Dilema re buying for investment!!!

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This topic contains 13 replies, has 9 voices, and was last updated by Profile photo of Melosine Melosine 9 years, 10 months ago.

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  • #52579
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    Anonymous
    Participant

    Can anyone give us any advice please….
    We hunting for a property purely for an investment to give us a good rental return and we are stuck!! We have decided either to get a 2 bed appt in Sotogrande or a 3/4 bed villa around Altea area but we cant choose which to go for. Our budget is approx £240k. Does anyone have any pearls of wisdom to share with us to guide us to a decision?? Much appreciated. 😕

  • #68622
    Profile photo of katy
    katy
    Spectator

    You will not get a good rental income on the CDS as there are literally thousands of EMPTY apartments. Sotogrande is suffering from over-development (have you seen the marina?) Altea used to be a nice place but I haven’t visited for years. My advice, if it is for investment only, go for run down terrace houses in the UK. or a 2 person apartment in Paris etc. I am with a private consortium and we have done well over the last 5 years with these.

  • #68623
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    Anonymous
    Participant

    Hi Katy, thanks for the advice, I already buy/sell/rent homes in the UK and will carry on doing so until I finally get sick of paying Mr Brown his share !

    I stayed at a friends Villa at the San Roque Golf Club the other month and took a look at the marina from the water and dry land. I thought it was pretty good and plenty of rental appeal due to the high class golf courses / bars and tennis etc in the area.

    It looked pretty smart with plenty of “well to do” Europeans looking around at property.

    But as you say, resale property there is hanging around on the market for a while !

    When offering on a property what kind of percentage on average would you offer below the asking price ?

    G. 😀

  • #68624
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    Anonymous
    Participant

    Graeme,
    When you say Investment. What do you mean rental or Capital or both, The time Span you are looking for ?

    I was last in Altea few years ago and I am sure that today I will not recognise it. There is a difference in the purchase price of about 15% to 20% between costa del sol or costa Blanca.

    Soto Grande is very quite and sad outside the summer i.e. July/August. Its long way from Malaga ( flights in mind) I know Gibralter is being opened for direct flights from Spain etc. I will not rely on it until a long term acceptable poltical situation is found to all parties concerned.

    In Soto Grande where will you in terms of evening outs as the choice is very limited.

    I hope it helps.

  • #68625
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    katy
    Spectator

    Golf is expensive in that area and most golfers are the type that either stay in private villas of friends or they like a good hotel where there is nightlife nearby. I love taking a light lunch on sotogrande, marina, its tranquil, but as Shakeel says options are limited. Most golfers (and I know many) like the Banus scene. A lot of places around sotogrande are presently closed for the season. San Roque is horrendous, like playing golf on a building site. Don’t agree with Mark’s article as to the potential in that area 😕

    As for making offers, you would need to do a bit of homework on the seller, some are not in a hurry to sell and won’t budge from the asking price others may be quite desperate. If you see something you like try a cheeky offer they will come back to you with a counter offer if its not enough. Personally I would go in arond 10% less but not an expert, could be wrong 😕

  • #68626
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    Anonymous
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    I think that you would have to be some sort of financial genius to make money on an apartment in Sotogrande in the short and medium term. It is possibly the most over priced area on the CDS
    It is over developed, lacking amenities and has a substandard infrastructure like most of the CDS.
    It seems that half of Sotogrande is for sale and the rest is sitting empty without renters. There have been some serious crime waves there over the last few years -did the estate agent/developer tell you this?
    Surely the UK housing market is a safer bet, and while you may moan about UK taxes, the taxes and costs involved in buying a property in Spain are significantly higher.

  • #68628
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    Anonymous
    Participant

    Don’t even think about it. Stick to the UK.

    Keith1

  • #68630
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    Anonymous
    Participant

    Hi Graeme

    Cant say for the CDS but Altea is not a good bet for rentals either. As was said before the rental market in Spain is a no go – there are hundreds of thousands of people in the same boat and a diminishing crowd of would be renters because the holiday companies are enticing people with offers to places like Egypt, Tunisia, Turkey and other such [places where the cost of hotels is cheap in comparison.

    If you are looking to invest in a property for rental then the UK market is your best bet or a mature market for rentals such as Florida. If you still want to buy in SPain a place that is rising is Valencia – the City itself not the outskirts – due in no small part to the arrival of the Americas Cup which kicks off in two months and also the World Indoor Athletics Championship next year followed by the possibility (helped By Alonso last week) of a GP in the City itself.

