Buying a holiday home abroad. What to look out for?

silvercar

Having had an amazing holiday renting a flat abroad and seeing the properties on the market nearby, we are toying with the idea of buying a place ourselves. We already have two friends who have bought in the area and have visited before, so know the area reasonably well. So it is a place we would be happy to visit often. Also from experience we know that there are a shortage of flats with pool access in the area, so are confident that we could rent it out when we need to.

The plan would be to rent it out for a few peak weeks a year to cover the maintenance and running costs and be able to use it ourselves at other times, thus giving us a couple of extra holidays a year for little more than the price of flights.

During our recent holiday we managed to visit a couple of letting/ managing agents and view a few properties.

Anyone any pearls of wisdom?

PasturesNew

Things to watch out for: foreigners
More things to watch out for: Dodgy foreigners that want to flog you flats and villas

How does the maths really stack up?
How many ways can you get there affordably?
Is it relying on one Ryanair route, that might be pulled next year?
Have you ever been out of season? How deserted is it?
How would you do the marketing?
What are the running costs/commitments?
How would currency fluctuations affect your ability to pay the charges?
Which currency would you get the mortgage in?
Have you stress tested your spreadsheet for a variety of currency rates?
Who would manage the property on a day-to-day basis? (cleaning, sheets, fixing broken stuff, chucking out holidaymakers from hell at midnight?)
With the management company, would you have to pay a fee for your own holiday (I've heard of some that make a charge because they're unable to make money/bookings for the weeks you want).

I would say ... I've never been abroad. These are just my first thoughts plucked from nowhere.

Cannon_Fodder

Research, research, research.

Country?

During the boom, pretty much anywhere that there was a sniff of demand to build, got built on - even places that made little sense managed to get built on - so why is there a shortage somewhere nice? You viewed a few, but there is a shortage...? Doesn't add up.

Are you including your mortgage payments/offsetting the loss of interest if a cash buy, in your "running costs"?

I would be cautious of acting swiftly after the 'amazing holiday'. Go back in October or next spring - as if you need to fill it to cover the costs, you will have to visit when its not peak time - to see if its still a wonderful spot...

With headlines saying "20 travel firms likely to go bust", is the "staycation" going to dent your expected volumes..?

While you may be happy to go twice a year for the next 3 years, what about 4 times a year for the next 10 years? Won't you fancy a change after a while? Are there no others countries/regions/areas/resorts you want to discover? When you have invested in your own place, you will feel you need to visit regularly to maximise your investment. "To get value for money". Which is fine, if you really won't get bored of rotating between the same restaurants, beaches, sightseeing spots...

Colincbayley

silvercar wrote: »

Having had an amazing holiday renting a flat abroad and seeing the properties on the market nearby, we are toying with the idea of buying a place ourselves. We already have two friends who have bought in the area and have visited before, so know the area reasonably well. So it is a place we would be happy to visit often. Also from experience we know that there are a shortage of flats with pool access in the area, so are confident that we could rent it out when we need to.

The plan would be to rent it out for a few peak weeks a year to cover the maintenance and running costs and be able to use it ourselves at other times, thus giving us a couple of extra holidays a year for little more than the price of flights.

During our recent holiday we managed to visit a couple of letting/ managing agents and view a few properties.

Anyone any pearls of wisdom?

Been there, done that, still doing it!
Loving it!!

Life is just too short, if it is really what you want, can afford it then go for it, you are a long time dead afterall.

BUT!! Do your research and when you have done that do it all again and then a 3rd time. CHECK everything that anyone tells you and don't get caught up with the excitement of it whilst still looking into the purchase.

Enjoy.
:T

theartfullodger

PasturesNew wrote: »

Things to watch out for: foreigners
More things to watch out for: Dodgy foreigners that want to flog you flats and villas

................

I would say ... I've never been abroad. These are just my first thoughts plucked from nowhere.

Dear PasturesNew...

Some might consider this extraordinarily chauvinistic outburst in extreme bad taste, arguably racist & probably outwith the Forum rules/etiquette..

& you say you've never been abroad..!!!

It might come as a surprise to you that there are some dodgy persons in these fair isles: A simple look at the Prison population would suggest, being as they are very much in the top half of the table..
http://en.wikipedia.org/wiki/List_of_countries_by_incarceration_rate

- are nothing to shout about.... Ask what most of Europe thinks of English footie supporters...

