SunSplash Homes -

Que 1: Are there risks of buying to be close to destinations served by budget airlines?

Que 4: Do I need a (Property) Financial Advisor?

Ans 4:

Financial advice.

A surveyor can stop you buying a 20-bedroom French chateau which is actually close to becoming a 20-bedroom French heap. A translator can prevent you from signing a document which says ‘I, the buyer, give all my money to the owner of this heap and expect absolutely nothing in return'. Yet there is one more advisor who may prove equally invaluable – a financial advisor.

Financial planning is an integral part of buying property and can be a complex topic. Few people will be able to pay for a property with a single lump sum, leaving the majority of buyers at the mercy of stage payments, international mortgages, currency fluctuations, varying tax regimes and more.

Financial and taxation regimes vary widely and taking advice based on your individual circumstances is critical. This is something to think about before beginning to look seriously; deciding how to share the tax burden and under whose name to register the property have significant financial implications. Most financial advisors will be able to help you plan for your domestic financing options and liabilities, but there are also firms specialising in the international market.

Financial Considerations.

Part of the appeal of investing in overseas property is that it is interesting, exciting, even ‘sexy'. However, when it comes down to it, it is the relatively dull aspects of finance which determine the success of the venture. Considerations of financing, exchange rates and taxation can make the difference between profit and serious financial headaches.

The reality is, however, that with a little forethought the financial aspects of investing abroad can be taken care of quickly and simply. The three areas that need consideration are: being aware of the additional costs involved (both in terms of upfront costs and taxation); making adequate provisions for currency risks; and selecting the best financing option.

Calculating the final rather than the asking price.

Most experts advise adding 10% to your budget in order to cover taxes, fees and unexpected expenses. However, making general assumptions of the cost is dangerous. Underestimating the costs could mean that you have to find extra money for the purchase once you have committed. This could be difficult, especially if the amounts involved are in the thousands. Equally, overestimating the costs could mean that you pass up an excellent opportunity because you assumed the purchase costs were higher than they were in reality.

Broad percentage estimates are simply not good enough and aren't actually necessary. Any agent will be able to give you an accurate breakdown of the costs involved and you should request this if it is not volunteered. Some of these costs, such as stamp duty, will often be derived from a fixed percentage of the property value. Others however will be fixed fees, regardless of the property price.

The best approach is to have a list of all potential, additional costs and write down the actual figures for the property in question. If you have access to Microsoft Excel or another spreadsheet programme use this as it will enable you to easily calculate the absolute values of percentage costs and to add all of the costs together. Holding the information in a spreadsheet makes it easier to compare the total costs of several investment opportunities at once.

As a guideline, the list below shows many of the potential additional purchase costs that you may encounter:

Stamp duty/purchase tax
Agent's fees
Lawyer's fees
Translation fees
Survey fees
Mortgage arrangement fees
Notarisation fees
Travel costs
Bank set-up fees
Currency transaction fees.

Financing your purchase.

When it comes down to it, you only have two options for financing your overseas property investment: use your own money or someone else's, such as the bank or even the developer themselves. Gearing your investment by using the bank's money to finance your investment is the ideal situation as it reduces your cash requirements and actually improves your return on investment from a capital gains perspective. If you decide not to use your own money to finance your purchase then there are three options available:

To raise a mortgage on the property you want to buy.
To re-mortgage against another property that you own already.
To find a property where the developer is offering delayed stage payments.

International mortgages: raising a local mortgage against your investment.

In many ways, raising a local mortgage for your property is ideal. One of the main benefits of financing your purchase this way is that your borrowing and repayments will be in the same currency as your rental income meaning that currency fluctuations will have no impact on your ability to make repayments.

Having a mortgage abroad will also make you feel more secure as your other assets will be left out of the equation. This creates a balance between assets (the property) and liabilities (mortgage debt) which is important. If you fall behind on payments the investment property is the only asset places at risk.

However, in many countries the mortgage market simply won't be developed enough for you to be able to get a mortgage there. Mortgages might not be available to foreigners (or even at all). If mortgages are available they may have restrictive lending criteria of prohibitive interest rates.

Outside the Eurozone, where interest rates were around 5% at the time of going to press, most places have higher rates that the UK or US. In places such as South Africa and Ghana rates are often much higher – 12%in Ghana and 15.5% in South Africa at the time of writing. Rates like this will heavily erode any rental income. Lending conditions are also tighter. The amount that will be lent will often be less than in more established markets. Typically, banks will lend no more than 80% of the property value, although this is changing as the overseas mortgage market becomes more established. Repayment terms will also be shorter than the 25 – 30 years that many investors are used to. Often repayment terms will be between 10 and 15 years – again, though, this is changing as overseas property investment becomes more common. This significantly increases the cost of monthly repayments. There are often restrictive age limits on lending, making it difficult for anyone over the age of 60 to borrow.

As a general rule, the more ‘emerging' a market, the less likely it is to have a developed mortgage system. Buyers can easily borrow in order to buy in Western Europe, the US, Australia and parts of the Caribbean, but in countries outside of these areas it can often be a different story. A first step to finding out whether mortgages are available in the country you want to purchase in is to ask an agent dealing with that area. Agents realise the value of mortgage financing to investors and will be very keen to let you know when it is available.

Alternatively, there are some financial services companies which specialise in arranging mortgage finance overseas. It is worth speaking to them as they sometimes manage to arrange special deals on mortgage financing in countries where it is not usually available to foreigners.

Countries where it is possible to borrow locally include:

Albania, Andorra, Australia, Austria, Belgium, Bosnia, Bulgaria, Canada, Caribbean, China, Croatia, Cyprus, Czech Republic, Estonia, Finland, France, Germany, Ghana, Greece, Holland, Hong Kong, Hungary, India, Ireland, Israel, Italy, Latvia, Malaysia, Malta, Montenegro, Morocco, New Zealand, Panama, Philippines, Poland, Portugal, Romania, Slovakia, Slovenia, South Africa, Spain, Sweden, Switzerland, Turkey, UAE, USA. There are more being added all the time.

Advantages of a developing mortgage market.

A developing mortgage market is one of the most reliable indicators that a country is on the way up. Without a developed mortgage market there is a limit to how far prices can climb. Where there is no mortgage market, the majority of transactions are in cash, purchasing power remains low, and prices stay artificially low. Turkey is a good example of a mortgage market which has just taken off. Previously, interest rates have been as high as 22.5% and repayment terms were 60 months for loans in lira and 180 months for loans in foreign currency. Mortgages are now readily available from a number of banks with interest rates from 6.4% over a term of 20 years. Re-Mortgaging to finance an overseas investment.

Another option is to re-mortgage your home or other properties that you own in your country of residence. This has become relatively common practice in countries like the UK and Ireland where house prices have risen dramatically, giving people access to large amounts of equity.

The advantages to this approach are that you will be able to arrange finance before you find a property abroad, meaning that you will be ready to process when necessary. You are also likely to have an established credit rating and be familiar with the borrowing process making it far less complicated than raising finance abroad. There is also the issue of interest rates which in the UK and US have been relatively low in the past. Because you will be borrowing against the value of an existing property, you may also be able to finance 100% of the purchase cost of the overseas property, giving you 100% gearing.

The downside of borrowing at home is that you may be exposing your main residence to risk if you fail to meet your repayments. There is also the currency risk. If you are letting out the overseas property, you will most likely be receiving rental income in the local currency. However, your repayments will be in your domestic currency. As the values fluctuate between the two, your rental income may drop relative to your mortgage repayments, making it harder to meet the repayments.

Whether you raise finance domestically or internationally is a personal decision which should be make in light of careful consideration of all of the benefits and risks. If you are unsure which option suits your needs best, speak to a professional financial advisor who can help ensure that you make the right decision.

Developer financing.

A potential alternative to mortgage financing to watch out for is developer financing. In areas where finding a mortgage can be difficult, some larger developers may offer financing or deferred payment schemes. Confident developers may agree to take money in regular instalments, bringing apartments and villas within the reach of more people. To all intents and purposes developer financing works like a mortgage although developers don't always charge interest.

Deferred payment schemes are different from stage payments. Stage payments are a limited form of financing where you pay for the property in stages until it is completed and you take ownership. Deferred payment schemes include stage payments but the stages continue well beyond the completion of the building. A typical deferred payment scheme would allow you to pay chunks of the property prices at regular intervals over a seven-year period even though the property is completed and you are given ownership within two years.

‘To all intents and purposes developer financing works like a mortgage although developers don't always charge interest'.

Developer financing is of course a marketing strategy that helps the developer sell more properties. In instances where the developer doesn't openly charge interest on the deferred payments, you may find that they have added a premium to the purchase price. Check this by comparing similar properties without developer financing. Adding a premium for this form of payment plan is perfectly reasonable and should be expected; just make sure that the premium isn't excessive and you are not paying over the odds.

Tips for financing a property

If you are arranging finance on the property, ensure that this is stated in any contract and you have an ‘opt-out clause' if the loan is not agreed (which will ensure any deposit paid is refunded).
Have mortgage financing arranged before agreeing to purchase, or before signing contracts and paying a deposit. This will help you to avoid delays and difficulties should your application be rejected.
Open a bank account in your chosen country and ensure you get a Certificate of Importation for the money you bring in from your home country. This will make repatriation of funds much easier.
Set up standing orders in a local bank account to meet bills and taxes. Failure to pay your taxes in some countries, such as France, Portugal and Spain could lead to court action and possible seizure of your property.
Consider using a specialist overseas mortgage broker – this will be invaluable when dealing with the red tape associated with foreign banks and as previously mentioned they will be able to negotiate better rates and terms.

