Sometimes investing in property overseas could be a good move to avoid putting all your eggs in one basket. However, before you commit yourself to a seemingly sound investment, you may want to know some of the more common mistakes made by investors when buying foreign properties.
1. Buying from an unknown developer
Henry Butcher Malaysia Sdn Bhd founding director Lim Eng Chong notes that it is always safer for foreign investors to buy from an established developer. “Nothing beats a credible developer with a good reputation,” he says.
2. Lack of research
Do not jump straight into buying without adequate research. According to marketing and sales director of Hartamas Real Estate Sdn Bhd, Kevin Lim, buyers should do their homework and know more about the seller and the agent whom they are entrusting their money to. Alarm bells should ring if the process seems too easy. “It’s easy to get cheated when doing cross-border transactions,” he warns. Henry Butcher’s Eng Chong also cautions that “there’s always a catch to cheap things” so it’s advisable for buyers not to be too happy when they come across an “awesome offer”.
3. Believing whatever the agents or developers say
Unfortunately, there are sellers, developers or real estate agents who make vague or wild claims about the property such as its location. For instance, they could claim the property is near the city centre when it is actually not, says Kevin.
4. Not paying a visit to the actual property site
JLL Malaysia associate director for research and consultancy Veena Loh notes that it is important to visit the site to check on the surroundings and what’s coming out around it in future. “Sometimes there are claims that it has a sea view or a city view but by the time the project is completed, another development could be starting and would eventually block the view,” she points out.
5. Not appointing a good agency to negotiate on your behalf
A good and reliable agent could be of great help to a foreign investor in finding tenants. The owner may not be able to be there physically to find the tenants given the distance he has to travel to find and interview and sort out issues with their tenants. Thus, it is important to find a good agency that can help rent out your property in a foreign land, advises JLL’s Loh.
This story first appeared in TheEdgeProperty.com pullout on Feb 10, 2017, which comes with The Edge Financial Daily every Friday. Download TheEdgeProperty.com pullout here for free.