In this introduction, we are going to introduce you to the factors you need to consider before investing in a buy to let in Spain.
We will discuss:
- why investing in a buy to let in Spain is a good idea
- how to safely invest in a Spanish buy to let
In future articles we will look in more depth at the pros and cons of short and long term rentals; licences and legalities; and of course finances; calculating finances based on costs vs yield; property refurbishment; improving profitability; how to register a holiday rental in Spain; and the all-important licence of first occupation.
essential information in your inbox as it is published.
So, for starters, why invest in buy to let in Spain? Or anywhere for that matter?
Investing in a buy to let is a popular option for many investors. It has a human element. We can see, touch and even manage and enjoy a property, unlike stocks and shares and even cryptocurrency.
Owning a buy to let in Spain means that not only have you invested your money in solid bricks and mortar, you also have something to enjoy with family and friends should you so wish. Provided you invest wisely, your investment will not only pay for itself over time but you will also have fun whilst doing so. They haven’t created holidays in Cryptoland yet, have they?
We promise to keep this part short. However, after almost thirty years of living here, we are still very much in love with this place and am happy to speak to you in person if you are having any doubts about buying a place here.
In short: the climate, the culture, the food, the scenery, the people … there, we kept it to the point!
Spain is currently one of the fastest growing countries in the eurozone. Tourism is simply booming in southern Spain. Demand in both the short term and long term rental market in the popular areas such as the Malaga province and the Costa del Sol far outweighs supply.
Why is there a shortage of rental properties in southern Spain?
- Long Term Rentals: People from all over the world are relocating to southern Spain. Malaga and the Costa del Sol continue to be the preferred destinations for young professionals, families and wealthier retirees. Flexible working conditions allow more people to work from home or travel freely. Excellent international education options attract families from all around the world. People relocating often choose to rent before they buy, ensuring they have the ideal location before financially investing. Long term rental contracts are generally 11 months (we will look at this in more detail in a later article).
- Short Term Rentals: In a nutshell, tourism. The trend towards independent travel has lead to a boom in private rentals via websites such as Airbnb and Owners Direct. This has allowed property owners to benefit, particularly those with properties in sought after locations. The fact that short-term holiday rentals are now tightly regulated in Andalucia has instilled confidence in the local holiday rental market.
So, southern Spain is in high demand, but how do you safely invest in a buy to let in Spain?
As with any financial investment, research is the key to success. Take your time, ask questions, do your calculations and do not be afraid to ask for help. Seek the advice of financial and tax specialists, start with your own accountant, let them do the sums. Then, simply contact us and we will show you how.
3 Initial Tips for investing in a buy to let in Spain:
Before even thinking about location or property type, think about money!
The amount of money you want to invest and the return on investment you want to achieve will help determine your ideal location and also the type of property you should invest in.
If you require a mortgage to finance the investment, you need to ensure rental income will cover these costs as well as running expenses. As a guide, initially, aim for a 4 – 7% annual return on your investment.
Head vs heart!
If you are buying purely for investment your head must lead the decision-making process. However, if the property is also for personal use, a happy balance is required. As your personal property finder, we will ensure both your head and heart are kept in the right place.
Decide who are your ideal tenants!
As with any business, understanding who is your ideal customer is a key to success. Ensuring your Spanish rental property appeals to your ideal tenant will ensure you achieve the income you desire. Do you want long or short term tenants? Each has their advantages and disadvantages. We will look in this at more detail in a future article.
So, there you have it, a short but sweet introduction to the factors you need to consider before investing in a buy to let in Spain. If you haven’t already done so, ensure you SIGN UP for updates and receive this essential information in your inbox as it is published.
To Read Next: Short term vs long term rentals in Spain.
Lisa & Louise