Investing in real estate may be a terrific strategy to increase your net worth while also generating a steady stream of passive income. You should, however, carefully consider our reasons to invest in the European real estate market before you make a final decision. The information we’ve provided should help you have a better understanding of what to look for when making an investment abroad. Keep in mind that every European country has different laws so make sure to do your homework before making a decision. When it comes to making financial choices, information is key. Read on to find out five reasons why investing in real estate in Europe could be the right step towards financial stability.
European market is growing
Europeans are enjoying the benefits of real estate investment, while Americans are being hampered by low interest rates and slow wage growth. Though Europe as a whole has been hit hard by the global financial crisis, there have been some bright spots. There are presently 20 percent unemployed Spaniards in Spain and 16 percent unemployed in Montenegro and both nations have some of Europe’s lowest interest rates. Investing in these markets is more affordable because to the low interest rates. Before you invest though, make sure to visit the country you’re putting your money to. Mid to long term rentals in Montenegro are a perfect choice, so make sure to stay for at least a month before you make a final decision.
You may get residency
In some European countries, the law states that you may apply for a residence permit if you buy property in the country. For example, the beautiful coastal Montenegro is one of the countries with this rule. This enables international purchasers to buy, sell and rent their homes in Montenegro under the same terms as Montenegrin nationals. If you’d like to become European, it doesn’t matter how much your property is worth to obtain a residence permit. However, the process is not instant since house owners may seek for permanent residency after five years of ownership.
Buy smaller properties
Smaller homes are becoming more popular in Europe’s housing market. For the most part, foreigners are especially not interested in purchasing or maintaining huge estates. Elderly people have the most money for investing and they are frequently unable to keep up with the upkeep of large homes. Younger individuals, on the other hand, may not lack the will to devote the time necessary to manage villas but they unfortunately lack the financial means to properly manage huge properties. Retirees choose to cash out on their homes and invest in smaller, but more luxurious, flats with gorgeous views. Furthermore, smaller properties are easier to rent out to both locals and tourists. Therefore, you may make significantly more money in the long run if you invest in a modest two bedroom house or a studio apartment.
The strong correlation between GDP growth and real estate demand may act as a hedge against inflation. Rents rise in growing economies because of the increased demand for real estate which is the reality in many European countries at the moment, especially those in Southern and Eastern Europe. As a result, the value of the property rises. To keep capital’s purchasing power intact, real estate passes some inflationary pressure on to renters and incorporates part of the inflationary pressure into capital appreciation. This is why investing in real estate may help guard against inflation in a variety of ways. Capital gains may be expected if the rate of inflation rises faster than the value of a home. For one thing, rentals on investment homes may rise to keep pace with inflation. For properties with fixed-rate loans, the relative size of the monthly payments will diminish over time — for example, a 1,000 euro fixed payment will become less difficult as inflation reduces the buying value of that amount of money.
You may find property below market price
In certain cases, you may be able to buy real estate in Europe for a reduced price if the seller is desperate to get rid of the property. This also means you need to act quick. It’s simpler to take advantage of these pricing discrepancies if you’ve made a full-time commitment to real estate investment. Finding homes for a below market price may be quite hard if you’re not familiar with the market, so make sure to do some research before committing to the purchase.
Investing in overseas property may sound like a risky investment, but it will surely broaden your portfolio. You may also yield great returns while also obtaining a European passport. However, make sure to fully understand all the legislation and tax regulations of the country you’re interested in.