If you want to make money, go into property. That has been a general rule of thumb for generations. Yes, there have been periods during which the housing market has collapsed. But it inevitably recovers, and throughout most years, property ownership is the most reliable way to bring in income from multiple sources.
With increased globalisation, international property investment has become increasingly popular. Even if you yourself are not doing all that much travelling, you can own property in multiple countries which you rent out using Airbnb or other platforms. Many people make significant money from visitors during peak seasons, and a steady stream during the off-season.
International property investment is nothing new for British people. A lot of retirees have invested in property overseas which they could use to fund an expensive post-retirement lifestyle. And many young people buy properties which they can use when they travel and rent out for income at all other times.
But in 2020, that all changed, and 2021 hasn’t provided us with relief just yet. The pandemic made international travel at times difficult and at times impossible. People had their overseas properties sit empty for months on end, struggling just to pay their bonds.
This has led to many deciding to put any future investments on hold. Rather than purchasing a holiday home or buy-to-let villa overseas, which will be mostly useless at the moment, they are waiting for the pandemic to come to an end. Vaccinations may bring it to an end in the near future, but we cannot be certain about when that will be and whether we may face any hiccups.
Is there still a future for investment in overseas property? If so, when can we expect it to be viable again?
The Benefits of Overseas Property Ownership
The pandemic has taught us that overseas property ownership is not always desirable. Owning a holiday home may have seemed like a foolproof plan in 2019, but now we know just how quickly it can become unreachable. Renting out overseas property may have made you a lot of money until 2020 put an end to overseas travel.
However, there are still perks to owning overseas property. Tourists are not the only people who want to rent property in great holiday spots. There are many people living in these cities who need to rent a place to stay. You need to change your mindset if you are going to turn your property into a residence – you won’t be able to charge as much and you may need to be available more often for your tenants. But it can ensure your property does not go to waste when travel is not an option.
It is also worthwhile to have a haven when international travel is possible again but still limited. You can stay in your holiday home without having to worry about crowds of tourists or about having to quarantine in a cramped hotel.
That said, investing in overseas property is probably not something you should get involved in just yet. Only if you already own property overseas should you start thinking about different ways to take advantage of it.
Indirect Impacts
With international property investment at an almost complete halt, it is not just the investors who are dealing with the consequences. This lack of investments has an impact on related industries. One of those that has been hit hard is the international money transfer industry.
There are dozens of British money transfer service providers that base their business models on overseas property buyers. They make their profits on the big transfers that property owners have to make in order to make payments on their properties and take care of any maintenance issues that come up. They also make money on the income brought in by the property owners each month.
These companies provide important financial services not only for property investors but for freelance workers, migrant workers, and expats. International money transfer companies came about to fulfil a need for people who lost significant portions of their incomes on money exchange. Banks charge high fees and provide unfavourable exchange rates, and money transfer companies bucked that trend.
While international property ownership may be seeing a lull and international travel is not bringing in income, these international money transfer services have managed to take advantage of the increased work-from-home ecosystem, with more people than ever embracing the gig economy and working with international clients.
When will Overseas Property Investment be Viable Again?
We can expect international travel to get back to normal over the next few months. However, that does not mean you should rush into property investment. It is worthwhile to wait to get a clearer view of how well the vaccines are working and whether future travel bans and lockdowns are likely.
Furthermore, it may take a while for people to start travelling again like they did before the pandemic. Some people will be hesitant, while other would-be tourists struggle just to make ends meet. If you want a good return on investment, you may have to give the tourist economy some time to recover.
It is also worth learning from the lessons of the pandemic. Whereas you may have invested confidently in international travel in the past, based on an almost-guaranteed income, you should now consider whether you will be able to afford your investment if we go through another crisis like this. You can truly make millions from property investment, but a few months of a pandemic can strip you of everything you have earned.
You may also want to consider buying properties that are “crisis-ready.” In other words, rather than buying property on a crowded estate or far from healthcare services, take these factors into account when choosing a location.
International property ownership will be viable again soon, but that does not mean it is wise to jump on board. Consider changing your business plan if you have been relying on international property to become a new source of income.
