Due diligence and research are paramount when it comes to whether, where, and what to invest in outside of your country.
Investing is as much a tool for shaping your present financial situation as it is in forming your future. International investment is about dropping your previous perception and taking on a new pair of glasses and understanding a new environment from it. Just as there is a reason to invest, there is also a big reason not to invest – lack of knowledge. The foremost principle therefore is to study the fundamentals about the place that you wish to invest in and if possible make a site visit. The visit may reveal a totally different picture than what you have imagined previously.
Investors tend to think that owning a property is the same anywhere in the world. They forget that each jurisdiction has a different set of legal criteria. Be it a democratic, socialist or monarchy government, property ownership ranges from absolute to a periodic lease, while a different set of rules is usually applied for foreign investors.
1. Due diligence on ownership
A country’s laws play an important role in the protection of property ownership. The risk of buying a property is definitely higher when the property might be seized by the government without any reason or compensated disproportionately to the amount invested without any recourse to the courts. It is also important to look at the land registration system of the country – whether they practise the deeds system or Torrens system (mostly in the Commonwealth countries) or even any other system. Under the Deeds system, the government does not act as the keeper for all land titles and record unlike the Torrens system. It is left to the prospective purchaser of land to investigate all deeds in the chain of titles before finalizing the purchase because the owner as shown on the land registry record does not necessarily mean he has good title to transfer. The title is liable to be defeasible hence due diligence is needed. On the other hand, in a country where the Torrens system of land registration is practised, investors can safely assume ownership recorded in the Torrens land registry is correct.
2. Eligibility & tenure