Que 5: Do I need an International Lawyer?

Ans 5:

Lawyers;

Before choosing a property a getting caught up in the buying process, you should try to have some arrangements in place. Better to have mortgage funding in place than to find a property with fabulous investment potential and then watch it being snapped up as you stand by waiting for your bank manager to made a decision. Making preliminary contract with a layer will also save time and preserve you from hours spent deep in the European countryside trying to find a lawyer through the local language version of the yellow pages.

The process of seeking advice should begin before you find a property. And of all the advisors that you will need, an English-speaking solicitor familiar with local conditions should be top of the shopping list. A good solicitor will ensure that the property title is sound, that you will not be liable for unpaid taxes or charges on the house and that the purchase runs smoothly.

A good lawyer should be seen as an investment, not an unnecessary indulgence. In particular, you should never sign anything until an official translation has been checked by your lawyer. Although the majority of agents are honest, if you sign a contract while unsure of the contents you may be committed to arrangements that you don’t understand, which may impose unfair terms and will not be designed for your benefit.

To paraphrase Mae West, a good solicitor is hard to find. If you are looking for a lawyer in the country where you hope to buy at the very least you should try to find someone on personal recommendation. Use an untrustworthy or negligent lawyer abroad and you may find yourself stuck with large financial liabilities, no house, and a lack of legal redress. The Laws governing solicitors varies widely. In some jurisdictions lawyers may not even be obligated to keep money entrusted to them separately from their own!

International Law firms;

As a more expensive but secure alternative, a number of solicitors in the UK specialise in international property transactions. This gives you redress under UK law should anything go wrong; firms will carry heavy indemnity insurance to protect buyers in case of any negligence. The Law Society maintains a database of English-qualified solicitors working abroad and foreign lawyers working in the UK.

Whether you opt for a home or locally based law firm is very much a matter of preference. As is often the case, the decision boils down to the relationship between cost and risk. A local lawyer will probably be cheaper – but local law may allow you no redress in case of incompetence of negligence. How much risk you are prepared to accept is entirely up to you.

Deciding where to look for your lawyer should also be influenced by the level of risk in the market where you are looking and the amount that you are preparing to spend. As a general principle, any purchase above £50,000 may warrant using a lawyer at home, or at least using a local lawyer recommended by a credible agent. It is sometimes said that lawyers in any EU country should be reliable. Unfortunately, the distinction isn’t this easy. For some reason the problems are most often reported in Spain, although this may reflect the number of transactions rather than the relative competence of Spanish lawyers.

Aside from the greater feeling of security, international firms may offer a service better tailored to the needs of people buying across borders. Lawyers will either be bilingual or qualified translators will be kept on hand. Either way, no room will be left for ambiguity about the meaning of legal terms and responsibilities. International firms are also better placed to understand which aspects of a legal system are apt to confuse of mislead overseas buyers, and will be used to explain the process from beginning to end.

Against this, an international firm will lack the close personal knowledge of an area that a local solicitor will provide. However, close personal knowledge can be too close and too personal: you should avoid using a lawyer recommended by or associated with a developer. One of the developments in international property has been the increased number of developers offering legal services as part of a comprehensive package. Nine times out of ten, this service is honestly meant and carried out, but no one wants to be the tenth person. Whether you look for a lawyer abroad or at home, you want to find someone who has your best interests, rather than those of the developer, at heart.

Que 6: Do I need money exchange advice?

Ans 6:

Currency and foreign exchange.

People often underestimate the impact of currency fluctuations, but it is worth remembering that movements in exchange rates can turn profit into loss very quickly. However, it is also worth remembering that it can equally turn loss into profit.

Currency markets are an investment opportunity in themselves and you should always consider the impact of currency movements when evaluating a property investment. As an example, between July 2007 and June 2008 the pound rose from €1.48450 to €1.49680, then fell to €1.23460 before ending at €1.27540. This meant that a property costing the euro equivalent of £200,000 in July 2007 fluctuated in value by over £52,000 in less than a year, purely as a result of currency movements.

An extreme example of currency where investors have made substantial profits is the Chinese currency, the RMB. For some years the RMB was pegged to the US dollar at a rate which kept the value of the currency artificially low. This made Chinese goods significantly cheaper in global markets than would otherwise be the case. In July 2005 the Chinese government removed the peg, associating the RMB instead with a basket of currencies composed of euros, yuan, other Asian currencies and the dollar and allowing the value of the currency to float based on market supply and demand. In April 2008, the RMB hit a milestone, as for the first time in over a decade the dollar bought less than seven yuan, trading at 6.9920 yuan to the dollar, a 16% increase since the removal of the peg. The yuan is still rising in strength against the dollar, although the growth rate is slowing due to a combination of domestic inflation and slow growth in the United States, China’s biggest export partner. It is still frequently suggested that the currency is undervalued, and analysts initially predicted rises of up to 40% relative to other currencies in 10 years. This would present an excellent opportunity to international property investors who invest in property in China, with a possibility of seeing the value of their property rise in value by up to 40% in pound or dollar terms even if the price in RMB doesn’t change at all.

Knowing where currencies are going to move would be an extraordinary gift but international money markets are complicated and it would be very difficult for ordinary investors to predict currency movements. These sorts of considerations are best left to the experts, but the good news is that there is an entire industry whose job it is to monitor currency movements and their services are readily available to international property investors. When you purchase abroad you will need to transfer currency from your home country to the country you are buying in. You could use your bank to do this but you are unlikely to get a good rate of exchange. The sensible option is to use a currency broker. Not only will these companies be able to save you thousands of pounds by offering a better exchange rate at the time of transfer, they will also be able to offer a range of associated services from advice on future currency movements to hedging currency risk.

‘Always remember that movements in exchange rates can turn profit into loss very quickly’.

Currency brokers publish research on potential currency movements and will be able to help you understand what is likely to happen to the currency of the country in which you want to buy a property. They will also help you plan the best means of transferring money between your home country and country in which you are investing. Depending on which way the currency you want to buy is moving, they will recommend when to buy the currency you need. They will also provide the option of a forward contract where you book the currency now at an agreed exchange rate using a deposit of around 10% of the amount of currency you want to buy. This can be a very good option when you have stage payments to pay. For example, imagine that you are buying a home in Thailand and that the value of the Baht is rising against the pound – meaning that the price of your property will cost more in sterling. The purchase price has to be handed over in three months’ time. Under a forward contract you could agree to buy the Baht at today’s exchange rate, or tomorrow’s, or whenever your broker thinks the optimum exchange rate is available. After paying the deposit, whether the Baht continues to rise is a matter of supreme disinterest as in three months’, time the money wil be delivered at the rates agreed. You can fix exchange rates in this way up to two years in advance.

If you are transferring money between countries regularly, for example for mortgage payments, transfer fees can be an unpleasant surprise. Bank fees can be as high as £50 for a single transfer and with little regard for the size of the transaction. In this case it may be worth looking at a regular transfer plan. Currency brokers offer regular transfer plans which reduce the transaction costs and can be used for mortgage payments or even for transferring your state pension payments overseas if you live abroad.

Que 7: Do I need tax advice?

Ans 7:

Taxation of overseas property.

Taxes vary widely from country to country and unless you are planning to make a permanent move overseas, owning property abroad may have implications for your taxation liabilities at home. Tax filing dates, procedures and requirements may vary widely and penalties for making a mistake can be severe. This makes the need to seek specialist advice doubly important. Wherever you buy, you will need to take advice on local taxation and the implications for your tax status at home. The information below highlights some potential issues, but professional advice from a qualified tax expert should always be sought.

Taxation can make the difference between a rewarding investment and a pocket-emptying plunge. This means that the level of taxation is one of the invisible driving forces behind the dispersal of buyers across different property markets. For example, higher rate income tax in Germany is 45% whilst Slovakia has a flat tax of 19%. Investment conditions in Germany would have to be very strong to compensate for the tax burden.

Main tax considerations:

How will any gain on the property be taxed in the country you wish to invest in?
How will rental income be taxed? Is there a minimum tax on rental income? Is there a withholding tax?
Are there any other local taxes to consider? These could include purchase taxes, annual rates (for example, the UK council tax) and annual wealth tax (countries with this include France, Switzerland and Greece – although many countries are now in the process of abandoning the wealth tax. Spain has just abolished wealth tax, as of 2009)
Will any profits be taxable in your home country?

Forms of taxation

There are several forms of taxation with the potential to make life seem very rosy of very blue for property investors. Some taxes are easy to calculate and your estate agent should be able to give you a good idea of the fees attached to buying in any particular country. Stamp duty, for example, is calculated as a percentage of the purchase price and is correspondingly easy to work out.

Other taxes are harder to calculate. Capital gains and income tax on renting can swallow up money like a starved boa constrictor but these taxes will depend on the amount of money made during the period of ownership. Reporting taxes in a foreign jurisdiction and working out which allowances apply is a matter for a specialised accountant. This is something else that will have to be factored into your costs.

Taxes can also impact on people in a way that they don’t expect. Some countries operate a withholding tax, where a tenant is obliged to keep back tax on the payment of rent when the landlord is overseas. This can be levied at rates of over 20%, creating problems for landlords dependent on rental income for interest payments or mortgages. Other jurisdictions, France for example, levy a wealth tax. This is collected annually on a sliding scale between 0.55% and 1.8% depending on the value of your property.

Capital Gains

Capital gains are a charge on profit made whenever a company or individual sells an asset to someone else and makes a profit. Capital gains are levied on all sorts of goods, from paintings to stocks, although many countries operate a dispensation on homes used as a primary residence.

