DANGER OF INVESTING IN OVERSEA PROPERTIES

It is common these days for Malaysians who reside in Malaysia but yet invest on overseas properties. It is because they have yet to know about the danger of investing in overseas properties. For Malaysians, most of them have chosen to invest in United Kingdom, Australia and Singapore as the reputable places to invest on properties. These are also the top three countries where most Malaysian working abroad in these countries who tend to invest here as well. But let us focus on Malaysian who just want to invest in oversea properties for the sake of property investments.

Why people like to invest in properties

Normally, these investors that invest on overseas properties come from persons with few of these goals set in mind.

• Buying for capital gain – investors who seeks for not yet discovered location which they will buy and wait for the market price to go up due to increase of demands.
• Buying for personal use – there are investors who actually looking for a vacation home as a place where they could spent their free time after exhaustive hours of work. They are seeking lifestyle that is different from the one they lived back at home.
• Buying for rental income – some investors are actually looking to create cash flows from buying the overseas properties. It is common these days for vacation rental to provide more lucrative rental income for their owners.
• Buying for retirement overseas – there are investors that are looking for properties that provides them with different lifestyle for them during their retirement. They must know if the retirement lifestyle goal meets the budget that they have allocated for their retirement.
• Buying to transform their life abroad – there are however lifestyle driven investors which buy properties to start new life abroad and live different lifestyle. Normally this type of investors searching for affordable property at location that offers lower cost living.

MYTH! It Is Always More Attractive To Invest In Oversea

Many investors have started to invest for properties broad due to many reasons. Although everyone have their own reason behind it but most of it happens because the attractive opportunities they couldn’t get within their country. Here are few of the reasons most investors prefer to invest on overseas properties:

1.Overseas property always sounds attractive to many people, because there are usually better capital growth claim and higher rental yields that properties in Malaysia.

2.This is a great opportunity for one to own their own home abroad which they can use as a vacation home or the place where they able to retire that have lower cost of living and away from problems.

3.This strategy can provide you with passive income from your rental as if you turn them into vacation rental, the income might be more lucrative and you may experience higher earnings from different currencies.

4.Enjoy a rich cultural experience when you live abroad because there are certain places across the globe that are rich with local cultures which you can learn and appreciate at the same time.

5.You’ll be able to store your wealth in a private way without anyone knowing it because overseas real-estate is tax-efficient investment.

Risk In Buying Overseas Properties

Although the benefits really attractive to all who decide to invest, you should know the downfall and risks associated with the overseas property investments. Here there are few risks that you can’t turn your back from:

• Policy risk – unlike Singapore, most from the neighboring countries around us don’t have the stability in political term and this will add the significant level of additional risk to any property investment that have been made.
• Developer Risk – since many of the overseas developers are relatively unknown, this will expose more risks to investors. Most of them will claim that they have sort of association with the larger association.
• Asymmetric Information – refers to the situation where one party possesses more exclusive information compared to the other parties. This is the problem that investors need to be aware of. We don’t know the actual value of the property and the risks associate with it, they do.
• Foreign exchange risk – investing in an overseas property might expose you to the foreign exchange risk that many are not aware of. As the result, your rental income might also suffer from the foreign exchange risk. You have to suffer the loss when you want to convert your return to your currency later.

Conclusion

Since there are so much risk involved along the process, you should consider investing in local property market because besides you are doing it in your home country, you will experience the benefit of familiarity with your own property market, enjoy good margin of financing your property and best of all, less risks associate with for example currency, political, economic and regulatory.