Be sure you are clear on exactly what the purpose of your overseas abode will be before you purchase it. The ideal location of your property will be very different depending on whether you are attempting to make money through rental yields, capital appreciation or merely want somewhere for your own use, maybe with the option of letting it out occasionally.

Buying an old property in need of renovation may look cheap – it is easily possible to pick up such homes for well under £10,000 in some countries – but remember, building standards in some countries will not be what you are used to. To get such homes up to a decent standard it can often be necessary to tear them down and start all over again, making the initial cheap price you paid for the property misleading, and even harder to make a profit off when the time comes. Carry out in-depth checks first, and get a second opinion if you feel you need it.

Ensure you understand the purchasing process in the country where you wish to buy. A property may look great value at, for example, 40,000 euros, but does this price include 'hidden costs', such as property taxes, agent fees, legal fees etcetera? If not then you may be in for a nasty shock by the time you come to complete. Always take legal advice, even if you are told you don't need it.

It is always worth haggling over the price, just as you would in the UK. A price may be listed at a certain amount but this doesn't mean the seller might not consider dropping their price slightly. If you don't ask, you don't get.

Check the credentials of the agent you are using. if they claim to have a great record in helping investors make money from their property, ask for proof – testimonials, for example. You should  be 100 per cent confident that an agent has your best intentions in mind at all times.

Always visit the property before purchasing. If you don't, how can you be sure that the promised two-minute walk from the beach/city centre isn't more like a 30-minute drive? You wouldn't buy a home in the UK without looking at it first, so why would you overseas?

Check to see if there are financial factors which could affect potential profits. Will you need to pay a capital gains tax when you sell your property? How much will you be taxed on the money you make through rental yields? It is is essential to be clear on all financial aspects of owning a property abroad before you can plan to make money from an overseas purchase.

It can be all too easy to simply look at by how much property is appreciating on average in a particular country and expect your home to do the same. Your property is only likely to make money if it is in a desirable location where someone else will want to buy it when the time comes to sell. You may also have trouble selling it if it is close to other similar properties which owners are also likely to want to sell in the future.

If you plan to let your property out, consider how you will maintain it between tenants. Some companies, particularly on newer developments, will offer the use of managing agents as part of the purchase agreement, so this can be worth checking before you buy. Remember, however, such a service will cost money, thus eating into your potential profits. Also, if you property does not come fully furnished, consider the outlay you will have to make on buying furniture.

Don't bank on becoming rich overnight. More often than not, investors stand a better chance of making money on their purchase over a number of years, rather than in a few short months. Research the country in which you are interested in buying a property to see if there are any future developments planned – such as EU membership, low-cost flights, top sporting events etcetera – which could impact on its popularity further down the line. Even once such events occur, however, it can take a good few months for them to have an impact.

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Article published July 2007