As much of Europe and some American states enter various forms of distancing and lockdown to stem the coronavirus crisis, property investors may be concerned about the impact on their overseas properties. Fortunately, even if you’re not able to get out there in person, there are some simple ways to protect your investment, as Chris Nye from overseas property experts Property Guides explains.
Make sure your money is secure
Perhaps the most important aspect is the financial side of things. For anyone with a cross-border portfolio, the foreign exchange markets can have a significant impact on your income or outgoings – and we have seen a great deal of volatility in the past few weeks. The pound, for example, dropped to a 35-year low against the dollar, while the Singapore dollar saw its biggest one-day jump since 2016 after the government announced a new stimulus programme.
These falls or boosts are almost entirely unpredictable (for starters, no bank could have predicted coronavirus in their last quarterly forecast) and yet could cause you to lose thousands for money you send for a purchase. Likewise, if you’re receiving regular income from a property, the amount might be fixed in the currency of the country the home is in, but you will find yourself getting potentially very different sums each month in your own currency.
For many, the safest option is to secure a forward contract with a currency broker, rather than taking the chance of transferring their money on the day through their bank. A forward contract is a simple method of locking in the same exchange rate for usually up to twelve months. That way, you know exactly how much you’ll pay.
Diversify your investments
On a macro level, plan your investments to be spread as much as possible. If you are putnig the majority of your capital in property, putting it all into homes in the same place or same market carries the risk that when one is affected, all are affected.
Instead, spread this risk across different area as much as possible. This could be a city and a rural property, or a rental home by the beach and one in a ski station. It could be related to markets; you might choose one property for long-term rent and one for the short-term tourism market.
Even if it’s one property, you can still spread that risk. Depending on budget, you can purchase in an area with appeal to different groups, such as the area between the Costa de Almeria and the Sierra Nevada, where you can have the beach and ski markets together. Another example could be Vilamoura in the Algarve, where you have both world-class golf and excellent beaches and a mixed market of short summer stays and longer winter ‘snowbirds’.
Arrange property maintenance
If you can’t travel to a home overseas as much as you would normally, make sure to arrange for things to be kept ticking over. This might range from simply having a neighbour check in from time to time to, for longer periods of absence, setting up your home to avoid any maintenance problems. In colder climates, this could be insulating pipes and water cylinders to prevent freezing, or it might be emptying any standing water features in warmer climates to avoid attracting mosquitoes and ensuring shutters and blinds are down to keep the house cool. For long absences, remember to turn off water and gas at their main valves.
The advantage of having an apartment, in many cases, is that communal areas will be maintained by the building management. Otherwise, you’ll need to arrange for someone to carry out maintenance. If you’re only gone for a shorter period, do remember in hotter regions to set sprinkler timers, if you have them, to water trees and shrubs.
Making the house look occupied can help to deter would-be robberies and ensure you have an alarm that is connected to a monitoring station, such as a CRA/central receptor de alarmas in Spain. For peace of mind, it can be a good idea to install a video camera that you can log in to over the internet.
Ensure too that you are covered with insurance and that the cover extends to longer unoccupied periods (there may be a cut-off of thirty or sixty days).
Look at the long term
It can be tempting at times like this to either be panicked into buying or selling, or pivoting what you’re doing. While there is merit in exploring new avenues – and no-one knows how long this situation will last – property is generally something you will be in for the long-term. Evaluate the situation as a whole, see what you can do over the coming months, but remember that whatever income you were previously making is likely to come back and six months or more is not long in the grand scheme of things.