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Feb 07, 2022

Why Investing in Offshore Property is a Key Part of Building a Successful Retirement Plan

An area of great importance to the Carrick Group is that of assisting clients in building a successful retirement plan.  

“It’s very important to understand that in South Africa and other parts of Africa, we unfortunately cannot rely on governments and government institutions to support us when we get to our retirement – the current state pension in South Africa, for example, is only R1890 a month,” says Craig Featherby, Founder and CEO of the Carrick Group, who believes that saving for retirement is one of the biggest financial decisions of a person’s life. 

“One of the biggest challenges in 2022 and probably for the next five years, is going to be about saving appropriately for retirement,” he says. “As a business, it’s our role to assist clients to ensure that they’ve saved appropriately and that when they get to retirement age, they’ve got sufficient asset protection, liquidity and cashflow to ensure that they can enjoy the retirement they’ve dreamed of.”  

Why Should You Include Offshore Property In Your Retirement Plan? 

“Who wouldn’t want to own property in hard currency, in a stable environment and in an asset class that is consistent and keeps on growing?” ask Anthony Palmer, Group Commercial Director at Carrick Wealth. “The simple answer to whether you should buy an offshore property as part of your retirement strategy is yes.” Here’s why: 

The power of leverage: The power of leverage is massively underestimated, says Palmer. “You can grow your portfolio by using other people’s money – in this case, the bank, through a mortgage. It really is a no brainer: you sit on it for 20 to 25 years and end up with a paid off property generating rental income in a hard currency. It’s an asset that supplements your overall retirement plan, with the added attraction of stability and consistency.” 

Owning property is a natural inflation hedge: The escalation clause in a lease means you can increase your rental so as interest rates rise and inflation kicks in, your house price will increase over the long term and your rental can rise along with it. 

Diversification is key: You need a retirement plan with a balance of traditional assets, such as equities and fixed income, coupled with a property investment. “Each of these play a part in the investment portfolio. A well thought our plan with a balance of assets, including bricks and mortar in your own name, really does make sense.” 

What To Consider When Looking To Invest In Offshore Property 

Scott Irving, General Manager, Carrick Property, shares some of the key considerations: 

 

1. Do your research: Lean on previous experience if you have it. If not, find an expert that can help you on your research journey and do due diligence.

Things to consider: 

  • What type of property can you afford?  
  • What is your objective –  is it a plan B if you need to leave the country? Is it specifically for your kids’ education? Are you focused on an investment return?  

 

2. Investigate the jurisdiction

  • What is the age of the population?  
  • Who are the big employers?  
  • Are employers moving headquarters or relocating there?  
  • Are there planned or current regeneration projects (government, local council, infrastructure investments, rail or connectivity, etc.)? 
  • Is there a major event planned for the area and what impact is that likely to have on the property market in years to come?  

 

3. Direct local property market

  • What has the growth been in the last 5 years?  
  • What is the growth forecast?  
  • What volume of sales has taken place?  

 

4. Supply and demand

  • What units are selling?  
  • Year on year, does the demand outstrip the supply? 

 

5. Consider your rental options

Who’s going to look after your property? Who’s going to manage the rent? If you don’t live in the UK, it’s not easy to manage the day to day running of the property. Carrick Property pushes for full rental management – having the right people on the ground taking care of daily issues and ensuring you have the right tenant profile.  

 

6. Will you leverage? 

Are you going to buy cash or are you going to use the bank’s money? The country, the region and your personal profile will determine whether you get a 50 or 70% loan and a 3% or 5% interest rate. 

 

7. Tax implications

The rules around tax and estate planning can be intricate so it’s essential to call in a qualified professional. 

The Carrick Group can help clients understand their financial needs, as well as where and how to invest and the financing options. “Clients need to understand the different choices so that they can make an informed decision,” says Irving. “We hold your hand through the whole process. We work with preferred partners in terms of mortgage providers, solicitors, developers, rental management companies and Carrick Consult. We’ve also got an investment committee that scrutinises in detail and does full diligence on every single project we are involved in.” 

Many people believe buying property in the UK is such a complicated process, but “it’s actually just as simple as opening up a bank account,” says Featherby. “However, people do make mistakes. Explore your options and get expert advice – you’ll see how easy the process is and how it can tangibly contribute to your overall financial planning.” 

Watch Open the Door to Offshore Property Investment in 2022 webinar recording for more.

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