Invest in Spanish Properties
There are different reasons why people decide to buy Spanish real estate. A lot of people buy a Spanish property to enjoy the Spanish climate without having to worry about where they are going and if there is anything available. Besides, they can choose when, how often and for how long they want to stay in Spain. There are also a growing number of people who decide to say farewell to their home country and settle in Spain permanently.
Spain doesn’t only enjoy a sunny and warm climate. Financially you can make a lot of profit from Spanish real estate. Therefore the country is getting very popular with small and large investors.
Profit from rent
If you are thinking about buying a Spanish property to rent out, it is important to consider some things and think about them before you buy.
First you need to determine if besides renting it out you want to use your Spanish house or apartment yourself during holidays.
Second it would be wise to compare the purchase price with the expected rental income. The costs certainly can´t exceed the income if you want to make a profit. A high purchase price, which consists of mortgage for the most part, gives you high monthly costs and will have a negative influence on your profit because the rental income is not in proportion with the costs.
The location of your Spanish house or apartment determines a big part of the price, but it is also important for the rental income. To give you an idea: you can purchase an apartment with 2 bedrooms, communal pool and at reasonable distance to the beach for an acceptable price and has good rental potential. This in contrast to a country house in quiet surroundings and some distance to the sea. The higher purchase price makes a higher rental price necessary which decreases the chance of rent.
If you decide to invest in Spanish real estate on a bigger scale and you want to make a profit from rental income, a discount is open to discussion. When you buy more houses or apartments within one (new built) project, it gives you extra security for the project developer, who will reward you with a ´quantum discount´. Your total purchase price will be lower and have a positive influence on the profit from rent.
Points of interest:
- aim of your investment (rental with or without using it yourself)
- proportion purchase price expected rental income
- location and rent, because of rental possibilities
- discount when buying several properties
In short: advice makes you wise!
Profit from selling
As mentioned above, it is more and more common that people plan to settle in Spain. To those who are considering this we would like to advice to ask for the possibilities of purchasing a property within a new built project timely.
As you probably know, most of the houses and apartments are sold off plan. This cuts both ways. As a buyer you pay a good price and the builder receives capital from the down payments to start the project. As soon as the construction starts, prices will increase and keep increasing as the building progresses. So it´s not imaginary that when you participate in a project from an early stage and resell your contract of purchase or your property after completion you can make a decent profit. You can always sell below market value or the builder´s price to keep a nice margin. Even when you take into account a loss of interest you´ll still get a good profit.
Of course you don´t buy your Spanish property to sell it immediately, but there are some advantages to buy a property in Spain while you are still working:
the building time (=waiting time) for a new built property is approximately 1 to 1,5 years. During this period of time you can´t live in Spain, which you weren’t intending, because you still have to work. You do profit from a lower purchase price if you look at the annual price increase only;
if you buy a Spanish property early you will profit from the increase in prices. After ending your working life you can sell your Spanish property and use the profit to buy a bigger and more expensive property or in a better location.
The above mentioned principle, also applies if you want to buy several properties within one project. In that case you need to discuss with the project developer what the possibilities and agreements are concerning the sale. In general, after you paid the down payment, you can sell the contract of purchase The use of signs or other visual aids within the project are usually not allowed to prevent competition with the project developer (your prices are lower than his).
Ask for the possibilities!
Project developing
Likewise, we can be of service at the development of bigger projects. If you intend to invest in a new project, urbanisation, or the purchase of plots for building individual villas we will, in cooperation with our specialised colleagues, take care of the supervision from start to finish.
First of all, the location wanted and the available plots will be discussed with you. After that, we will find out if the building plans you have in mind are according to the plans of destination. Then we can make a project with the help of an architect and a possible builder and try and get the proper licenses. When the licenses are in place we can start with the project.
Although the above is described in a nutshell, it is actually a complex route during which several parties have to cooperate for a long period of time to see to it that the project will have the aimed result. A mutual trust is very important, so we draw up a letter of intent to prevent misunderstandings between the parties involved.
Investment in projects
It occurs regularly, project developers can use some support to start with a project. They ask for a relative small investment with a duration of, for example, a year. They will document a very good profit on paper for you.
The investment could be used for the purchase of building ground needed or for preparing the plots. It usually concerns the part that the project developer can’t finance via the bank, but will be able to later because of the increase in value of the project and therefore extra security for the bank.
There are also project developers who want to carry out their projects with an investor. They have already looked into everything and know the possibilities. Because the building costs and the expected benefits are known, they can produce a complete investment plan so you can estimate in advance what the final result of your investment will be. In general the duration of these investments is longer.
A good investment without risks!
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