JAMES HAYDON OF LEATHERHEAD, SURREY, WRITES: With property prices in the UK prohibitively high and uncertainty surrounding the buy-to-let market, I am considering looking elsewhere for an investment property - a location where my money will go further.
I would like a property that can be rented out fairly easily for a healthy return (at least enough to cover mortgage repayments) and at the same time benefit from a good rate of capital appreciation over a five- or six-year period.
Ideally, we would like to be able to use the property for the occasional holiday, so I would like to stick to places within a flight time of around four or five hours. I have a budget of around £320,000. Would this be best used buying a single large property or several smaller properties?
In terms of location, I have been reading a lot about the new eastern European markets - would these be a safe place to invest or should I stick to more established markets like Spain and France?
Could you please provide myself with some examples of good investment properties so I can get more of an idea of what's out there?
KATY POWNALL REPLIES: The type of investment you describe has been dubbed "fly-to-let" or "jet-to-let" by marketeers and it is a very appealing prospect in today's property market. Research commissioned by UK-owned Oceanico Developments suggests that the UK jet-to-let market is worth in excess of £58bn, with around a fifth (17 per cent) of Britons who own a property abroad renting it out on a regular basis.
As with any investment, the key to getting it right is doing plenty of research. There are no hard and fast rules for success, I'm afraid. The success or otherwise of a buy-to-let proposition rests on the property price relative to the rental income you can generate. For example, you could purchase an attractive two-bedroom apartment in a nice area on the south coast of Spain for around £150,000.
Your outlay for such a small property is high, as property prices have risen hugely in resort areas, but against that you can have virtually year-round rentals, thanks to the winning combination of golf courses, beaches, low-cost flights and a great climate. Additionally, average rents in such areas will be high, even for apartments.
Alternatively, you could buy a villa in Cyprus for the same amount, thus getting far more bricks and mortar for your money. Again, by virtue of its great climate, Cyprus has a long letting season, but average rents aren't as high, so the returns might not be so good.
Capital appreciation is another matter altogether, with "emerging" eastern European markets predicting (but not guaranteeing) astronomical price increases, while safer options, like France, offer a slow and steady increase.
"The key is to properly work out your income stream for each prospective investment," says Richard Bowser of the small investor's handbook Property Investor News ( www.property-investor-news.com).
"Location is crucial. If you want year-round rentals or have long-term tenants, then a city location will be best. Beaches and mountains will offer shorter seasons, but rental rates will be higher.
France is a very positive market at the moment, offering a relatively secure long-term rental prospect combined with low interest rates on mortgages. Spain is harder to navigate - you have to be very careful when choosing your property, as some micro-locations within the most popular areas are suffering through overbuilding.
I have selected three very different fly-to-let propositions for you. The first relies on a steady tourist market in a growth area, the second on a unique selling point in an established area and the third on a long-term let in a growing city.
All offer good rental yields and capital appreciation prospects.
Property One: A two-bedroom townhouse within the pictured development Jardim da Meia Praia, western Algarve, Portugal
Agent's details: It comes fully furnished, with parking space and communal pool. It's near Lagos, a short walk from the beaches of Meia Praia and within an hour's drive of Faro airport. The property will rent for around 25 weeks per year, bringing in an annual income of some £10,000. Oceânico Resorts offers a rental and management service.
Capital appreciation in this area of the Algarve is running at around 10 per cent per annum.
Agent: Oceânico: 00 351 282 790840; www.oceanicodevelopments.com
Property Two: A two-bedroom townhouse in the St Endreol golf resort, in Var, Provence, France
Agent's details: A prime location less than an hour from Nice airport, near St Tropez and with excellent access to the Côte d'Azur. Proximity to a world-class golf course is quite rare in France and offers an extended rental season. This factor will also improve capital appreciation, which is expected to be high. Rental income would be about £1,000 per week for nine weeks in July and August.
Agent: Assetz Limited: 00 44 (0) 161 456 4000; www.assetz.co.uk
Property Three: A one-bedroom apartment with balcony near the town centre, Prague, Czech Republic
Agent's details: This unit - in a recently reconstructed classical terrace - is situated in a cobbled square near the Vltava river. Ideally situated on the Prague 1 border, this apartment is likely to be in high demand. A long-term let for 52 weeks of the year yields around £450 a month. Capital appreciation should also be excellent.
Agent: Prague Property Investments: 0845 070 5545; www.praguepropertyinvestments.net
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