However, if the property you own abroad is an investment, the dispensation given on primary residences will not be available to you. This means that when you sell the property you may be liable for some form of capital gains tax.

‘Taxation can make the difference between a rewarding investment and a pocket-emptying plunge’

The rate of capital gains tax and how it is calculated can vary significantly from country to country. Some countries offer taper relief which reduces the amount of capital gains owed for each year that you own the property. These sorts of schemes are often in place where governments are trying to stop rampant speculation in the property market.

Capital gains tax is usually charged against profit, but what is defined as profit will vary. Some countries may define the capital gain as the difference between the purchase price and selling price, whilst others may make allowances for other costs incurred such as purchase costs, selling costs and even property maintenance.

Care should be taken when it comes to capital gains as some countries have been found to be far from transparent in their dealings. At the time of writing it would seem thousands who sold property in Spain between March 2004 and December 2006 could be owed a 20% tax rebate from the Spanish government. British non-residents who sold their Spanish properties during this period were charged 35% capital gains tax whilst a rate of just 15% was paid by Spanish nationals – this contravenes European Community Treaty rules. Sadly those who sold pre January 2004 have also been affected but cannot issue a claim as the four-year claims period has now elapsed.

Income Tax

Income tax will be charged against rental income. The rate of tax will vary from country to country and may also vary according to the amount of income you make. In many countries, foreigners will be entitled to the same income tax allowances as locals. This means that you pay no income tax on some of your rental income, but then pay increasingly higher levels of tax on amounts of income above and beyond pre-defined thresholds. You will also need to understand any allowances on offer to offset against your income. Some tax departments will tax you on your gross rental income, whilst others will allow you to deduct some costs such as mortgage interest, maintenance and even travel before taxing you on the net remaining income.

Inheritance Tax

Inheritance or death taxes can be particularly problematic for overseas property holders. Some countries have very high death taxes and it is also worth considering inheritance laws as in many countries, property doesn’t automatically pass to your next of kin. You will almost certainly find that your existing will is insufficient and that you will need to make a local will for all the assets you own abroad.

For countries where inheritance rules for property are against your interest, the usual response is to buy through a wholly-owned company. Even if this overcomes local inheritance and taxation issues, you should also be aware of the taxation of your estate in your home country. For everyone domiciled and resident in the UK, inheritance tax may be payable on your total worldwide assets.

Double taxation

Many people select a country in which to invest based upon its attractive tax environment. However, this approach often overloods the fact that whilst there may be no taxation in the country in which you are buying, it doesn’t mean that you don’t owe tax at home. A classic example of this is Dubai, where there are no capital gains or income taxes of any kind. People buy in Dubai for this very reason, perhaps choosing it as a preferential place to invest over a country such as Bulgaria where capital gains tax is 15%.

The problem that many people don’t realise is that their total tax liability is likely to be the same in both circumstances. If you are domiciled in the UK or US, the Revenue is likely to want to take a slice of any capital gains you make in Dubai or Bulgaria at your usual rate. If your usual rate of capital gains tax is 18% then you will pay 18% capital gains tax on the gain you make in Dubai or Bulgaria. The only difference is that, as long as a double taxation treaty between your country of domicile and Bulgaria exists, you would pay 15% capital gains tax in Bulgaria for which you would be given a tax credit in your own country to reduce your liability there to 3%. Either way you end up paying the full 18%.

Domestic Tax Liability

Many international investors are entirely unaware of their domestic tax liabilities resulting from overseas property. This is very dangerous as a failure to accurately declare your interests could be seen as evasion. It is essential that you take appropriate advice and report all of your activities as necessary, both at home and abroad.

For all that has been said above, it is important to be aware of the existence of double taxation treaties. These treaties are formulated between governments to ensure that you are not taxed twice on the same slice of income. If you invest in a country where there is no double taxation treaty you may find yourself paying both local tax and domestic tax. If there is a double taxation treaty in place you will be given a tax credit for paying the tax locally and therefore only need to pay the difference in your home country.

The UK has more than 100 bilateral double-tax treaties, the largest network in the world and agreed with countries from Uzbekistan to Myanmar. World-wide, there are more than 1,300 double-taxation treaties. The treaties work to the advantage of countries as well as individuals. Companies are more confident about trading overseas if they know that they won’t be taxed twice.

If the UK doesn’t have a double-taxation agreement with the country where you own property, UK tax payers may be entitled to special relief called ‘unilateral relief’ or to something called a foreign tax deduction. Your local tax office should be able to give you more advice about whether you are eligible for this relief.

Que 8: Does it take along time?

Que 9: How do I know when I have made profit?

Ans 9:

The third means of making money from property is profit. Whilst in general terms profit can refer to any money made, it does have a specific meaning which is money made as a result of discount purchasing or renovations. Profit in this sense is the money made by buying and selling a property, not including capital appreciation. This shows that you can make money from property even if prices in the market are not rising. As an example, if you were able to buy a property for 10% under market value and then sell the property at market value, you will have made a profit, even if the market value has not risen.

There are two basic strategies for generating profit from property. The first is discount buying and second is adding value. It is possible to buy property below market value when buying off-plan as developers often give genuine discounts to get early sales before construction starts. Bulk buyers can also buy below market value as they are likely to negotiate a discount for buying a number of properties in one development. However, these bulk discounts can also be available to people even when they only buy single property. This is usually achieved through bulk buying as an organised group. This could be as informal as getting together with some friends to buy a number of properties, or could involve joining a property club or syndicate where the club arranges bulk buy discounts on behalf of its members. Buying through clubs like this can prove very profitable, as long as the discounts being offered are genuine. Before buying through a club, check that the savings stack up as you will usually pay some form of fee for the privilege of receiving the discount.

Profiting by adding value to a property usually involves renovation and modernisation. This is a good strategy in your home market, but very difficult or organise when the property is abroad. Unless you are doing it on a large scale and therefore able to employ a turnkey project management company, it is best to steer clear of this approach to international property investment.

Que 10: How do you know how much value is left in that emerging market?

Ans 10:

It goes without saying that the best property investment is in a property which is currently undervalued and set to increase in price. The difficult part is knowing whether a market is undervalued, overvalued or valued correctly. Knowing whether a market is valued correctly is a good starting point when considering where in invest. Undervalued markets will not always increase in value but normally will. Overvalued markets may not necessarily fall. Just because a formula says that a market is overvalued it doesn’t mean that people will stop buying. However, an overvalued market does not make a good investment.

There are formulas which help us to identify anomalies, compare markets and to make a decision on whether a market is ripe for investment or may be about to crash. Two key tools discussed below are the price to earnings ratio and the ownership ratio. We have focused on these because they are measures which allow us to connect a property’s price with its underlying value as an asset and its underlying affordability as a home.

The price to earnings ratio ....

The price to earnings ratio (the P/E) is a measure used by investors when considering many forms of investment. A quick flick through the stock market indices will show a column giving the P/E for each stock. The P/E can also be used as a tool to evaluate and compare house prices.

In the case of property, its net earnings is the amount of revenue received through letting minus costs (maintenance, property management, mortgage financing etc.) The P/E is the purchase price of the property divided by the net earnings.

The house P/E provides a direct comparison to P/E ratios used to analyse other uses of the money tied up in a property investment. This means that you can use this measure to compare two property investment opportunities or compare a property investment opportunity against an alternative use of the money.

The P/E is effectively the inverse of yield. Therefore what it is assessing is the value of the property based upon its income. In a property market where average net yields are 10%, the P/E would be 10; or in other words, the value of the asset (the property) is ten times its net annual profit (rent). When comparing markets, therefore, we want to see a low P/E ration which means that rental yields are high. When the P/E ratio is high, say 25, yields would be unattractive for investors and we could say that the asset is overvalued compared to returns.

Rents, just like corporate and personal incomes, are generally tied very closely to supply and demand fundamentals; one rarely sees an unsustainable "rent bubble" (or "income bubble" for that matter). Therefore a rapid increase of house prices combined with a flat renting market can signal the onset of a bubble. This would be highlighted by an increase in the P/E ratio.

Que 11: Investment vs Speculation

Ans 11:

For most people starting out in international property investment, or investment of any kind for that matter, it is important to focus on buying assets and generating income. This is the basis from which to build a portfolio. This isn’t to say that investing purely for capital growth is not a viable approach. In fact when selecting an investment property, the ideal scenario is to find one that generates cash and increases in value but the rental yield will always be the bottom line and possibility of capital appreciation a bonus.

The danger for investors with a small portfolio comes when you invest in property purely for capital growth. If you are investing in a property which only breaks even in terms of income, or even worse costs you money every month, but you expect it to increase in value over time, you are not actually investing you are speculating. These capital growth oriented investments have a place in an investment portfolio, but the cash generated by other assets in your portfolio should comfortably generate sufficient income to fund your outgoings on any speculative investment.

Understanding the difference between speculation and investment is also important from the point of view of analysing markets. If most players in the market are speculating on future capital appreciation and are not generating yield on their investment, then it is likely to be a bubble. On the other hand, a market where all the property owners are investors generating attractive amounts of rental income on their properties will be sustainable.

One of the most important aspects in ensuring you will make a secure and profitable investment is to research the market. Many agents and developers offer additional incentives such as "discounted property" or "guaranteed rental yields" buy many are inflating the initial price to offer headline grabbing discounts. Simple internet research will enable you to tell whether the prices are in line with the local market.

