Real Estate Investor Magazine South Africa March/April 2020 | Page 55

affects what you can afford to buy offshore. Know the rates and
look at using a specialist FX broker as they usually offer a more
competitive exchange rate than your bank is likely to give you.
4
Leveraging
How do you plan to fund your offshore property
investment? Will it be a cash purchase or are there
any leveraging options available? Borrowing offshore
makes sense as the interest rates are considerably lower, but
it is subject to strict criteria so do your research and find out if
this applies to you.
5
Use the experts
Arm yourself with expert advice and as many tips as
you can. Speak to independent advisors, like Hurst
& Wills who do not work for one specific developer,
to get important, unbiased information. Most independent
companies also have considerable local knowledge and
years of experience in the markets they specialise in, which is
invaluable.
Tax specialists, investment experts and your wealth
manager may also be able to point you in the right direction
and help to determine the best route forward to reach your
own financial goals.
Pitfalls to watch out for
1
Watch out for guaranteed returns
Often developers build these guaranteed returns
(which could be genuine) into the purchase price of
the property, consequently the buyer is overpaying
for the property. Always double check that the sales contract
actually matches what you're being sold in terms of product
and investment outline.
2
Confirm the payment terms
With most new-build properties there is a series
of deposits to be made in stage payments. Make
sure that these are clear from the start so there are
no surprises or unexpected calls demanding money. Many
developers do have very attractive payment plans some of
which we have negotiated to suit our South African investors.
3
4
5
Do not assume that you'll qualify for financing
While you may suit the criteria to get a bond in South
Africa that does not necessarily mean you will get one
offshore. To have the best chance of achieving those
low interest rate bonds available overseas, make sure you have
the best advisers in the country you are hoping to invest in.
Hidden costs
Make sure you have full visibility of all the costs
involved. These include the transaction costs,
acquisition costs, FX costs, home-owner running
costs, maintenance, levies, insurances and management fees.
Who is the developer?
Even the most unscrupulous developers can slip
through the net. Do your own due diligence and
only buy from the best developers with a long and
proven track record building or selling the product you're
investing in. Developers who deliver on time with the returns
and occupancy rates they've promised. The market is saturated
with developers flying in and selling directly to South Africans.
Be sure to work with an independent advisor who has access to
all of them and can advise you in line with your requirements.
6
Exit strategy
Make sure that the property you’re investing in
offers you the exit you are looking for. This should
determine whether you purchase it or not. Some
properties come with fixed guarantees that lock you in, others
are only saleable to certain buyers, and some are locked into
syndications. Check the title deeds and figure out what your
exit would be in the worst-case scenario.
SOURCE Hurst & Wills
SA Real Estate Investor Magazine MARCH/APRIL 2020
53