What kind of properties are best investment abroad?

There is no general rule whether a certain type of a property is a better investment than another type. Selecting the best type of a property is a choice of selecting a certain type of the property in a certain location in a certain time.

The return on investment (ROI) when investing in a real estate is made of two basic gain streams – A) appreciation of the property in time (difference between the buying and selling price) and B) rental income.

With regards to A) – The appreciation of the property is basically defined by the supply and demand for such type of a property in a particular area. There is a higher demand for houses in some areas and there is a higher demand for apartments in other areas. Such areas are not defined by country but rather by microlocations, such as town departments or microregions, such as ski resorts. The investor should take into account if he is buying a property for a primary housing, therefore most demand comes from locals. Or if he is buying a property for secondary (recreational) housing, therefore most demand comes from non-locals (including foreign buyers). In both cases it is vital to consider the liquidity of the property (chance for a resale).

The demand for a primary housing is subject to several factors – local demography, business and social environment, local urban planning, access to financing, real estate market cycle and other local conditions. All these factors define if buying a house or an apartment is a better investment.

In case of the secondary housing properties, the demand is subject to some of the local factors plus additional ones like: level of incomming tourism, safe business and political environment, full property services with no worries for the owner etc.

In some countries/areas people prefere to own property, in other countries people prefere to rent a property. In case of countries, where people tend to own their property, the investor may have a problem to rent the property, however, he should be able to sell with a profit. And vice versa, in countries like Germany, where it is popular to rent a property, the owner should have no problem to make interesting rental yields but the liquidity of the property may be lower.

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