When deciding what type of property to buy, you need to consider how you intend to profit from the investment. Below, we look at the three main ways in which property can generate a return in investment; rental yield (buy-to-let), capital appreciation and profit.

Que 12: Is it affordable?

Que 13: Is it difficult?

Que 14: Is property a good investment?

Que 15: Is property better than stocks and shares?

Que 16: Perception of Reality? Knowing when growth is sustainable

Ans 16:

Within any property market, there are three general types of buyer; end users (people that want to live in their property all or some of the time), investors (people that want to let their property out for profit) and speculators (people that buy in the anticipation that prices will rise). Thinking about market participants in this way allows us to make better judgements as to whether the market we are analysing is experiencing growth based on economic fundamentals or whether it is a bubble.

The underlying concept is that sometimes price growth is based on fundamentals (supply is exceeded by genuine and sustainable demand) and sometimes growth is self-perpetuating, i.e. Price growth attracts buyers, which makes prices rise further. In such a scenario speculators believe prices will grow and therefore buy property. If enough speculators buy property, demand increases and prices go up. Such a market is based entirely on fragile human confidence and when the speculators lose their confidence and stop buying or start selling prices plummet as there are no genuine end users in the market.

Speculation is essentially second guessing how other market participants will respond to certain stimuli and then gambling on it. Speculation is a valid investment strategy used by many different types of investors and is not harmful to a market per se. The problems arise when rampant speculation takes over market and price rises become more dependent on speculative investment than they do on fundamentally driven demand. An excellent example of speculation leading to a bubble followed by a crash is the Asian Economic Crisis of 1997. This particular economic phenomenon was only partly related to real estate investment buy it did play a part. Once speculators lost faith in the markets of South East Asia they pulled their money out. As a result stock markets in the region crashed, currencies plummeted in value and the real estate market went into free fall.

What does this mean for international property investors? It means that when deciding whether or not to invest in a market, you must decipher whether any price rise or fall is the result of underlying fundamentals or whether it is down to the second guessing of speculators.

Sunny Beach in Bulgaria ....

It is our opinion that an excellent example of a speculative market is Sunny Beach in Bulgaria. Due to Bulgaria's accession into the EU and the Bulgarian government's attempt to bring tourism to its Black Sea Coast, investors made the decision that Sunny Beach would be a good place to invest. Those who got in early were right. Prices in the town have risen dramatically. However, at the time of writing holiday apartments in Sunny Beach and on the Black sea coast are being sold off-plan to investors at over €1,500 per square metre and in some cases over €2,000 per square metre. The question is; do fundamentals support this price? Our opinion would be no, for the following reasons.

As a tourist destination, Sunny Beach could have two kinds of end-users for the types of apartments and villas that are being built there; holiday home owners and holiday let landlords. With the massive development that is happening in the town and competing resorts along the Black Sea Cost, we would need to see a reasonable number of holiday home buyers and more importantly a massively expanding tourist base to create demand for holiday lets. If there isn't enough demand for the number of hotel rooms and holiday apartments owned by investors then yields (net annual rental income as a percentage of the total purchase price) will be below the level which is attractive to investors. If this is the case then investors will not want to buy.

Our view for Sunny Beach is that due to the local climate, it will not be able to compete with the resorts of the Mediterranean in attracting tourists. The summer season in Sunny Beach is only 4 months long and the climate is too cold to attract even low paying guests for the rest of the year. Because investors' apartments will be empty for much of the year, they would have to achieve extremely high rents during the summer season in order to achieve an attractive yield. However, as the supply of holiday accommodation is likely to exceed the demand for it, rents are likely to be low even in the summer months.

In our opinion the driver behind the spectacular growth in Sunny Beach property prices has been speculation. People are buying because prices are rising. It is likely that many buyers in Sunny Beach have purchased with the intention of letting their property and would therefore consider themselves investors rather than speculators. However, the reality is that the demand fundamentals may be not there and whether buyers are aware of it or not, their purchases have been speculative. This may ultimately lead to a significant correction as off-plan properties are completed and investors struggle to generate respectable rental incomes. As people realise that the price of property is not justified by the available rental income there will be a slowdown in demand. Equally, as those who have already purchased fail to see a return they may begin to sell leading to an increase in supply. Supply will outstrip demand. If this happens the correction could be significant, although prices are unlikely to drop below a point that bears a sensible correlation to the rental income.

Que 17: Selecting a development

Ans 17:

The primary reason for selecting a development is that you believe it is a good investment. Perhaps there is a five star hotel on site to help attract paying tenants, or perhaps you feel that the off-plan prices are undervalued compared to comparable properties. Whatever the investment rationale, you also need to ensure that the off-plan promise is going to translate into reality when the development is finished.

There are simple measures that you can take to ensure that you are making the right choice of development. Ask the developer for some information on their track record; see what developments they have done before. This will provide a good indication that the developer is credible and should give some confidence in their build quality. In emerging markets, however, you may find that you come across many first time developers. This doesn't automatically mean that they won't be good. In this scenario check that the promoting agent has completed sufficient due diligence, that the contract paperwork is in order that the developer has sufficient finances to deliver the project.

You also need to look at floor plans with a critical eye. Look at the shared areas as well as the design of your individual property. Is the swimming pool generous enough to cope with fifty families? Does the design look crowded and where are restaurants and recreation facilities in relation to your apartment?

It is also important to ask about completion dates – something that a surprising number of buyers seem to be relaxed about. Off-plan property is most likely to be sold in areas where demand out-strips the existing housing stock. But if demand is high, developers will be tempted to take on a many projects as possible, cranes many be booked up, there may be a shortage of qualified construction staff. With the best intentions in the world, they can fall behind schedule.

A good contract will include penalty clauses for every day beyond the scheduled completion date that handover is delayed. For example, developments have been found which offer refunds of a small percentage of the purchase price for every single day of delay, and if delivery is held back for more than 90 days the buyer is offered their money back. With this kind of penalty in place, delay can be quite profitable. If nothing else, you will be saved the frustration of seeing your money tied up in a project that seems to be going nowhere.

Safeguarding your investment

Think also about what lies beyond the edge of the development plans. Is more building planned in the area and do you have guarantees that high-rise buildings won't spring up around the charming low-density development of the plans? This is something that a lawyer can help with (another reason to have a good professional enlisted before beginning your hunt for property). Ask your lawyer to conduct a search as soon as possible, looking at plans and regulations on surrounding sites.

This is particularly important for properties with a sea view – you'll pay a premium for this and the property value will fall if developers squeeze another property in between you and the coast.

The staged payments common with off-plan property are themselves a form of guarantee. The points at which instalments will be needed differ under various jurisdictions; a typical schedule in Europe would be a reservation deposit – which will be legally binding in most jurisdictions, and then four instalments on completion of foundations; the shell of the building, roof and finish.

In some markets, developers should have a sheaf of independent guarantees and should be falling over themselves with eagerness to present these to customers. Developer insurance, taken out by the company and guaranteeing at least return of your money should the project fall through, will help to keep your investment safe. Developers sometimes also offer bank guarantees which offer similar protection. However, many emerging markets do not have these systems of guarantees in place and so need to be even more certain that the developer can and will deliver on their promises.

Finally, check the contract for clauses limiting your right to resell before completion. This is called flipping and is extremely common in markets like Dubai. When markets grow at an unsustainable rate, local governments may encourage or require developers to take action by inserting contractual clauses making flipping illegal. This can be good for the market, encouraging stability and preventing markets from spiralling out of control, but if there is any chance that you will need to resell prior to completion of the property, you need to be sure that this right is specified before buying.

Que 18: Should I Buy Off Plan?

Ans 18:

The joy of buying off-plan. A number of structures have been developed to cater for the investment market. By far the most popular is off-plan property. Buying off-plan means purchasing a property before the building is complete; instead of touring a property the buyer works from images, plans and computer simulations. At best, this arrangement benefits both developer and purchaser. Off-plan property is sold at a discount in order to compensate buyers for the inconvenience of waiting for completion. On some projects prices rise in three or four stages. As the development nears completion the developer's risk exposure lessens and they raise prices.

Off-plan property does cost less, and often carries other advantages; for example, people buying a property before completion may be able to influence the design. However, there is also some risk attached and it is a good idea to make sure that the developer is able to deliver the property that is promise

Off-plan: too good to be true?

The excitement of flipping leads us to the second problem with buying off-plan: the dangers of the 'too good to be true' stories of instant capital appreciation and instant profit. Search 'off-plan property' on the internet and you will find a hundred 'true stories' starring ordinary folk who put down a deposit on an off-plan development and then re-sold it before completion for enormous profit. It's an appealing story and, where people have made a clever choice of development, sometimes true. According to the Global Property Guide property prices on The Palm in Dubai increased considerably between 2003 and 2007, from 3,563AED (£490,00) per square metre to 8,224AED (£1,131.00)per square metre; this averages out at an incredible 226% increase. This, however, is not always the case and buying property purely in the expectation of such swift capital appreciation and resale is a dangerous policy.

In some areas, buyers have been so confident that the real estate markets are rising, that they have taken loans in order to buy several properties, even if they depend on resale in order to meet the final instalments. Others have leveraged in order to buy more than one apartment or house, hoping to make profit on as many properties as possible.

When buying off-plan you have to be sure that there are underlying reasons why someone will want to rent or buy your property from you when it is completed. In some cases where markets are dominated by off-plan property, you may find that new market-entrants only want to buy direct from the developer as well. This is a very typical scenario in a market dominated by speculators. If the growth drivers in the market are genuine, people will be desperate to buy your completed property from you in order to live in it or rent it out. If you don't believe that there is a queue of people waiting to buy completed property, then you should avoid any off-plan developments and probably avoid the market altogether.