Perhaps time for you to explore Pastures New and learn a little of reality?

Sigh!


Lodger

It would be prejudiced of me to ask if you're a Daily Mail reader so I won't.

silvercar

PN, thanks, We decided to come home talk to people and "cool off".

PasturesNew wrote: »

Things to watch out for: foreigners
More things to watch out for: Dodgy foreigners that want to flog you flats and villas:rotfl:

How does the maths really stack up? yes, particularly if we rent out at peak times
How many ways can you get there affordably?plane
Is it relying on one Ryanair route, that might be pulled next year?easyjet, BA, national airline.
Have you ever been out of season? How deserted is it?march and october would be lovely, Xmas time less so.
How would you do the marketing?agent alreasy in mind. (that's how we found the flat we stayed in this year.
What are the running costs/commitments?paid by the rent if necessary.
How would currency fluctuations affect your ability to pay the charges?exchange rate is naff at the moment, doubt it could get worse.
Which currency would you get the mortgage in?sterling
Have you stress tested your spreadsheet for a variety of currency rates?
Who would manage the property on a day-to-day basis? (cleaning, sheets, fixing broken stuff, chucking out holidaymakers from hell at midnight?)the idea is to be too expensive to attract the tattoo brigade. Seriously, the rigmarole we had to go through to rent through these managing agents, I would be confident that they would be able to avoid the undesirables.
With the management company, would you have to pay a fee for your own holiday (I've heard of some that make a charge because they're unable to make money/bookings for the weeks you want).They would be managing it 52 weeks a year, so that cost would be in our running costs. Additionally they take a fee from the rental for times it is let.

I would say ... I've never been abroad. These are just my first thoughts plucked from nowhere.

silvercar

Cannon_Fodder wrote: »

Research, research, research.

Country?not saying yet

During the boom, pretty much anywhere that there was a sniff of demand to build, got built on - even places that made little sense managed to get built on - so why is there a shortage somewhere nice? You viewed a few, but there is a shortage...? Doesn't add up.
well it was difficult to find a rental with a pool, so restricting to buying with a pool. There were a few, but there's always a few properties on the market, anywhere.

Are you including your mortgage payments/offsetting the loss of interest if a cash buy, in your "running costs"? Yes and part of what makes it all possible is our offset mortgage here, paying 0.75% over base for ever.

I would be cautious of acting swiftly after the 'amazing holiday'. Go back in October or next spring - as if you need to fill it to cover the costs, you will have to visit when its not peak time - to see if its still a wonderful spot...The beauty of my plan, is that we would actually prefer to go there out of peak season, so it should be easier to rent out at peak times, leaving us to enjoy off season. Circumstances dictated when we would go this year, but that won't occur again.

With headlines saying "20 travel firms likely to go bust", is the "staycation" going to dent your expected volumes..?The rentals only need to cover the running costs. I don't need volumes, I need it to be rented for 6-8 weeks peak time in total.

While you may be happy to go twice a year for the next 3 years, what about 4 times a year for the next 10 years?Good point, at the moment I'm saying yes, but it could change, though our children would also use it independently by then. Won't you fancy a change after a while? Are there no others countries/regions/areas/resorts you want to discover? When you have invested in your own place, you will feel you need to visit regularly to maximise your investment. "To get value for money". Which is fine, if you really won't get bored of rotating between the same restaurants, beaches, sightseeing spots...good point, if its paying its own way I don't know if I'll feel obliged or not.

All info to chew on.

Cannon_Fodder

silvercar wrote: »

well it was difficult to find a rental with a pool, so restricting to buying with a pool.

Are you including your mortgage payments/offsetting the loss of interest if a cash buy, in your "running costs"? Yes and part of what makes it all possible is our offset mortgage here, paying 0.75% over base for ever.

Operators have not taken all the properties available onto their books this year, that they usually would, as they knew they couldn't shift their normal volumes. So while it may appear that few rentals were out there, you can be pretty sure that the local owners were wishing the operators had exercised their option to put more chunks of "stock" into their brochures/websites.

I found out for myself this year, when we had a glitch at our villa, and after an aborted re-location to the "only" (and therefore horrible) property the operator had left empty, that when you complain, suddenly a Premium villa becomes available, as it is sitting empty because the operator hadn't exercised their option of putting it in their brochure, but had the local contacts to call upon it when a situation arose where they need to mollify their customer...a couple of years earlier, it would have been in the brochure and booked.

