Facing up to necessity – global financial leverage

Like many South Africans, I thoroughly love the lifestyle, the landscape and the eclectic cultures of our Rainbow Nation, yet I am forced to admit that I often watch the sliding Rand with dismay. And while economists say that the Rand is undervalued and a potentially strong currency, the fact of the matter is that currently our international buying power as South Africans is pretty dismal.

The current impasse between the Treasury and elements of government is a good example of factors, external to one’s own business, having a potentially disastrous effect on the economy and all of our livelihoods.

Personally, I don’t believe that I could build again in another country the business and social networks and relationships that I have here, many of which go back as far as my school days. So while I choose to stay in my motherland, I am all for foreign financial hedging too. This is a way to ensure that not all ones assets are susceptible to political and economic events beyond our control, and by creating a portfolio of positive global wealth, take steps towards ultimate financial freedom.

The good news is that there are many foreign investment options available, my preferences always being those related to property. And it is encouraging to know that counties including Australia, US, Spain, Cyprus, Mauritius and even Mozambique welcome South African investment and, as such, buyers are encouraged through rebates and tax incentives.

There are a number of purchase strategies related to purchasing abroad, but I think the easiest without actually emigrating would be a buy-to-let in a location that has a large and affluent tenant pool. That said, there are a number of countries that offer their own sale and property investment structures, which are also interesting.

While I can’t go into them all, a few thoughts to bear in mind, c/o Private Property!

  •  Thoroughly investigate the market. Property markets in different countries go through their own cycles, so for those buying to invest it’s important to understand current values in the country of your choice – the ideal being to buy near the bottom and sell near the top of a cycle.
  •  Make sure the price is right and find out what local and international expenses there are that are not included in the purchase price.
  •  Watch exchange rates. Transferring large sums via a specialist foreign exchange firm and hedging against rate rises can save costs considerably.
  •  Be aware of tax implications – these will include local tax implications when buying and selling as well as international ones. Consider options such as joint ownership with a spouse or through a company and factor in capital gains tax and inheritance tax.
  •  Use a reputable estate agent for some degree of protection and invaluable advice. Buying directly from an owner can sometimes make for a great deal, but you may have no recourse.
  •  Get legal assistance. Make sure you have the services of an independent lawyer when entering into a property deal. A lawyer’s advice can be invaluable if legal wrangles occur.
  •  Get your questions answered – in writing. Oral confirmation isn’t enough should a legal altercation occur. And don’t be pressured into signing anything or making payment until you are completely satisfied  the deal meets all your due diligence requirements.
  •  Understand every word. Have your documents translated before you sign anything relating to a potential purchase.