FIVE YEARS AGO only professionals were interested in overseas property as an investment. Then the toe-dipping amateurs arrived on the scene, buying a flat on the Spanish coast and letting it out to the odd holidaymaker. But today a new breed is buying not just one property but building sizeable foreign holdings. Asia, the Caribbean, South America, the former communist states — it does not matter how far away it is as long as the investment logic is sound.

The jump between buy-to-let in Barking, East London, and buy-to-let in Bratislava, Eastern Europe, is not something everyone would feel comfortable making, but John Walker, a management consultant, has made that leap. Walker, 57, got into property five years ago when he, together with a colleague, bought five flats in Barking. At £50,000 each, they proved to be an astute buy, having more than doubled in value while netting a healthy rental yield.

But Walker decided that the British market had peaked and started to look abroad. His first purchase — again with his colleague — was a four-bedroom villa in Florida, bought for £150,000. While he has no regrets, Walker does not think holiday lets make the best investments. “I handle the admin side of it and I quite enjoy it, but the time you put into it is by no way compensated for in rental terms,” he says.

With local taxes, council taxes, utility bills, cleaners’ bills, homeowners’ association fees, not to mention letting agents’ fees, Walker estimates that the first 15 weeks’ rent is eaten up by running costs. “It washes its face but I would not regard it as the best return on capital.”

Florida was not the dream investment that he was looking for, so he decided to examine the new European Union entrants for a better financial opportunity. “We were initially attracted to Prague,” he says. “But we came to the conclusion it was overdone, so we started to consider the other European countries.” After looking at Budapest, Warsaw and Croatia, he was drawn to Slovakia.

“We realised it had all sorts of things going for it, and unlike Prague, Bratislava’s property market had yet to take off.” A government that favoured business and a flat-rate tax of 19 per cent was also appealing.

Walker flew to Slovakia and was struck by the number of hideous Stalinist blocks. He realised that there were almost no smart homes for upwardly mobile Slovaks or the growing numbers of foreign executives working for international companies in Slovakia. Local letting agents backed up his view. They told him they would take anything he had and promised two-year lets with blue-chip foreign companies.

Walker decided that the investment credentials were compelling. He bought two one-bed flats five minutes’ walk from the central business district in Bratislava, paying £80,000 for each, and a further two, two-bed apartments in nearby Trnava — a beautiful old town with a growing motor industry — for £55,000. He expects to rent the Bratislava flats for €600 (£400) a month and the Trnava apartments for €500, netting an initial return of 7 per cent and 7.5 per cent respectively.

For Walker, a guaranteed income and almost no administration means that long-term urban lets are far more appealing than tourist destinations. He says: “Holiday letting is more hit and miss. It is very intensive in terms of time and there is no guaranteed income.”

Lee and Emma Day could not agree more. But unlike Walker, the Days are prepared to put a lot more of their time into maximising the rental return from their portfolio of holiday homes. After all, who would not like to own a string of homes in the Caribbean, Mediterranean and Aegean? It is certainly a lot more glamorous than the Slovakian equivalent of Dagenham.

The Days’ tactic is to look for properties with the best potential for year-round tourism. “That means as near to the airport and as near to the beach as our budget allows,” Lee says. Many long nights researching up-and-coming tourist markets on the internet and comparing prices resulted in the Days buying three properties in Antigua, Cyprus and Turkey for a total of £200,000 in the past 18 months.

Their best buy was probably their first: a two-bedroom house at Jolly Harbour in Antigua last year. As Lee says, 5,000 miles is a long way to go on a viewing trip, but £88,000 is not a lot of money for a house on a Caribbean island. The British agents handling Jolly Harbour, Waterside Properties, also found their next investment, a one-bed flat in Cyprus on a gated development bought off-plan for £57,000, and advised them to look at Turkey rather than Bulgaria. Here Lee found another good investment: a four-bed flat on two floors just south of Dalaman airport on the Turkish coast for £40,000. He bought it from the builder, who had been trying to market it himself for several months.

Although it was the idea of owning a foreign holiday home that initially excited them, the Days decided that property would provide a better pension pot than the British stock market. As newlyweds, they were able to sell Emma’s house to start their international portfolio. But they have also remortgaged the family home in Nottingham to increase their buying power. The Days really need to make their properties work as investments. Lee reckons he has the time, the skill and passion to succeed. One smart move was to buy the internet domain names villarentalsantigua.com, villarentalscyprus.com and villarentalsturkey.co.uk. Using his skills as a graphic designer, Lee has set up sites for each of his properties.

Amateur investors gravitate towards two distinct markets: tourism and long-term buy-to-let. Both strategies have their merits and risks. Lee’s plans may sound riskier but, unlike Bratislava, he has bought in areas where there is an established resale market. The going rate for a two-bed house in Jolly Harbour is now £160,000.

The success of the Days’ strategy will be directly related to the time and energy they put in. If that commitment looks daunting, then you may conclude, like John Walker, that the holiday market is not for you.

Charles Mavor, head of property finance at Singer & Friedlander, offers sage advice for those thinking of investing overseas. “Don’t leave your brains at the airport,” he says. “It’s very important to know what you are buying. Ask questions and use an independent lawyer.”

BUYER'S GUIDE

Consider a fallback plan. If your financial priorities change, would you be able to sell the property?

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