may also find their use to finance a property purchase attractive as it is easier to raise funds through the company than an individual. However the taxation issues this raises can damage the profitability of the trading element and could put it at risk from trading creditors.

back to top >

Shared Investments

Again shared investments are exactly what you would assume given the name: buying a property with one or more friend, relatives or even acquaintances. This method makes an overseas property investment feasible to the masses by reducing the amount of money necessary for it to become a possibility.

On the downside is the possibility of disputes. To limit the possibility of having to make a rash early sale before the maximum gain has been made it is wise to have some sort of contract drawn up detailing all parties, and their respective amount of finances involved in the purchase.

back to top >

Pension Schemes

Some pension funds may allow an overseas residential property investment, though not all will allow such a purchase in their mainstream funds, and so a specialist pension fund manager may need to be sought.

Strictly governed by both law and taxation regulations and differing from one country to the next, advice from a independent financial advisor is neccesary when considering this option. It can however be appealing because of the significant tax advantages relating to contribution into the scheme, the good pension generated and the capital gain when sold.

back to top >

Investment fund purchases

This is a group of individuals pooling their resources under the management of an investment advisor or fund manager.

For example An investment advisor opens a fund that requires at least £10,000 per person, from no less than 500 investors. This provides a fund of 5,000,000 to invest in an apartment complex which generates rental income and earns capital appreciation.

Perhaps the most important downside of such an investment is the non personal nature, with so many investors, decisions are usually made by the fund manager on behalf of all investors.

It is worth stating that these funds do need to me independently managed and there is a cost associated with this service; usually a percentage of the value.

back to top >

Contact David Stanley Redfern Ltd...

For more information on the properties available with David Stanley Redfern Ltd please make an enquiry on a particular property of choice or alternatively contact us using our contact details here >