The key to turning your dreams into reality is to ensure that you are prepared for every eventuality along the road to success.

Make sure you come out on top with some insider information for building a successful investment portfolio, says Henry Davis from www.internationalproperty.ie.

1. Research, research, research

The most frequently offered advice is always the same. Do your research. Only when you know the state of the rentals market in your desired area can you make an informed choice. Additionally, ensure that you are looking for the right kind of property in the area. Talk to local lettings agents to find out which type of units rent easily: often, if the area is over developed, there can be an oversupply of one type of unit. This happens particularly with two bedroom apartments.

2. Lead with your head, not your heart

Don’t let your emotions cloud your good business judgement. Davis advises: “If you are buying for investment purposes particularly, try not to become emotionally involved, remember this is a business transaction and unless you plan to stay and use your overseas property, choose an area with strong capital appreciation.” He adds that just because you wouldn't live there yourself doesn't mean it's not a good investment.

3. Transaction costs reduce your returns

Remember that transaction costs reduce your overall yield, warns Davis. In Germany, for example, apart from transfer taxes (stamp duty) the buyer pays the estate agency fees, not the vendor. Transaction costs also increase in countries where the loan-to-value rates are low. “The more cash you have to put into a deal, the less the return on investment,” he says. “Check all your transaction costs before buying; ask your solicitor for a full quote in writing (outlining all taxes and fees) before you commit.”

4. When is a discount not a discount?

Discounts come easily on properties with a higher perceived value, overpriced properties and oversupplied destinations. It always pays to remember that list prices are developer-driven. It is very often wiser to buy in areas where there are good resale and rental markets rather than in an area where developers are offering discounts.

5. Appreciating short-term capital appreciation

Capital appreciation prospects are limited if you purchase a two-bedroom apartment in an area oversupplied with two-bedroom apartments, whether they are completed or in the planning stage. In order to beat the market, try to establish which segment within a given market has the least supply and the greatest sales demand from both local and foreign buyers.

6. Have a haggle

Haggling can have a surprising effect: you may well be shocked at how much discount you can get, particularly if you are a cash buyer. Says Davis: “Estate agents often over-estimate values and many test the market with unrealistically high prices. Some agents and developers have a built-in habit of implying there is more actual demand than there really is.” He advises that the best negotiation strategy is to be able to highlight comparable properties selling in the area; basically if you can show that a similar property in the same area is selling for less, it's easier to justify the price you are offering.

7. Beware of rental schemes

If it sounds too good to be true, it may well be. Guaranteed rental schemes are sometimes used as a sales tool and can be offered in areas where there is an oversupply of rental properties. The developer may give you the value of the rental yield by way of a discount; this way you won't be taxed on the rental income. Some rental guarantees are legitimate and backed by established management companies or hotel chains. Always be cautious in this area and hand any documents over to a solicitor to check the terms and conditions.

8. Go local

Always buy through a local agent. This way, any problems can be more easily resolved. Dealing with the developer directly in a foreign culture and language can often cause problems that you would not encounter by going through an agent.

9. Strategise

One size never fits all when it comes to finding the right way to purchase investment property. Davis advises a strategy based on your long-term goals in line with your financial position. “If you are a first-time investor with limited resources be careful to choose a property with good rental income, otherwise you will end up sending large monthly top-ups to your mortgage provider,” he says.

10. Resales

Understanding the dynamics of the resale market is of key importance when investing. Try to think of both the foreign and local market when considering the location of your overseas property. It is vital that you consider your options to resell in the area. Think about where the most part of your buyers come from. If the most part are Italian and the Italian economy is hit by problems, then your ability to resell your investment may be seriously hindered.

Pay a visit to the Invest in Property Show, 13 – 15 April at London Earls Court, where a whole host of experts will be on hand to offer advice for the most cautious and speculative of investors.