by Tripinvest UK
You want to invest in Spain but are worried about misplacing your savings and not achieving the expected profit? Learn how to safely invest in Spain by Reading this article.
What to consider when safely investing in Spain?
Spain remains an attractive destination for foreign investors looking to safely invest/investing in Spain. The 2019 forecasts for the Spanish real estate market confirm its sustained appeal. However, it’s crucial to understand that the market operates under unique rules, demanding careful consideration and adequate preparation for safe investing abroad. Successful investments require meticulous calculation, weighing the pros and cons of available offers, and finding a balanced approach to maximize profit potential.
When deciding to purchase a house or apartment in Spain, it is crucial to conduct a thorough analysis considering the following aspects:
- Investment objective: Clearly define your investment objective, whether it is for personal use, rental income, or long-term appreciation.
- Location of the investment: Choose a strategic location that aligns with your objective. Consider proximity to amenities, tourist attractions, and growth potential.
- Legal status of the property: Ensure that the property has a clear legal status, with proper documentation and no pending legal issues or disputes.
- Technical condition of the property: Assess the property’s technical condition comprehensively. Evaluate structural integrity, maintenance requirements, and necessary repairs or renovations.
- Return on investment: Evaluate the potential return on investment by analyzing factors such as rental demand, rental rates, and the property’s potential for value appreciation.
- Source of financing: Determine the most suitable financing source for your investment, whether it involves personal funds, loans, or other financial arrangements. Consider associated costs, interest rates, and repayment terms.
By meticulously analyzing these aspects, you can make informed decisions and minimize potential risks when purchasing a property in Spain, ensuring a safe investment in the country.
Investment Objective
Aligning the entire property purchase process with our investment objective is crucial. Whether we are seeking a holiday home for personal use, a tourist rental apartment, or a permanent residence, several factors come into play.
Our investment objective significantly influences the preferred location, square footage, and number of bedrooms in the chosen property. For example, if our goal is a tranquil family holiday home, a secluded location on the outskirts of a Spanish village, away from bustling tourist resorts, might be ideal. However, for rental purposes, considering holiday apartments in or near popular resorts, offering access to attractions, sandy beaches, and urban entertainment, would be more suitable.
The investment objective also determines the type of property. Investing in an apartment with 1-2 bedrooms can be advantageous for generating income through short-term rentals during the summer season. Conversely, properties with larger square footage, more bedrooms, and desirable amenities like a spacious terrace, pool, or garage can enhance the potential for later resale at an attractive price.
When seeking a permanent residence, prioritize ample square footage, comfortable living conditions, and a convenient location near amenities like shops, hospitals, schools, and transportation connections to other parts of the city.
By aligning the property purchase process with our investment objective, we can make informed decisions and achieve desired outcomes, whether it involves a personal holiday home, a rental property, or a permanent residence.
Property Location
If you are considering purchasing a property in Spain for profitable purposes, the location plays a crucial role in determining its success. Investing in lesser-known towns or areas that are not popular among tourists may not yield profitable results. On the other hand, larger resorts may have higher property prices but offer better chances of a faster return on investment. From an investor’s perspective, properties in highly lucrative locations such as Torrevieja, Calp, or Benidorm can be highly rewarding. Here are some sample offers to explore:
- Seaside apartment in Alicante
- Apartment with a pool in Torrevieja
- Luxury apartment in Calp
- Beachfront apartment in Benidorm
Before finalizing your property purchase, it is crucial to familiarize yourself with the immediate surroundings of the property. For some tourists, a location in the center of an entertainment city, close to restaurants and clubs, may be desirable, generating significant interest in your rental offer. However, if you are looking for a quieter holiday home for personal use only, it may be preferable to purchase a property on the outskirts of the city.
When selecting a location for investment, it is essential to consider future spatial development plans for the desired area. This proactive approach helps prevent situations where the rental offer becomes less attractive than initially anticipated. For example, if you purchase a house in a peaceful area, you would want it to remain that way. However, if there are plans to build a large shopping center or new roads in the near future, it can significantly impact the desirability of the location. Obtain information about spatial development plans in advance to make well-informed investment decisions.
Legal status of the property
To protect your interests and avoid future expenses, seek guidance from a qualified Spanish-speaking lawyer or real estate agent.
Before proceeding with a property purchase, it is important to verify the following key aspects:
- Debt-free status: Confirm that the property is free from any outstanding debts.
- Ownership verification: Determine the rightful owner of the property you are interested in.
- Building permits: Verify if the previous owner obtained the necessary building permits for any modifications or constructions made on the property.
- Land registry registration: Ensure that the property is duly registered in the land registry.
- Property tax payment: Confirm that all property taxes have been paid and settled.
In addition, exercise caution when dealing with formalities. Remember that documents required for the property purchase transaction should be accurately translated into your language. It is crucial to complete this step before signing any binding agreements.
The technical condition of the property
Before finalizing a property purchase, it is crucial to ensure the technical condition of the property and verify the accuracy of the presented property listing photos. This meticulous assessment is necessary to safely invest in Spain and avoid unexpected expenses that could arise from undisclosed defects.
Due to favorable financial conditions, some investors choose to acquire properties in Spain that require renovation. In such cases, it is crucial to ensure that the price reflects the current technical condition of the house or apartment. Without an appropriate discount, the purchase may not be financially viable when considering the additional costs associated with significant renovations.
Return on investment
Individuals investing for profit purposes should calculate the profitability of their investment before making a purchase. In order to do so, we need to take into account:
- Property price
- Taxes and additional fees associated with the purchase and mortgage loan
- Property maintenance costs
- Mortgage loan amount
- Monthly mortgage loan instalment
- Rental property tax
- Rental rate
- Estimated occupancy rate of the house or apartment
We encourage prospective investors to familiarize themselves with a sample calculation when purchasing an apartment in Spain.
Financing the investment
Investors interested in buying properties in Spain often opt for mortgage loans to finance their purchase. This financing method allows covering 50-70% of the total purchase costs. Although loan offers may vary among different banks, choosing this property financing option commonly offers a repayment period ranging from 5 to 25 years.
The loan’s extended duration highlights the importance of carefully assessing your financial capabilities to manage future installments. Rushing into a house purchase can lead to overwhelming monthly payments and the need to sell the property.
To improve your chances of obtaining favorable loan conditions, seek assistance from specialists in the Spanish real estate market. We offer valuable support to prospective investors, helping with document compilation and finding the best mortgage loan offers in Spain.
Remember, taking sufficient time before purchasing a property in Spain to thoroughly verify all the aforementioned aspects is crucial. If you wish to mitigate potential risks and ensure a legally compliant purchasing process, contact our specialists. We will tailor an offer to match your investment objectives and assist in securing financing for your property purchase.
