Don't get caught out by cheap overseas property

Every few years there seems to be a new hot property international destination

In the late 90's - 2002 it was Florida, then from 2002-2005 it was Spain (and if you couldn't afford that then Bulgaria!) then 2005-2008 it was Dubai and then 2008-2010 it was Cape Verde.

Now it seems that its Brazil. All these trends were perpetuated by investors looking at glossy brochures and being shown graphs of 20% per yr price increases.

I have been asked by clients what I think of the latest property trend emerging over the last few months i.e heavily discounted overseas property.

Indeed the latest batch of emails that I receive on an almost daily basis from so called "property experts" aka salespeople (who I bet wouldn't invest their commissions on what they are selling) include 70% off market price valuations in Florida, Spain, Ireland, Cape Verde and properties for 15k in Detroit.

Now it would be wrong of me to state, without knowing all the facts for each development, that all of these properties are rip-offs. In fact I was following a round of auctions last month where you could pick up a genuine tenanted studio flat in the Temple Bar district of Dublin (equivalent to our Covent garden/Leicester sq) with a yield of 9.5%!,. The unit also wasn't a new build.

However I often wonder why they are at such high discounts. Quite often its in a development where nothing has been sold in the first place or whether most properties have been repossessed, so you might as well buy in a ghost town as the likelihood of getting tenants is very low.

A note of warning- quite often you'll see that the property has two year rental guarantee- these guarantees are paid from the commissions that the agent makes or from the income on the sale.

However thats not to say you can't get a bargain in that particular area, you just have to cover yourself. For example I'm potentially looking for a holiday home in Florida for an equi-distant meeting place to meet my brother and his family that live in Toronto.

So a property that used to be worth 90k but is doing going for 35k could be of interest. However instead of buying via the agent all I need to do is visit a local listings site e.g http://www.trulia.com/ and see what the real value of an equivalent property is ,with out the massive commission being paid to the selling agent.

Unlike the UK where finding a below market value is difficult, (hence finding an equivalent cheap property is difficult) these areas are flooded with them, so that the discounted price has in fact become the market price.

Then all you need to do is go out and visit these places for yourself!!

If you would like any further advice- please feel free to call in the office.