Renting vs Buying: What is the Best Investment Option for Your Foreign Buyers?

One of the common goals foreign investors have is acquiring a house. Of course, a home is an essential commodity that we should have. This is why this kind of investments play an important role for this kind of investors.

However, there will be a question they will make. What will be their return when it comes to the investment done? What’s the best option for their targeted audiences? What makes a property a good investment for renting?  Well, one thing is for sure, consumers can’t purchase a house without money. In the meantime, they will need to rent as they wait to save enough for a house. Economists may suggest otherwise though.

Let's take a look into some tips to convince your investors to buy a house to rent!

Choosing between buying a house to rent and buying a house to live

If your foreign buyers have to choose between the two, there are some things you must put in mind.

Your investor plans

Before selling a house to your foreign investor, you need to know what are their goals.

If he/she is comfortable about paying a rent, then there’s no harm in renting and maybe you can also use that to sell a more expensive house. If your investor wants that house to be one of the assets under his/her name, then he/she should buy one.

Cost 

Before selling a house to your foreign investor, you need to know what is the budget available for the purchase. On the other hand, be prepared as your client might be looking to have an estimation on what will be the return on investment for different levels of cost if they decide to rent that house.

Financial ability should help your investor to decide.

• Can your client afford to buy a house upfront? What’s the amount he can pay?
• Can he afford the mortgage and for how long?
• What are the conditions to buy a house in a different country?
• Is is possible to get a loan and under which conditions?

A cheaper house can encourage buying a place to live while a lower rent amount can encourage renting.

Advantages and disadvantages

Each choice has its pros and cons. It’s upon you as an agent to weight them with your client and decide on the most appropriate option. Renting a house comes with several benefits. First, it gives your customer a possibility to earn more money. Your customer will have more money available in the end of the month and maybe the earnings on that investment will be higher than other banking products. Contrarily, renting also has disadvantages. Your customer will have to consider the taxes that will need to be payed.

What about buying? Does it have any advantages? Of course yes. Your customer will have an official residence in your country and maybe he will also benefit of some taxes advantages. Countries like Portugal and Spain often offer taxes advantages to foreign buyers buying property like some tax exemptions during a few years. On the other hand, if your customer pays upfront, no monthly payments will be made so there will be less complexity and less things to worry about by the end of the month.

In all situations buying a house requires a lot of money. In case home values drop, your investor can easily lose money. House prices can also go up, making it difficult to even finish paying the mortgage.

Conclusion

Now, should your client invest in a house to rent or just a house to live. This decision entirely depends on the plans he has and also on what are the reasons to buy abroad. Gauge your customers plans, preferences, costs, and other factors. At the end of the day, you should be able to come up with a professional advice to your customer. Otherwise, both options are suitable. Your customer may want to live in that country for a period of time and them rent the apartment to improve their income.

Note that for short term purposes, your client can also choose to rent first and buy a house later. This is especially true when customers are planning to live in a different country. Make sure you evaluate all factors and the options available before you start showing your customer different houses or apartments.

About the Author

Monica Gibson is an architect and writer for different design websites. She is young and ambitious, with a degree in architecture. She has eight-plus years of experience in interior and exterior design. Her mission is to inspire others to live their dreams and create their perfect sweet home. She puts a big effort into working with her clients and tried to help them in the best way she can.