Categories
Real Estate Knowledge

5 QUESTIONS to Ask Yourself Before Purchasing Overseas Property

There are a lot of aspects that are to be taken into consideration before investing in overseas real estate which may lead to many arising questions regarding the local protocols, property availability, right area, price range, legal procedures, payment policy, taxes and stamp duties and many more!

Purpose of buying properties.

These are the 5 questions that we think you must ask yourself before buying any property overseas, whether it is your first purchase or you’re just looking to make your next investment.

1.   Purpose

Why do you want to buy a property? Do you want to buy a retirement home for you and your partner? Or an apartment for studying and working family of 4? Do you want to buy a piece of land or an office building? The answer to all these questions is hidden in your purpose of buying the property. While a cosy beach house may be the perfect option for a retired couple who is looking to buy a second home, that might not be the best choice for a family with students and white collars. If you want to purchase a home, you’d probably prefer a new place that is in a nice neighbourhood and has easy access to employment, institutions, and other important places. But for commercial or industrial properties, the neighbourhood does not really matter a lot, you would want to be looking for something that can be utilized in several ways, will generate incomes, and is affordable.

Tropical living in Phuket

2.   Location and space

We know that different countries are famous for different reasons. For example, tropical developing areas are more suitable for vacation or retirement, whereas developed cities are mostly for people who are still in some stage of their career or student life. These points will help us decide which cities or states of which country we should aim at, for which we need to do a lot of research and that brings us to the next point.

Regulations and permits.

3.   Laws

Laws and regulations vary from country to country, state to state, and even city to city. As a foreigner, it is the most crucial part before making any investment. Some countries do not even allow foreigners to own property. So, before moving forward, we need to confirm whether we’re allowed to make an investment in the targeted country. If yes, then what are the regulations? How different is it from one’s homeland? What are the tax policies? Is it the same throughout the nation? What about licenses and permits? How long does it take to process the application? Is the property a lease-hold or a free-hold? What are the metric units? What happens when you are not there? Is the place safe enough? Is the local law going to give any kind of protection to your property in your absence?

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How to finance investment property.

4.   Finance

Before making any decision, there should always be market comparisons and backup options in terms of pricing. It might be hard to get all the boxes checked but money undoubtedly is a major factor in any kind of investment. It is not only limited to currency rates and overseas transfers. It also involves extra taxes that can vary from place to place and can actually amount to a huge figure. Buying a property overseas means managing finances in two different countries and it is very difficult to manage the finances of a country that you do not reside in. To handle finances overseas smoothly, investors often tend to hire a professional.

Click here to look at an example of securing exchange rates

Property market forecast.

5.   Forecast

Once you’ve found your perfect property that fulfils all the necessary criteria, this is when you need to take a short pause and ask how the future looks like for the property you chose. How is the market now and how is it going to be in the next 10 years? How is the growth now compared to the past decade? How are the upcoming years looking like for the type of property you want to purchase? Is the demand high or low? Is the growth strong or soft? How big is the scope of growth? Is it already a well-developed city that will have a stable market in the next few years or is it going to see a rapid change?

Final Thoughts

With these questions, you can understand more about your preference and what is the scope of your property search. By knowing which are the most relevant factors to consider it makes your property search so much easier, ultimately making your property investment journey a much more enjoyable journey.

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Now that you’re here…

At Denzity, we help you find your next overseas property. If you have any enquiries about the above properties, or questions about the process, reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.

Disclaimer

Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.

Categories
Market Updates

What does Cathie Wood Think About PropTech?

Cathie Wood PropTech
Cathie Wood PropTech
  • Digital real estate pioneer Zillow had 22% revenue growth through online sales
  • New real estate technology company Opendoor Technologies lost nearly half of its market value

Why Cathie Woods?

Cathie Wood, the founder and CEO of ARK Investment Management, is a star stock-picker, who identifies large-scale investment opportunities. She focuses on investing in “disruptive innovation” centring around robotics, artificial intelligence, and blockchain technology, etc. Wood is an important voice when it comes to talking about platforms and technology that will dominate our future, and she is of particular interest especially among millennials for her digital savviness and deep understanding of future trends. If she is, she would be the perfect advocate for current PropTech companies and their mission.

