Dominican Republic Properties for Sale
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Carabi Realty S.A.
Overseas Property and Negative Equity Risk
Although you can never completely guarantee against negative
equity, particularly in the currently unstable housing market,
there are steps that you can take to minimise the risk. Here
we look at measures that you can follow to avoid getting into
a negative equity situation.
Second Home Financing
If you are looking for an overseas property as a second home
rather than a rental property then the main thing to avoid
is borrowing to heavily against the property. This way, should
house prices start to fall, you are left with a better chance
of selling the property without making a loss. You will also
find that your mortgage payments will be more manageable this
way.
When borrowing to make investments
in overseas property try to borrow money in the local currency.
This helps you to avoid losing money during currency fluctuations.
Do Your Sums
This is particularly important if you are looking to let out
your holiday property. Be sure to consider all possible incomings
and outgoings, such as potential rental income for your chosen
area, agency charges, local taxes, advertising costs required
to find tenants, management fees, occasional repair costs,
fixture and fitting costs, as well as occasional void periods.
Always check local newspapers and websites for figures before
making any investments in overseas property, and do not rely
on quoted figures from property developers or estate agents
alone.
Transport Links
The chances are that the availability of cheap flights is
what will attract you to a certain overseas property area.
You should consider the effect on your investment should the
airline serving the area go under. Check to see if other airlines
offer flights to the area, or there may be alternative rail
or road links.
Bear in mind distances between the airport and properties.
Most travellers would consider an hour-long drive to be an
acceptable time in which to reach their destination, so avoid
properties that are too far away from airports. Look out for
properties with excellent transport and public transport links
as this is always attractive to prospective tenants.
Location, Location, Location
Keep an eye out for up-an-coming areas rather than already
fashionable towns. You will find cheaper properties in these
up-and-coming areas. If you are looking to attract professional
ex-pats, look out for areas with newly incoming international
company offices. Or if you are targeting local tenants, look
out for areas where new universities, factories or hospitals
are being built.
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