The following options are available for creating value from buying property for investment. But in each case make sure you do your sums, factor in all costs and make sure that you know what you are getting into before buying.
Buying to rent for the holiday market
This means that you have to put your own preferences aside and look purely at what will give you the best return on your investment. The old catch phrase 'location, location and location' could not be more appropriate, everything depends on where you buy.
You should think about going with tried and tested property rental locations. This will be the area where you will get the best return on your money, both when you come to rent out and for resale value.
To be rentable your property must be near a beach and have the use of a pool in a warm country, and be near ski and/or mountain facilities if you are buying in a winter wonderland. It should be close to shops and entertainment and preferably be within easy reach of an airport. Make sure you always keep in mind what a family would like to find in a holiday home, is it child safe?
Also bear in mind that you sometimes need a license from the local Tourism Board and perhaps Government permission to rent to tourists. Your property may need to fulfil certain building and safety regulations. Many of the regulations differ from the UK so please check that your property conforms to these local regulations before signing contracts.
Buying off plan
The hope is that the price of the house will increase during the build. This is an option mainly available in areas that are really popular with tourists - it is important to do your homework when making this kind of purchase.
Ask the agent or property dealer to show you facts and figures - talk to people. I would perhaps try and find out which properties they have sold off plan previously, for how much and what the current selling price is now.
Also, do ensure that the property plan conforms to building regulations and letting requirements before you sign the deal. The last thing you want to do is to have to pay money to bring your property into line with the legal letting requirements.
It is worth your contract having a clause allowing you to withhold some of the purchase price for a period of time after taking ownership of the property in case faults arise and the builder fails to correct them.
The completion of each stage should be certified in writing by your own lawyer before each payment is made. You should make sure that your payments are made on time or you at risk of losing your payments, penalties or losing the property. It is very important that the builder or developer has an insurance policy (or termination guarantee) to protect your investment if he goes bankrupt before completion of the property.
Buying to renovate
This takes a keen eye and a clear head. It may sound very obvious, but you really need to do your sums extremely carefully here to make sure that you recoup your investment and that the property is one that you will easily be able to either sell or rent out.
Make sure that your property conforms to local regulations and that you do not make any unlawful changes. Know exactly what costs will be incurred in order to renovate. Get the input of a local architect or developer before going ahead with a purchase for renovation. Not only may it be prohibitively expensive but there are sometimes regulations in place in various countries that forbid certain changes or alterations. Things like the size and number of windows are restricted for instance – many villages in Greece only allow two storey buildings and you are restricted to the number and size of windows allowed. Also be very certain that if there is no electricity or water you know in advance the costs of getting this up and running. Or if indeed it is even possible to even get it to your property at all.
Get a local surveyor, civil engineer or architect on your side. Not only can he advise you on what needs to be done and what you are allowed to do, but he will also know local prices and local workmen - a few pounds spent here may save you a lot of money later. Remember do your sums first and make sure that there are workmen on the spot who can carry out the renovations to your satisfaction. Demand to see other work they have done - talk to other people who have had work done locally. Be prepared to change your mind on the choice of workmen or property if you are not happy with the answers.
Importantly be there to supervise important jobs. If you cannot, get someone else to supervise for you. You do not want to have to live with shoddy workmanship that may spoil the look of your renovated property. Also make very sure exactly what the price includes, who is responsible for removing rubbish etc