New Build vs Old

Older Property

In France, for example, the market is calibrated to older property and buyers tend to look for something with charm rather than novelty. This is also partly a case of buyers adapting to availability. With an ample supply of older housing and strict planning laws, something older may be easier to find and provide better value for money.

Italy is another country where the market is adapted to aider properties. It is not insignificant that these countries are among the most sophisticated and developed of second-home markets. A link can often be made between the youth of the market and the youth of desirable housing, People prefer new developments in Eastern Europe because the quality existing housing is good.

The key to the appeal of new builds is the confidence that they instil in the buyer. The thought of older houses, with the potential for dry and rising damp, can put off the most determined buyer. And whilst coping with a leaking roof fragmenting walls is possible if you are living in a house, copying with the manifold disasters that may beset your paying tenants several thousand away can be spectacularly daunting.

Newer property can sometimes also seem better calibrated to social and cultural development. This is not a case of 'all mod cons' but a growing demand for smaller properties across the world. The trends for later marriage, higher divorce rate and more single households ensure that prices often climb faster than for houses.

New Builds

New properties may also be easier to maintain than older buildings - an important consideration if you are stuck a thousand miles from a building with a flooding washing machine. If you buy on a new development the developer may even have made arrangements for management before completing the project.

For people looking for a second home, there is often some comfort in numbers. Master planned communities can include facilities which older housing can't match. This doesn't just mean swimming pools integrated into the design of the house but can extend to golf courses, shopping centres and water parks.

A sense of community can add value to a rental property, especially if you are aiming for holiday lets. If a development is well placed, close to the sea or a ski resort, and attractively planned, you will hold a competitive advantage over other properties in the area which lack these benefits. With new builds the reputation and prior experience of the developer is often a useful guide. Large developers have to run their businesses on very professional lines and this gives the buyer a chance to demand good service. Asking to look at references, to look at completed developments or even to talk to people who have bought before are all valid requests. You won't get this level of service from someone selling their family home, but then, you can explore a completed house at leisure, whereas a new build may not be completed for two years after the purchase.

There is also a less positive side to newer builds. Just as the presence of developers can be an advantage, showing you that an area is very much on the way up, in areas where a great deal of new building is under way, there is a danger of over-supply.

Que 19: What are Overseas Property Funds?

Ans 19:

Collective investment schemes: property funds and REITs

For those with limited budgets, there are ways of investing in portfolio of high-quality properties without mortgaging everything you own. There are a range of collective investment schemes available which offer the opportunity to participate in large-scale property investments for a relatively small amount of cash. Collective investment schemes operate like funds in which investors' money is put together to purchase a range of properties.

Collective investment funds have numerous benefits, not least of which is that someone with only £20,000 ($35,000) to invest could gain access to the sort of returns only usually available with larger-scale investments. Another benefit of collective investments is that they let people duck out of the process of researching markets, assessing when to buy and when to sell and all of the difficulties of finding and keeping tenants. They also allow people to invest in commercial and industrial property, the thresholds of which are set too high for most investors.

Different investment funds will have different objectives. Some might have the purpose of developing a resort or tower block allowing investors to make the same kinds of returns as developers; others may buy a range of off-plan properties from across the globe and flip them before completion. Whatever the purpose of the fund, its objectives will be laid out in a prospectus for investors to examine prior to committing their funds. The actions of the fund managers will be governed by the parameters set out in the prospectus, so you can be certain how your money will be invested.

Benefits of Collective Investment Schemes

Opportunity to benefit from property without the hassle of organising buying, letting or arranging sales
Your investment will be managed by experts
Opportunity to expose even small investments to a broad portfolio of properties and countries
Funds can use their buying power to arrange bulk discounts
Some funds have tax benefits. In the UK, invest in many types of funds with money held in ISAs and even SIPPS (self-invested personal pensions)
No sleepless nights over letting, tenants, vacancy rates and so on

Types of funds

The types of funds on offer vary dramatically in their structure and their investment objectives. In the US and Australia, readers will be familiar with Real Estate Investment Trusts (REITs)which are regulated funds managed by major financial institutions and operate in a similar way to unit trusts. The UK launched REITs in January 2007, and they took South East Asia by storm in 2005 and 2006. In the United States, REITs recently celebrated their 40th birthday.

Other forms of investment trust do, however, already exist. From the informal syndicate of friends to collective property funds, people are buying property through a variety of different instruments.

The rules and regulations surrounding investment funds make describing their various forms difficult here, but in outline there are several different forms which are usually made available to different types of investor.

Onshore or Offshore

Often funds will be referred to as offshore or onshore funds. This typically refers to the country they are domiciled in and therefore the jurisdiction which regulates their activity. In the UK for example, an onshore fund would refer to one that is regulated by the UK's Financial Services Authority (FSA). Onshore funds need to meet certain criteria and the greater level of regulation usually allows them to be offered to a broader range of investors.

Onshore funds will often be structured differently from offshore funds due to regulatory requirements. Often onshore funds will have greater liquidity making it easier for investors to sell their interest in the fund when they want to. (See open-ended investment vehicles vs. close-ended investment vehicles below.) Maintaining the UK example, an offshore fund would not be regulated by the FSA. The fund would, however, be regulated by the financial regulator in the country in which it is domiciled. The domicile of an offshore fund will usually be in a jurisdiction with low taxation and a reliable financial system which investors have confidence in. Typical locations for offshore funds include Jersey, Guernsey, The Isle of Man and the British Virgin Islands.

Whilst offshore funds are not regulated directly by the onshore regulator, the sale of shares in those funds is a regulated activity. In the UK, FSA regulations state that offshore funds can only be offered as an investment to "sophisticated" or "high net" "North" investors. Investors need to self-declare themselves as being in one of these categories before a qualified financial advisor can hand over details of the fund.

Open-ended investment vehicles vs. close-ended investment vehicles

Open-ended investment vehicles are funds which allow investors to sell their units or shares almost without restriction. This makes these funds very similar to unit trusts which hold a range of equities. In order to facilitate the movement of cash in and out of the fund as new investors buy units and other investors sell units, the fund needs to maintain a certain level of liquidity.

In other words a fund which allows investors to take their money out of the fund as and when they wish needs to have the cash available to pay them what they are owed. This would be difficult if the fund only owned property as property is not a liquid asset. Instead therefore, these funds have to hold more liquid assets like shares in other companies (usually property companies of some sort to maintain the theme) and even cash.

Most onshore, regulated funds will, by order of the financial regulator, be open ended. As a result these funds are open to all investors, including those who are viewed as neither 'sophisticated' nor of 'high net worth'.

Close-ended investment vehicles do not allow investors to sell their shares in the fund when they want. Instead, investors commit their money to the fund for a fixed time period in which the fund managers invest in properties to generate a return and then dispose of them to liquidate the assets and release cash back to the investors.

The 'lock-in' time on these funds will vary, but will always be set within a band as laid out in the investment prospectus offered to investors before they commit. Because these funds do not have the liquidity requirements of open-ended vehicles, the fund manager is able to invest all of the investors' money in property. The lack of liquidity in this type of fund is one of the primary reasons that the FSA only allow them to be offered to self-declared sophisticated and high net worth investors.

Real estate investment trusts (REITs)

Buying into a REIT is just like buying shares in any other kind of fund. Whilst they have the advantage of being based on property investment, they enjoy the liquidity of equity-based funds. Another appealing factor is the tax advantages that most governments package up as part of the deal. In the US and UK REITs escape corporation tax by distributing up to 90% of the income derived from rents or capital appreciation on real estate sales as dividends. The money is then taxed as income against individuals.

There are different forms of REITs, some of which look more like a financial than a property investment. Equity REITs invest in and own properties taking income primarily from rents. Mortgage REITs deal in investment and ownership of property mortgages, lending money for mortgages to owners of real estate. Income is earned primarily through interest charged on mortgage loans; this type of REIT accounts for less than 10% of the total.

Choosing a REIT

There are a couple of considerations to bear in mind when choosing a REIT. First is diversification. This is one of the great strengths of a REIT and if you are placing money into property through this kind of investment structure why not go the whole hog and pick a fund which enables you to invest in the full range of property including commercial buildings?

Secondly, because REITS are different from the common run of equities, assessing the relative success of any trust can be a complex task. Experts recommended judging a REIT according to "funds from operations", a figure on the balance sheet which doesn't include depreciation. Property rarely depreciates - quite the reverse. And calculating success by funds from operations may therefore give a more accurate picture of performance.

Costs: Investing in a REIT can seem comparatively expensive. Initial charges can account for up to 5% of the value of the investment and a yearly management fee Nil I be charged. But compared to the annual growth targeted by property funds, often between 15% and 20%, this looks reasonable. A good fund should return up to 15% annual growth and 6% yield; given the amount of research and administration necessary to identify and invest in growth areas, the fees begin to look comparatively reasonable.

In most jurisdictions, REITs have replaced ordinary property companies as the favoured way of holding property. However, there are some bonuses to staying outside this system in the UK. Here, REITs are restricted in how much they can borrow and how much development they can do, and overseas property owned through foreign subsidiaries is not eligible for tax-free status. As a result, most will be UK-focused and act more as landlords than developers, although they may still build new schemes. Many investors may therefore prefer the higher risks and potential gains of direct investment in foreign property or development.

Que 20: What are property funds?

