Overseas investors will often be unaware of the fact that retail banks are eating into their rental yields each time they repatriate those funds back to their country of origin. For years, the banks have had carte blanche to provide clients with uncompetitive exchange rates, often taking margins of as much as 5%.
However, as investors are becoming more savvy, with access to unlimited information at the touch of a screen or the click of a mouse, they are seeking alternative, cheaper ways of transferring funds internationally.
Specialist currency brokers can provide clients with exchange rates that are significantly better than what they would achieve through their banks, allowing the investor to repatriate a larger proportion of the income earned on their rental portfolios.
For example, an overseas investor from the UK may be generating $1,000 per month in net rental yields through their Australian property portfolio. The investor may decide to repatriate these funds on a monthly basis. Based on an interbank exchange rate of $1.65 dollars to the pound, they would likely be offered a rate of around $1.72 through their local bank. A specialist currency broker, such as the Foremost Currency Group, would be able to offer an exchange rate close to $1.66. Each conversion from AUD to GBP would therefore net the investor an additional £21 on each repatriation, or £252 over the course of a year.
The savings will, of course, depend on the amount being converted. There will come a time when an overseas investor will decide to sell one of the constituent properties in their portfolio. Based on the figures in the example above, a conversion of $1million back into Sterling using a specialist currency provider would net the investor an additional £21,014.30.
With such significant savings to be made, it makes sense to explore the currency transfer options available to you.
If you would like to find out more about Foremost Currency Group’s transfer services, Joe Mayhew and James Baxter (Asia-Pacific currency experts) will be happy to answer your questions.