What is PropTech?

Let’s imagine how our lives would be without technology. Well, It is purely impossible as technology plays a fundamental role in our lives. Since almost every industry in the world utilizes technology to streamline operational processes and improve workflow, the real estate industry is no different.

PropTech (also known as property technology) is the application of technologies in real estate. It uses Big Data, Artificial Intelligence, virtual reality, and machine learning, etc.

Here at Denzity, we use Big Data technology to reduce uncertainties to help you make better decisions in your home search journey.

Proptech shaping the future of the real estate industry.

Wood’s Proptech Investment

Wood’s focus on disruptive innovation is inspired by a unique investment thesis. It suggests we underestimate the value of innovative companies emerging now that will one day shape the entirety of industries and our way of life – including how we do real estate.

Cathie Wood investing in disruptive innovation.

While PropTech has been used as a buzzword for some time, in recent years there has been serious endeavours to build platforms that actually may have an impact on the real estate industry. Wood’s firm invests in themes such as Artifical Intelligence, FinTech, IoT, etc. themes that emerging PropTech companies are capitalising on. This is no wonder she has made the following companies her stock picks:

  • Zillow

This is why Wood decided to invest in Zillow (NASDAQ code: Z), a pioneer in the digital real estate industry. The company offers a platform that handles real estate transactions and services. Amidst the global pandemic, its revenue has grown by 22%, and the adjusted EBITA metric has climbed to an all-time high. This highlights the company’s future profitability and opportunities ahead.

Zillow is listed on NASDAQ.
  • Opendoor Technologies

Similarly, Wood decided to invest in Opendoor Technologies (NASDAQ code: OPEN), an app platform that enables people to buy and sell their properties freely. The platform collects a 5% handling fee of the property’s total asset value. Although the company is facing the headwinds of COVID-19, it is preparing for a comeback. The property boom driven by the pandemic should be able to assist the company to further expand its businesses. Therefore, it is believed that the existence of Opendoor Technologies would potentially eliminate the need for real estate agencies as time proceeds.

Opendoor Technologies is listed on NASDAQ.

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Wood’s Expectations

No doubt Wood is quite optimistic about the PropTech outlook. Being a top-tiered seasoned investor, anything in her portfolio must have done something to deserve to be there. With that said, however, is Wood is a very long term investor, and her time horizon is something many investors need to get used to. Given current turbulent conditions in the market, it’s good to understand how it’s affecting her current investments in these PropTech companies, and how she is seeing past that:

  • Higher Interest Rates

The world came through from a low interest rate period due to COVID-19. As the pandemic starts to get under control, Wood expects the interest rates to rise and the stock market has already shown some signs of panic. The Federal Reserve fluctuates between yes or no on interest rate hikes. Especially when Jerome Powell, the Chairman of the Federal Reserve, admits the huge uncertainty in the economy as the country recovers from the pandemic. This leads to people moving their money in and out of the stock market, bringing huge fluctuations.  

The rise of the annual interest rate is one of the major factors that influence investors in both real estate and the stock market as it indicates how much they should pay for the amount of mortgage or the leverage they used. Unlike others who panic when interest rates rise, Cathie Wood believes that the adjustment of interest rates would not be a big deal as we were used to about 2% of interest rate before the pandemic. It just takes time to adjust back into the mood.

Federal Reserve Chairman Jerome Powell

The increase in interest rate also leads to a loss in revenue for new real estate technology companies such as Opendoor Technologies. The company has lost nearly half of its market value during these days. However, The Federal Reserve has reassured the public about the central bank’s commitment to keeping a loose monetary policy. They stated that the interest rate would not rise in a short period until late 2022 or early 2023. Therefore, Opendoor Technologies should have time to get back to its peak price. As online real estate trade is the mainstream in the future, buying this stock for a long hold is recommended. 