Ans 20:

Collective investment schemes: property funds and REITs

For those with limited budgets, there are ways of investing in portfolio of high-quality properties without mortgaging everything you own. There are a range of collective investment schemes available which offer the opportunity to participate in large-scale property investments for a relatively small amount of cash. Collective investment schemes operate like funds in which investors' money is put together to purchase a range of properties.

Collective investment funds have numerous benefits, not least of which is that someone with only £20,000 ($35,000) to invest could gain access to the sort of returns only usually available with larger-scale investments. Another benefit of collective investments is that they let people duck out of the process of researching markets, assessing when to buy and when to sell and all of the difficulties of finding and keeping tenants. They also allow people to invest in commercial and industrial property, the thresholds of which are set too high for most investors.

Different investment funds will have different objectives. Some might have the purpose of developing a resort or tower block allowing investors to make the same kinds of returns as developers; others may buy a range of off-plan properties from across the globe and flip them before completion. Whatever the purpose of the fund, its objectives will be laid out in a prospectus for investors to examine prior to committing their funds. The actions of the fund managers will be governed by the parameters set out in the prospectus, so you can be certain how your money will be invested.

BENEFITS OF COLLECTIVE INVESTMENT SCHEMES

Opportunity to benefit from property without the hassle of organising buying, letting or arranging sales
Your investment will be managed by experts
Opportunity to expose even small investments to a broad portfolio of properties and countries
Funds can use their buying power to arrange bulk discounts
Some funds have tax benefits. In the UK, invest in many types of funds with money held in ISAs and even SIPPS (self-invested personal pensions)
No sleepless nights over letting, tenants, vacancy rates and so on

Types of funds

The types of funds on offer vary dramatically in their structure and their investment objectives. In the US and Australia, readers will be familiar with Real Estate Investment Trusts (REITs)which are regulated funds managed by major financial institutions and operate in a similar way to unit trusts. The UK launched REITs in January 2007, and they took South East Asia by storm in 2005 and 2006. In the United States, REITs recently celebrated their 40th birthday.

Other forms of investment trust do, however, already exist. From the informal syndicate of friends to collective property funds, people are buying property through a variety of different instruments.

The rules and regulations surrounding investment funds make describing their various forms difficult here, but in outline there are several different forms which are usually made available to different types of investor.

Onshore or Offshore

Often funds will be referred to as offshore or onshore funds. This typically refers to the country they are domiciled in and therefore the jurisdiction which regulates their activity. In the UK for example, an onshore fund would refer to one that is regulated by the UK's Financial Services Authority (FSA). Onshore funds need to meet certain criteria and the greater level of regulation usually allows them to be offered to a broader range of investors.

Onshore funds will often be structured differently from offshore funds due to regulatory requirements. Often onshore funds will have greater liquidity making it easier for investors to sell their interest in the fund when they want to. (See open-ended investment vehicles vs. close-ended investment vehicles below.) Maintaining the UK example, an offshore fund would not be regulated by the FSA. The fund would, however, be regulated by the financial regulator in the country in which it is domiciled. The domicile of an offshore fund will usually be in a jurisdiction with low taxation and a reliable financial system which investors have confidence in. Typical locations for offshore funds include Jersey, Guernsey, The Isle of Man and the British Virgin Islands.

Whilst offshore funds are not regulated directly by the onshore regulator, the sale of shares in those funds is a regulated activity. In the UK, FSA regulations state that offshore funds can only be offered as an investment to 'sophisticated' or 'high net 'North' investors. Investors need to self-declare themselves as being in one of these categories before a qualified financial advisor can hand over details of the fund.

Open-ended investment vehicles vs. close-ended investment vehicles

Open-ended investment vehicles are funds which allow investors to sell their units or shares almost without restriction. This makes these funds very similar to unit trusts which hold a range of equities. In order to facilitate the movement of cash in and out of the fund as new investors buy units and other investors sell units, the fund needs to maintain a certain level of liquidity.

In other words a fund which allows investors to take their money out of the fund as and when they wish needs to have the cash available to pay them what they are owed. This would be difficult if the fund only owned property as property is not a liquid asset. Instead therefore, these funds have to hold more liquid assets like shares in other companies (usually property companies of some sort to maintain the theme) and even cash.

Most onshore, regulated funds will, by order of the financial regulator, be open ended. As a result these funds are open to all investors, including those who are viewed as neither 'sophisticated' nor of 'high net worth'.

Close-ended investment vehicles do not allow investors to sell their shares in the fund when they want. Instead, investors commit their money to the fund for a fixed time period in which the fund managers invest in properties to generate a return and then dispose of them to liquidate the assets and release cash back to the investors.

The 'lock-in' time on these funds will vary, but will always be set within a band as laid out in the investment prospectus offered to investors before they commit. Because these funds do not have the liquidity requirements of open-ended vehicles, the fund manager is able to invest all of the investors' money in property. The lack of liquidity in this type of fund is one of the primary reasons that the FSA only allow them to be offered to self-declared sophisticated and high net worth investors.

Real estate investment trusts (REITs)

Buying into a REIT is just like buying shares in any other kind of fund. Whilst they have the advantage of being based on property investment, they enjoy the liquidity of equity-based funds. Another appealing factor is the tax advantages that most governments package up as part of the deal. In the US and UK REITs escape corporation tax by distributing up to 90% of the income derived from rents or capital appreciation on real estate sales as dividends. The money is then taxed as income against individuals.

There are different forms of REITs, some of which look more like a financial than a property investment. Equity REITs invest in and own properties taking income primarily from rents. Mortgage REITs deal in investment and ownership of property mortgages, lending money for mortgages to owners of real estate. Income is earned primarily through interest charged on mortgage loans; this type of REIT accounts for less than 10% of the total.

Choosing a REIT

There are a couple of considerations to bear in mind when choosing a REIT. First is diversification. This is one of the great strengths of a REIT and if you are placing money into property through this kind of investment structure why not go the whole hog and pick a fund which enables you to invest in the full range of property including commercial buildings?

Secondly, because REITS are different from the common run of equities, assessing the relative success of any trust can be a complex task. Experts recommended judging a REIT according to 'funds from operations', a figure on the balance sheet which doesn't include depreciation. Property rarely depreciates - quite the reverse. And calculating success by funds from operations may therefore give a more accurate picture of performance.

Costs: Investing in a REIT can seem comparatively expensive. Initial charges can account for up to 5% of the value of the investment and a yearly management fee Nil I be charged. But compared to the annual growth targeted by property funds, often between 15% and 20%, this looks reasonable. A good fund should return up to 15% annual growth and 6% yield; given the amount of research and administration necessary to identify and invest in growth areas, the fees begin to look comparatively reasonable.

In most jurisdictions, REITs have replaced ordinary property companies as the favoured way of holding property. However, there are some bonuses to staying outside this system in the UK. Here, REITs are restricted in how much they can borrow and how much development they can do, and overseas property owned through foreign subsidiaries is not eligible for tax-free status. As a result, most will be UK-focused and act more as landlords than developers, although they may still build new schemes. Many investors may therefore prefer the higher risks and potential gains of direct investment in foreign property or development.

Que 21: What is a Buy to Let?

Ans 21:

Rental Yield

Buying for rental income is probably the best long term investment strategy available. Not only can the cash generated from the investment be used to re-invest into additional assets, it can also be more profitable than buying and selling property. There is an old Farsi saying which goes “hold the property and it will hold you”. This simply means that when you buy property it is better to keep it. This is true for several reasons. Firstly, historically speaking, property prices always go up over time. There may be peaks and troughs at different points but the price trend is always upward. Secondly, when a property you own increases in price, you make money. If your property increases in value from £100,000 to £200,000 you have made £100,000. In most countries this profit is entirely tax free until you sell it. In theory therefore you could make a million pounds a year or more and not pay a penny in tax. Additionally, when you realise your profit by selling you will incur a variety of transaction costs.

If you keep a property, over time it will increase in value as will the amount of income you make from it. The value of your assets will grow and you will incur no tax or costs for the privilege.

Letting a Property

Letting a property abroad can be a hard slog. Setting up websites, finding tenants, arranging advertising, taking enquiries, finding someone to take day to day care of the property. The anxiety of trying to control events from a distance can be difficult. However, this doesn’t have to be the case. If you take the time to select the right property and instruct the right professionals to maintain and let your property, you should be able to sit back, and enjoy the income. On new developments built specifically for the holiday or second home markets, the management company may be as much part of the development as the swimming pool. Communal and management fees are specified in the initial contract and cover services such as ground maintenance, local rates and sometimes also electricity and water costs. It is however, potentially more difficult for people buying an older property with no built-in letting and management system.

Another recent and popular scheme that many developers and hotel operators are now offering is the ability to purchase a room or suite within a fully managed hotel. This can be a secure way of ensuring you maintain a steady and sufficient income from your investment and the additional benefit that many schemes offer one to four weeks free usage per year. Many operators are starting to offer either a guaranteed rental scheme or a split of the revenue generated. With the right location, using a management company with a good track record, the purchase price may be higher than a standard apartment, but you are likely to benefit from long term and secure rental potential. This is especially true when you buy through a large or respected hotel chain.

Fees

Management fees will usually be charged whether your rent out a property on a development or not. However, you should be particularly aware of these when renting as they will impact upon your returns. Management fees are often expressed as a charge per square metre or square foot. The charges can however vary significantly and you will need to read the contract carefully to ensure that fees are realistic.

When letting your property, the management company will also charge percentage of rental income for the services that make rentals feasible such as finding tenants and maintenance. The level of management fee will often depend on whether you are renting to long term or short term (holiday) tenants. Management fees for holiday lets are usually higher because there will be more cleaning involved for changing over tenants on a weekly basis. In most places you should expect to pay between 5% and 20% of the rental income.