So, although the websites/brochures might have appeared "light" on stock, this was not because properties have ceased to exist/don't exist, but is influenced by the agreements operators have made with owners for 2010, that may well change if demand recovers in 2012. Presumably they have already guessed what they will need in 2011. AIUI, if they have a good pre-xmas period, they can call on additional stock if need be. But if they have a slow spell, they will leave owners to try and shift them on their own, which often means left empty.


Re the offset. You will take some offset funds out to buy. That will increase the monthly mortgage directly. You've done the maths, and that's fine at today's rates.

At 2%, 4%, 6% ?

Something doesn't quite seem right, that you only need 6-8 weeks of bookings to break even. If it was that easy everyone would be doing it. Is it a particularly cheap property/resort, in which case can you really expect to dissuade "undesirables"? Or is it dependant on the 0.75% IR, in which case you know that cannot last forever, you might need to triple bookings.

silvercar

Something doesn't quite seem right, that you only need 6-8 weeks of bookings to break even. If it was that easy everyone would be doing it. Is it a particularly cheap property/resort, in which case can you really expect to dissuade "undesirables"? Or is it dependant on the 0.75% IR, in which case you know that cannot last forever, you might need to triple bookings.

The 6-8 weeks bookings cover the running/ maintenance/ agents. I guess everyone isn't doing it because not everyone relishes owning property overseas and also can't raise money to find it. Just as people here are renting, not because they can't afford the mortgage but because they don't have a deposit large enough to get a mortgage.

Its probably a particularly expensive resort, certainly the part of town we would be looking to buy in, so rents are high and that's what I hope would keep undesirables out. We had to pay a £1000 deposit to rent the flat we took, I hope that would put off lager louts - though I accept it would put off others. I'm aware this also leaves it vunerable to a white collar credit crunch, but the market isn't only from the UK.

missile

You do not say where you want to buy? Spain is still by far the most popular destination for Brits

1. Be careful buying off plan, you have no guarantee when (or even if!) your property will be complete.
2. Beware glossy sales brochures for new developments, buy a resale in a developed area, so you can see what you get
3. Guarantees in a foreign country are not always as reliable as you might think.
4. Prepare a budget for your monthly expenditure. Council tax (SUMA) is much less than in the UK. Electricity and gas are similar. Food is similar, unless you must have UK branded. Car tax and fuel is less.
5. Stick to holiday rentals. Get a Paypal account, so they can pay you by credit card.
6. Avoid long term rentals. Spaniard are honest, but Jonny Brit may trash your property then do a runner or it will be a nightmare to evict if they do not pay.
7. Buy within easy traveling distance of an airport.
8. If you are tempted to buy in one of the "new property hot spots" like Turkey and Morroco? DO NOT DO IT

I have owned property in spain for 8 years and would be happy to answer any questions you may have.

We are looking to relocate. I will not post a sales pitch, but if you are interested I can PM details.

silvercar

missile wrote: »

You do not say where you want to buy? Spain is still by far the most popular destination for BritsNot Spain.

1. Be careful buying off plan, you have no guarantee when (or even if!) your property will be complete.The only sea fronting development left off plan in the area looks amazing, if only I could afford it......IT will be the last one as there are no more locations within a reasonable distance of the town. Miles south of the town there are many, many new developments but no infrastructure at all, a desert out of season I would imagine.
2. Beware glossy sales brochures for new developments, buy a resale in a developed area, so you can see what you getI agree.
3. Guarantees in a foreign country are not always as reliable as you might think.
4. Prepare a budget for your monthly expenditure. Council tax (SUMA) is much less than in the UK. Electricity and gas are similar. Food is similar, unless you must have UK branded. Car tax and fuel is less.
5. Stick to holiday rentals. Get a Paypal account, so they can pay you by credit card.I would never trust paypal!
6. Avoid long term rentals. Spaniard are honest, but Jonny Brit may trash your property then do a runner or it will be a nightmare to evict if they do not pay.Its a holiday town, the only people looking to rent long term would be well off retired.
7. Buy within easy traveling distance of an airport.
8. If you are tempted to buy in one of the "new property hot spots" like Turkey and Morroco? DO NOT DO IT This isn't a guessing game, but its not a hotspot in that sense.

I have owned property in spain for 8 years and would be happy to answer any questions you may have.

We are looking to relocate. I will not post a sales pitch, but if you are interested I can PM details.

Do you rent out? Does that work for you?