Wood and the Future of PropTech

While we can’t say how best to avoid losses or make short-term gains in the market today, we can all learn from Wood’s determination not to be distracted by current trends and focus on the future picture. PropTech has made significant gains in the past few years, but it has so much more to offer, and we have yet to see the force that will alter the industry forever. Staying true and studying the long-term trends like Wood will help us see that PropTech is a certainty and coming alive.

Locally (in Hong Kong), you can start being involved in the shifting calculus. Associations like PropTech Institute (PTI) and our own company – Denzity – are seeing these trends and capitalising on the moment. If you are an interested real estate company that believes it’s time to make a digital transition and stand out in a crowded digital space, Denzity has the solution to help you do it within a day. And finally, check out PTI for more recommendations to help you on your PropTech journey. Like Wood, make the big bets today and own the future.

Now that you’re here…

At Denzity, we often emphasize the importance of real estate agencies moving online. If you are keen to learn more about online transformation and digital marketing, feel free to subscribe to our channel and stay tuned for more real estate industry content and updates.

Disclaimer

Please note all the above stated is opinion only and does not constitute proper investment advice. Denzity is not liable for any investment decisions that result from following the opinions outlined above.
Categories
Real Estate Knowledge

4 Ways to Wisely Manage Your Worldwide Property

Why…and how?

Investing in another home abroad is increasingly common.

However, foreign ownership poses unknown challenges. Foreign laws, business cultures, and currency exchange rates are just a few potential considerations in the property ownership cycle.

1. Familiarize Yourself with the Location, and the Property

Experience with the location is a must. What country are you most familiar with? Whether you previously worked abroad or are simply hoping to buy into an energetic market, here are a few considerations:

  • Where are your overseas family members?
  • Where did/will you and close contacts attend university?
  • Where do you hope to retire?

Virtual house tours are also increasingly available. Check with your agent or online property service if they offer a modern, virtual tour of the property.

Accelerated by COVID-19, more property services offer immersive, virtual house tours.

2. Employ a Property Manager

Certain property can come with a management fee. The more amenities, the higher the fee. This pays for security, maintenance, and other services that add value to your property. Whereas a fund may see a rate between 0.5% and 2%, property management fees can run between 8% to 10% of rent.

Property managers will help find tenants, conduct local compliance, and ensure that the investment remains in good quality. The more properties in your portfolio, the higher the benefit of bringing in more help to run your operation. Even for a single buy-to-let property, a property manager will help take the load off your shoulders if you spend most of the year in another country.

For a more in-depth article about hiring a property manager, read more here.

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3. Look to Family

A majority of people tend to rely on family to manage their assets and other essentials. Compared to relying on a property manager, keeping it within a circle of trusted relatives can build up individual skills, strengthen reliability, and potentially save cost.

Especially if the portfolio is limited to one or two properties, it may be the wiser choice to leave a spare key in the hands of an overseas cousin or uncle and have them be your local attaché. However, if the stakes are considerably higher, hiring someone to handle matters professionally may be the better choice.

FFI’s article on Asian Family Office Management touches on family run investments.

4. Streamline your Payment Method

As a property manager, there are a variety of payments wide and small that require a smooth financial system. It easy to get overwhelmed with payment processing times, exchange rates, and constant notifications – especially when your bookkeeping will regularly handle the below fees:

  • Rental invoices
  • Local Taxes
  • Property Expenses
  • Mortgage Due Dates (if applicable)

If using a property manager, offload payment processing to them. Otherwise, research into cost-effective money transfer options, set up a local bank account, and contact local financial professionals. 

Whether it is for retirement or investment income, the number of international buyers is constantly growing due to globalization, availability, and affordability. And as far back as 2017, Investopedia reported a 19% leap in the overseas property market.

For more reading on overseas investment, check out IP Global’s piece, here. 

Now that you’re here…

At Denzity, we help you find your next overseas property. If you have any enquiries about the above properties, or questions about the process, reach out to our team here. Stay tuned for more investor focused content, financial advice, and industry updates.