    At the moment it is still possible to buy an apartment in some parts of the City which need reform at a good way below market value (when completed). Also Rentals this year are very good (because of the afformentioned Americas Cup) and it is reckoned that it will have the same affect on Valencia as the Olympics did in Barcelona and the world Expo did on Seville

    If you dont fancy the idea of reforming a property then I suggest you spend a lot of time here because althogh bargains are sitll to be found – you really have to look hard for them and know the City. If none of this appeals I would strongly suggest you stay out of Spain and concentrate on other areas because the rental market in Spain is fraught with frustration.

    Best wishes

    Vince

  • #68644
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    Anonymous
    Participant

    So What happens after the event. The site of the expo has been lying barren with the exception of few businesses. Buy to let is a medium to long term.

  • #68647
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    Anonymous
    Participant

    Graeme

    We rent our 2 bed apartment all year round averaging 25 weeks a year. We bought 4 years ago and the gross return on our purchase cost is currently 7%. You have to pay Spanish tax on gross rents (not allowed any deductions if non tax resident!) of 25%.

    This brings the return down to 5.25%. Expenses (cleaning, laundry, electricity, IBI, legal, maintenance, community fees etc) account for 30%. So that brings down the net return to 3.15%. That compares with an after tax return of 4.4% for my UK building society.

    However the ASKING price for similar apartments is now about 30% higher than when we bought. In other words even to achieve our low returns you would have to offer 25% less than the asking price, in our village.

    We don’t view it as a business and so are content with our return which more than pays for our flights, car hire, airport parking and food for holidays totalling 10 – 12 weeks a year. If we valued each of those weeks for the rent we would have to pay, it just about compares to a high interest building society account. And it may go up in value (but we don’t intend selling for the next ten years or so, anyway).

    Clearly, based on our limited experience (bear in mind we are inland and not on immediately on the coast) this is not a commercial proposition, and certainly not if you have to raise and pay a mortgage.

  • #68648
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    Anonymous
    Participant

    Hi Shakeel

    I think the difference between the Exp site and Valencia is the fact that it is actually the City that is rising ‘ the development at the port and Marina – whilst very good – is not where people are buying – it is the City Centre where peope are wanting. There is no doubt that people are looking hee . many people want to rent here and that pushes ental incomes up (long term rentals) (and believe me having looked for the past two weeks for something half decent anywhere near the City centre for a decent rate walking kilometre upon kilometre – there is not much abo

    Anyway the point is that the investment is affecting the whole City not just the port area. Add to that that if the Swiss team win again (and if you know anything about the Americas Cup you will know that the competition is weighted heavily in favour of the holders as the make the rules to suit) then they will re hold it in Valencia.

    However that aside Valencia is a City that is moving – there is a definitie buzz here. I myself am moving here because of the music scene – but many people have their reasons – very few people are buying here because of the Americas Cup, but the Americas cup has highlighted Valencia and certainly pt it on the map whereas before many poele would never have considered it now they are.

    However as I also said and have done on ay ocassions – pure buy to let is not a good option here in Spain unless yu have the time to dedicate to it to look for a property below market value – so you areable to sell it later if need be withut losses, and time to manage it. I would suggest looking to the UK market or USA market as it is much more mature and the returns are better there, not to mention your investment is safer because you have a better legal system to protect you.

    Best wishes

    Vince

  • #68650
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    Anonymous
    Participant

    ashtondav
    I think you have not taken the opportunty cost, if you dont have a mortgage.

    I understand that you did not buy as a financial proposition. However the opportunity cost should be reflected to get the true position.

  • #68919
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    Anonymous
    Participant

    I bought a 4 bedroom detached villa in Ayamonte, it was a buy to let investment. After 1 year of advertising it on the web and putting it in the hands of an agent in Ayamonte I had not one person rent it even though I dropped the rent to 500 euros a month, yes that is right 500 euros a month and it seeps eight. So I sold it and bought a 2 bed semi detached house near my home in Devonshire and within 2 weeks I had let it long term for £500 a month. My advice is do not purchase a buy to let in Spain, there are already too many properties for rent.

  • #68937
    Profile photo of Melosine
    Melosine
    Participant

    Graeme,
    If you really want to purchase in Spain have you considered Murcia as an option ❓
    Not where the Brits are now ,but Spanish Spain,nearer Lorca, Aguilas area.
    There is a massive expansion of building taking place ,aimed at foreign buyers, which although I personally cannot speak for the legalities of, not being in the property business, of suffice to say it is not an area under investigation for corruption.
    One of these is Lorca Resort Golf the other is Los Olivos. Both currently under construction but because here individual plots have to be a minimum of 5000 sq.m it will never resemble the horrors of other areas.
    The re-sale properties here are enormous and much cheaper than where you are looking, and because of of the building programme many people, as we were during our build, are looking for intrim rental properties.
    Just a thought

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