Calculating Rental Potential

Rental potential is a simple equation based upon the daily, weekly or monthly rental price (depending on the time periods you are letting the property for) multiplied by the occupancy rate. For example an apartment with a monthly rent of £500 would deliver an annual rental income of £6,000. However, you may only be able to find tenants for 6 months of the year. The actual rental income would therefore be £6,000 x 50% = £3,000.

After the gross rental income, you will then need to deduct costs which usually include management fees, rental management fees, maintenance costs and taxation.

Working out Occupancy Rates

One of the most important determinants of your rental income is occupancy. The agent and developer should both be able to give you a realistic idea of occupancy rates but you should also check this from an unbiased source. In relation to holiday lettings, you need to consider the length of the letting season; information on this can usually be found on the internet or from the local tourist board.

When assessing likely occupancy try not to be unduly cynical, or to automatically disbelieve people who tell you that the letting season is comparatively long. Cities are a cert for year round letting and there are areas of the countryside which also attract people in summer and winter. The Alps attract high numbers of summer visitors for walking holidays and the mountain resorts of Eastern Europe look like developing in the same way.

Whether to Rent to Locals or Try for the International Short-let Market

Part of working out the expected occupancy is deciding whether you will market to locals or to holiday lets. The two markets are very different. Renting a house to the local market will provide a more reliable income, with tenants often booking an apartment for a year or more. (This is typically the case in city centre locations). It is also sometimes possible to rent to businesses or international organisations. In Brussels for example, apartments are sold with a rental agreement with the European Union already in place. The EU uses your apartment to house politicians or diplomats and you receive a regular and generous income. In Mongolia, yields are high due to the number of companies that have partnered with developers to offer long term rented accommodation for their international workers.

As we keep re-iterating, it is important to conduct research on the local market. Certain countries and regions have a culture of renting (e.g. Germany) whereas others are focused on home ownership (e.g. The UK).

In some countries, rents have not always kept up with the increase in property prices, giving compressed yields. This has certainly been the case in many Eastern European cities where there has been an over supply of property put into the markets by investors.

If you have already purchased overseas without any management contracts in place, there are a number of ways to find tenants for your property:

Local agents
Advertising in the local press
Large or international companies in the area who may be looking for accommodation for their staff
British embassies who may be looking to relocate new arrivals to a country
The internet – there are many local and international portals who list property for rent.

Long term versus Short term rentals:

Long term lets;

Renting long term is the simplest and often one of the most profitable ways of renting, especially when the property is let to tenants all year round. Long term lets are often easier to find in city centres rather than holiday resorts. There is no need to arrange for tenants to be met at the airport, no need to clean between lets or to arrange for the garden to be maintained. Your tenants will also expect less; you won’t have to put in a swimming pool or worry about access to an airport if you are renting to local business people. Of course, what your tenants expect will be determined by local norms so you need to make sure your property is competitive. On the other hand, your rental on a daily basis will be much lower than for holiday lets and you won’t be able to holiday in the property yourself.

The advantages of long term lets include:

Reliable long-term income
The possibility of agreeing long-term contracts with businesses or international organisations
Hassle free
Lower management costs.

Short term lets;

Short-term lets can offer a greater financial reward, but there is less security. If you invest in a holiday resort, you are more likely to let your property to people staying in your property for only one week who will expect to pay a relatively high price for that week compared to someone renting an apartment for a year – an apartment that generates £400 a month if let yearly could generate £50 a night from tourists. However, with short term lets, you will always have void periods. |How long the void periods are depends upon the length of the letting season (often dictated by the climate) and local competition in the letting market. It should be emphasised that short term letting is not just restricted to holiday destinations. Many European cities such as Barcelona, Prague, Krakow and Gdansk have opened up to cheap, direct flights and are proving popular long weekend destinations, meaning higher yields are now attainable.

The advantages of short term lets include:

Higher rental value
Opportunity to book the property for your own use and to occupy it during the low season.

Disadvantages:

Possible void periods making income less reliable
High rental management costs.

Que 22: What is a Good Strategy Buy to Let?

Que 23: What is a hotspot?

Ans 23:

This is our delight!

Gold: Great location, Great growth, Great Rental Income. (Normally High Budget and low investment risk good for short term and the cautious investor)

Silver Great Location, Great Growth Potential, Great Rental Income (Normally Medium Budget and medium investment risk good for medium term and the medium investor)

Bronze: Great Location, Great Growth Potential, Great Rental Potential (Normally Low Budget and High Investment Risk good for Long term and the adventurous investor)

Top Ten Hotspot Indicators

An expanding economy and increase in tourism - Countries with an expanding economy will witness an increase in tourism, leading to high rental demand and increased capital returns.
Political Stability - Research into the political environment of the country investors are interested in is important, especially if it has a history of war and instability.
Government and private investment in the area - Investment encourages improvements in local infrastructure and amenities and brings money into the area, pushing house prices upwards.
Improvements in local transport links - New or expanded airports and upgraded roads and railways increase accessibility and the inward movement to an area.
House-buying process simplified for foreigners - Keeping abreast of legal issues surrounding foreigners, access to the housing market or removal of purchasing restrictions allows investors to move in quickly, taking advantage of lower property prices.
Large companies relocating to the area - This brings instant investments and employees often relocate to the area. Corporate lets, for example in Sofia, Bulgaria's capital, are a good opportunity for investors.
Recent entry to the European Union - This brings inward investment and the easing of restrictions on movement of capital and trade. Many of the new EU member states have not disappointed.
Large scale leisure facilities being constructed - Ski runs, golf courses and hotels increase property prices and push up demand for second homes.
Low cost flight routes opening up - Cheap flights increase the demand for holiday homes and rented accommodation.
Hosting an international sporting event - These encourage development and regeneration and attract tourists to the area, boosting house prices.

We recommend you don't put all your eggs in one basket as investments change. If you spread your risk this can be very safe and very profitable.

Que 24: What is an Exit Strategy?

Ans 24:

Capital Appreciation

Research suggests that most people evaluate potential investments primarily on the capital appreciation that they offer. In fact many people specify that they are more interested in capital appreciation than rental income. On the basis of the points made earlier, this means that the majority of 'investors' are in fact 'specuI81tors'.

For small or new investors, the pursuit of pure capital appreciation is a dangerous strategy. This is primarily because property ownership incurs expenses and if the property isn't generating cash then you have to fund the expenses from elsewhere. It sounds obvious, but it is always worth remembering that you can pay for things in cash. It doesn't matter if your property has increase in value by £30,000; if you do not have the cash to pay the mortgage you will lose the property. Therefore, a good property investment should generate sufficient cash to cover expenses, and cash can only be generated through rental income. For those who want to build a portfolio, every investment should generate enough cash to cover expenses and leave a profit which you can use towards further investments in your portfolio.

Having said all this, capital appreciation is important and is often the single biggest contributor to your overall profit from the property. The ideal investment is therefore one which pays for itself through rental yield whist appreciating at a health rate. The two objectives of yield and growth are not mutually exclusive both objectives can be met in one investment.

Many investors' demands for capital appreciation are unrealistic and it is worth nothing that a property which appreciates in value by only 7% per year will almost double in value over 10 years. This is growth which, compared to other asset classes, is both generous and sustainable.

Exit Strategy

In order to realise the capital appreciation from your property investment you need to sell and liquidate it. Whether you are a speculator buying short-term gain or an investor buying for the long term you should always consider how easy it will be to liquidate your assets.

Often people are (and we have both been ourselves) blinded by the attractiveness of a new-build resort that is offered for sale and do not think about how attractive the property will be in a few years' time. This is especially important in areas of fast touristic and economic growth. Yu must consider what competition there is (or is likely to be) in the area and how likely it is that you will be able to sell either another investor or an end-user of the property.

Que 25: What is Analysis Paralysis?

Que 26: What kind of Investor am I?

Ans 26:

Investors know exactly what they want, an entrance and exit strategy for their overseas property. It is important to budget and plan for the unexpected as the overseas property industry involves elements of risk.

Life Style Investment

The question here is what is it for; Capital Growth, Rental, Both or just a Holiday Home?

When buying property overseas for lifestyle think about how much you are going to use the overseas property. Will the rent cover the out goings? Choose a country you frequently holiday or scuba-diving, golf, ski or boarding. Get a good letting agent. The advantage of buying your overseas property would be capital growth and no hotel bills.

Below are typical types of investors, which one best describes you?

A: Conservative

You are not prepared to see any reduction whatsoever to the nominal value of your investments. You are only prepared to put money into investments such as cash or short term fixed interest securities where the capital return is guaranteed. You fully understand and accept that the future purchasing power of the capital is likely to be lower over the long term.

B: Cautious

You are a cautious investor and want a high proportion of the investment to be in cash or other guaranteed investments. Some investments could be in funds where there may be a limited degree of fluctuations of values in return for prospects of modest long-term growth. You would generally prefer to avoid the volatility of stock market investments, but would accept some stock market investment is essential to provide long-term security.

C: Medium

You are a more typical investor who is prepared to see investments fluctuate in return for a high level of prospective growth both in income and capital. A reasonable proportion of your investment should be in largely asset-backed investments such as managed funds. You may be prepared to put a small part of your investments in higher risk funds. You understand that this approach has the potential for growth over the medium to long term and values may fall as well as rise especially in the short term.

