Offshore

However, there are unique challenges that come with buying offshore property. These factors include lack of information about the offshore market; identifying and managing the properties; cultural, legal and tax hurdles as well as currency and interest-rate risks.

Problems with offshore property are more financially taxing for buyers because of the distance factor. You might need to travel abroad to settle matters or, even if you don't have to do so, you'll still incur substantial communication costs.

Still, it's possible to minimize the additional risks that come with offshore real estate purchases. With sufficient planning and getting the 'right' people to help execute and manage your property.

Knowing why you want the offshore property can help minimize the risks. For instance, if the property is related to emigration purposes, then the currency-exchange risk isn't much of a concern. The purchaser may only need to look at the tax implications of disposing of the property and the property market outlook.

Then you have to develop an investment strategy for your prospective asset. Even if you're buying the property for personal reasons, it represents an opportunity cost in your portfolio and should, ideally, generate rental income as well as increase in value over time.

A strategy also helps prevent rash decision-making such as buying on rumors that properties in a certain location will increase in value or because the developer is offering a discount.

A well-thought-out strategy involves a fair amount of researching and managing the property and identifying the funds you have available and the financing that you need. Because the purchase cost is affected by the exchange rate at that point in time, think about how long you intend to hold on to the property. Come up with an exit strategy with triggers what would lead to the sale of your asset and lay out the process that you would take in doing so.

The buyer must research and make comparisons before making a commitment. Many investors go wrong because after seeing an advertisement in the paper, or attending a seminar or exhibition, they jump in.

If you're buying for investment, consider the likely returns in terms of yield and capital growth by looking at the economic potential of the property, the type of property and the surrounding area. Other important factor is the cost of borrowing. In a low-interest-rate environment one can be confident of covering cost and make a good yield; especially for properties which one intends to rent out. There are many expenses involved in buying property both locally and offshore. They include the agent's commission, the legal fees, bank charges and stamp duty. Taxes are usually the highest cost, but in many countries, this expense can be minimal if you have a mortgage. Before you commit to the property, look for your mortgage provider and get the loan 'pre-approved'.