Buying commercial property abroad can be lucrative for an investor or company. There are a number of reasons for this, but one overlooked explanation is the inherent risk and difficulty attached to property deals made overseas.

This risk deters many investors, which is why it can be such a useful advantage to understand the avoidable traps and the hidden advantages you can bring to the negotiating table.

It is this prior knowledge and detailed preparation that can buy you an edge when it comes to making commercial property investments overseas. Without this, you will be left vulnerable to a number of potential risks and money burners.

This is what you need to know before buying commercial property abroad:

Legalities may vary between countries – don’t be left vulnerable

One of the most significant factors to keep in mind is the legal differences between your country and the country the property is in. Now, this can be a problem for a number of reasons. The most obvious is that the legal documents will likely be in a foreign language. This would be enough of a problem as it is (unless you speak the language), but consider the fact that these documents and laws won’t just be in a different language, but foreign legalese. Of course, legalese is infamously difficult to decipher in any language, let alone one you don’t understand.

This is why seeking legal translation services is crucial to closing the deal without walking straight into a hidden legal trap. It is better to invest your money in a professional upfront than risk far more by powering into property deals blind.

The language barrier can either be a hindrance or an advantage

While translating jargon is a particularly steep hurdle to overcome, there is still the matter of the language barrier in general. It is this basic problem that deters so many investors from spreading their property portfolio abroad. 

Indeed, while fears of being ripped off by or failing to understand brokers, owners, builders, and tenants is well-founded, the language barrier can actually be used to your advantage. 

To turn this hindrance into an advantage, you will have to learn at least a basic level of the language, good enough for you to understand short sentences and important phrases. Ideally, you will want to hire a tutor and learn the language fluently, but core phrases will do if you don’t have the time or resources. 

This will hand you a valuable ace card in all negotiations you encounter – whether it’s fixing the deal, renovating the property with the help of local builders, or negotiating a tenancy deal. It is safe to assume that, unless you make it explicitly clear, most natives you deal with will presume you can’t speak their language. 

This will lead some people to speak openly to their own colleagues in their native language during a negotiation. You will be able to gain an advantage by understanding a lot more of the background politics and hidden agendas than you let on. 

This is a tremendously powerful negotiating tactic. While you should not use it unethically, it can provide you a far safer position to negotiate from.

Make sure you have an asset on your hands, not a liability

Building financial assets and minimizing liabilities is a basic wealth strategy, but it works for a reason. Be careful to choose a commercial property that has a significant amount of use as an income-generating asset. Consider the location (not just the immediate vicinity but the wider region and its prosperity), as well as the property’s potential uses.

While a shop can be valuable, it does not have as much long-term value or income generating potential as a building that could be used equally well as private property, shop, and office, depending on the state of the economy and local demand. 

Bureaucracy can slow the process to a halt

This is a hidden trap that few business people consider when they choose to invest in commercial property overseas. The level of paperwork, bureaucracy, and local politics in many countries is high, especially when combined with the paperwork you’ll need processing in your own country. This can slow your negotiations to a halt, potentially killing the deal or choking your cash flow. 

There is no way around this other than preparing for the worst. Avoid countries where bureaucratic control strangles commerce too heavily, as it affects how valuable your property is as a commercial asset. As long as you factor long lead times into your negotiations, there is no reason why you can’t close the deal.