D: Realistic

You are a realistic investor and prepared to invest in asset-based investments with very little in managed funds. You are prepared to invest a significant amount outside the UK and may be willing to invest a proportion in higher risk funds. You would like to take advantage of equity investment with the prospect of good long-term returns and can accept the increased short-term volatility.

E: Adventurous

You are prepared to invest in asset-based investments with little or no managed funds exposure. You are comfortable with investments in high-risk funds or individual shares or property. Most of your capital or contributions are placed in investments that aim to maximise long-term growth. You are willing to accept potential loss of capital to gain potentially high returns.

Que 27: When buying property overseas do I rule with my head or my heart?

Ans 27:

Considering a property investment is a very different process to deciding where to buy a holiday home. Investment is a financial decision and must be made with the head, not the heart. Just because you love that beautiful old farmhouse in the heart of the French countryside, it doesn’t mean that you will make any money out of it. The question of whether you want sun drenched beaches or an equally sun drenched terrace overlooking a medieval old town ceases to be relevant. The real question is: is it better to invest in a city, countryside or a tourist resort?

City or country?

Research suggests that over the long term, the rental and resale potential of properties in cities outperforms that of properties in the countryside. The following table, taken from the Economist, shows the national average price rises for a selection of countries compared to price rises in major cities within those countries between 1980 and 2001.

Prices in cities are however often more volatile than in the countryside, partly because the supply of land is more limited and partly because of higher rates of population mobility.

What attracts investors to countryside properties, particularly in emerging markets, is price. However, low prices don’t necessarily suggest that prices are going to rise. You may be able to buy a run-down village house in Romania for a few thousand pounds, but part of the reason that these properties cost so little is that nobody wants to live there. Even if your country house investment is close enough to new infrastructure, entertainment or commercial developments in increase demand, prices have got to go a long way before you make any significant profits in absolute terms. |Our tip: stick to cities and major towns.

Buying in Resorts: The Impact of Tourism

Many property companies focus on selling properties in resort areas. This partly due to the fact that many people buying abroad are buying a holiday home, but it is also partly a result of increasing investor interest in resort properties.

Increasing levels of tourism bring increased wealth and demand for short-term holiday accommodation. In theory, with more people comes more demand. However, it is the intentions of those people that are important to decipher. Genuine resort investment opportunities exist in places where there will be considerable tourist demand for holiday accommodation and where buyers are landlords or holiday home purchasers rather than speculators. Determining the longevity of an investment in a resort area is based on simple common sense. There must be genuine, fundamental reasons why people would choose to holiday in the resort and even buy a holiday home there. For example; will the Black Sea coast of Bulgaria with its short summer season actually be a popular a holiday and second home destination as Spain? The answer is probably not.

Climate and local attractions are important. People will always want to holiday and live in the Mediterranean area because of the climate. Equally, people will also always want to holiday or live near Disneyworld. Florida and Spain might be very mature markets, but there is a reason that prices have reached the levels that they have; there is a genuine demand. When looking for emerging resort markets we have to look out for the same demand motivators.

There is also a potential, non-financial benefit to having a property that you can use yourself in a resort. In a holiday resort, your property is likely to be used for short term visitors rather than long term tenants and it is therefore likely that it will be available for you to use at least some of the time. On many purpose built resorts, developers offer packages where they let your property for you for most of the year but keep it open for your personal use at set times. This can be a good investment in your lifestyle as well as your financial future.

Que 28: Who is the guy in the FAQ?

Que 29: Why do I need to put my eggs in several baskets?

Ans 29:

Diversifying and Building a Portfolio..

Diversifying is simply a matter of hedging your bets. You may find a development that seems guaranteed to double in price, but to buy up as much as possible of a single development or area is risky. Any unexpected change in the market will endanger the whole, rather than a small proportion, of your investment.

The ideal approach is to split your investment and buy as large a range of property as possible. At some stage this may mean commercial and industrial property as well as residential. These markets are more complicated however, and price entry thresholds are higher. Most new property investors will prefer a first venture into commercial property to be in their home country.

For those people taking their first step into property investment, look instead for different kinds of residential property, and in different countries or different continents even. Because property markets are often localised (usually at a national level), buying in a range of countries helps to reduce your risk. Buying on different continents will reduce your risk exposure even more, by limiting the impact of regional events on your portfolio. In the late 1990s property prices plummeted across the whole of South East Asia. Property investors who had all of their investments in the region suffered significant losses. For those who owned South East Asian properties as part of a broader portfolio, the events of 1997 were less of a concern.

Even if you are absolutely devoted to a single market and determined to pick up as much as possible in the country of your choice, there are ways to diversify risk by buying different kinds of property. Dubai has been one of the favourite investment destinations of the last few years. In Dubai apartments have traditionally been more desirable than villas. This has caused many investors to concentrate exclusively on building a portfolio of apartments. In 2005 the market shifted slightly and villas became more desirable. One study suggests that between 2005 and 2006 villas appreciated up to 15% faster than apartments, a trend which is likely to continue. Those investors who have had the foresight to diversify will therefore benefit.

If your first property is in a sunny holiday resort, try to balance this with something in a city. If you have been busy buying up houses with five or six bedrooms, then balance your portfolio with a couple of one-bedroom apartments or studio flats. After all, the size of the family is shrinking and more people are living alone than ever before.

Part of this diversification is trying to put together a portfolio where the properties carry different levels of risk and will react differently as an investment in different circumstances. Put simply, it is the old adage of not putting all of your eggs in one basket.

Whilst diversifying your investment helps to reduce your risk, over stretching yourself can be equally damaging. If you only have enough money to buy one property, the best option is to buy something generating significant yields and then save that income towards your next property in a different market. Over time you will end up building a healthy, sustainable, low risk and diversified portfolio.

Collective Investment Schemes: Property Funds and Reits

For those with limited budgets, there are ways of investing in a portfolio of high quality properties without mortgaging everything you own. There are a range of collective investment schemes available which offer the opportunity to participate in large scale property investments for a relatively small amount of cash. Collective investment schemes operate like funds in which investors’ money is put together to purchase a range of properties.

Collective investment funds have numerous benefits, not least of which is that someone with only £20,000 (€35,000) to invest could gain access to the sort of returns only usually available with larger scale investments. Another benefit of collective investments is that they let people duck out of the process of researching markets, assessing when to buy and when to sell and all of the difficulties of finding and keeping tenants. They also allow people to invest in commercial and industrial property, the thresholds of which are set too high for most investors.

Different investment funds will have different objectives. Some might have the purpose of developing a resort or tower block allowing investors to make the same kinds of returns as developers, others may buy a range of off-plan properties from across the globe and flip them before completion. Whatever the purpose of the fund, its objectives will be laid out in a prospectus for investors to examine prior to committing their funds. The actions of the fund managers will be governed by the parameters set out in the prospectus, so you can be certain how your money will be invested.

Benefits of collective investment schemes

Opportunity to benefit from property without the hassle of organising buying, letting or arranging sales.
Your investment will be managed by experts
Opportunity to expose even small investments to a broad portfolio of properties and countries
Funds can use their buying power to arrange bulk discounts
Some funds have tax benefits. In the UK, investors can invest in many types of funds with money held in ISAs and even SIPPs (self invested personal pensions)
No sleepless nights over letting, tenants, vacancy rates and so on.

Que 1: Are there risks of buying to be close to destinations served by budget airlines?

Ans 1:

Que 2: Can I avoid risks?

Ans 2:

Que 3: Can I do it myself?

Ans 3:

Que 4: Do I need a (Property) Financial Advisor?

Ans 4:

Financial advice.

Financial Considerations.

Calculating the final rather than the asking price.

Financing your purchase.

International mortgages: raising a local mortgage against your investment.

Advantages of a developing mortgage market.

Developer financing.

Que 5: Do I need an International Lawyer?

Ans 5:

Lawyers;

International Law firms;

Que 6: Do I need money exchange advice?

Ans 6:

Currency and foreign exchange.

Que 7: Do I need tax advice?

Ans 7:

Taxation of overseas property.

Forms of taxation

Capital Gains

Income Tax

Inheritance Tax

Double taxation

Domestic Tax Liability

Que 8: Does it take along time?

Ans 8:

Que 9: How do I know when I have made profit?

Ans 9:

Que 10: How do you know how much value is left in that emerging market?

Ans 10:

The price to earnings ratio ....

Que 11: Investment vs Speculation

Ans 11:

Que 12: Is it affordable?

Ans 12:

Que 13: Is it difficult?

Ans 13:

Que 14: Is property a good investment?

Ans 14:

Que 15: Is property better than stocks and shares?

Ans 15:

Que 16: Perception of Reality? Knowing when growth is sustainable

Ans 16:

Sunny Beach in Bulgaria ....

Que 17: Selecting a development

Ans 17:

Safeguarding your investment

Que 18: Should I Buy Off Plan?

Ans 18:

Off-plan: too good to be true?

New Build vs Old

Older Property

New Builds

Que 19: What are Overseas Property Funds?

Ans 19:

Collective investment schemes: property funds and REITs

Benefits of Collective Investment Schemes

Types of funds

Onshore or Offshore

Open-ended investment vehicles vs. close-ended investment vehicles

Real estate investment trusts (REITs)

Choosing a REIT

Que 20: What are property funds?

Ans 20:

Collective investment schemes: property funds and REITs

BENEFITS OF COLLECTIVE INVESTMENT SCHEMES

Types of funds

Onshore or Offshore

Open-ended investment vehicles vs. close-ended investment vehicles

Real estate investment trusts (REITs)

Choosing a REIT

Que 21: What is a Buy to Let?

Ans 21: