sorry, mortgages again

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This topic contains 9 replies, has 7 voices, and was last updated by Profile photo of Anonymous Anonymous 10 years, 5 months ago.

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  • #51953
    Profile photo of Anonymous
    Anonymous
    Participant

    I have been in contact with an agency in spain regarding bars for sale (i know you warned me) They have asked for my budget,. I have explained that we want an appartment also, so the bar budget was dependant on the mortgage situation for the appartment………. they have suggested that a 100% mort was do-able. What is the situation, reading back through the forum i see references to “valuation” based morts what does this mean?? and are they being a little bit frugal with the truth??
    I understand the “black money” concept and i’m not willing to take part in any such nonsense.

    Chilly 8)
    ps we are looking for a re-sale appartment

  • #63287
    Profile photo of Melosine
    Melosine
    Participant

    Would it not be easier to seek out a bar with accommodation?
    With the long and arduous hours it’s not easy living elsewhere. Appreciate lots of bars are lock ups but then you have the added concern of security.
    Just a thought.

  • #63295
    Profile photo of Anonymous
    Anonymous
    Participant

    It would be a possibility but we are looking to be in Spain long term and at our age we don’t want to retire in 20 years time and have to rent, we are also thinking of pensions and the like.
    also there are very few bars with accomodation

    Chilly 8)

  • #63296
    Profile photo of Anonymous
    Anonymous
    Participant

    Chilly

    If you need to make money from a bar to cover the mortgage ,especially a 100% one, then please DON’T BUY. listen to others here and RENT first. Making money from a bar is very hit and miss and even having experience of working in or owning a pub in the UK will not fully prepare you for the possible difficulties you will face in Spain.

    I know as I’ve been there and done that and my BIG mistake was to buy a property first, I then found the 30 min journey to work on the extreme working hours was a nightmare, especially as the traffic on the CDS can be horrific, a normal 30 min drive regularly took 1 hr plus and up to 2 hrs on occasions.

    Friends of ours a few bars down the road also bought a bar but they rented an apartment 15 mins away and even they after 6 months moved house into a flat a 2 min walk from work to make life more bearable.

    If you buy first and don’t find a bar round the corner, you will be stuck commuting until the property sells, which at the moment can take forever.

  • #63361
    Profile photo of Anonymous
    Anonymous
    Participant

    This is actually the reason I came to work here for a major drinks supplier, if anyone would like any independent advice on the bar market in CDS PM me as I still have my ear close to the ground!

    Good luck, my advice is research, research, research, and look long and hard for the bar.

    Most publicans in the UK spend 6 month looking for a pub, I suggest you do the same here before buying anything.

    Bar for sale are usually because they are not making any money! If they are goldmines, then a local would have bought them before they were marketed. Be very careful

  • #63371
    Profile photo of Anonymous
    Anonymous
    Participant

    @chilly wrote:

    It would be a possibility but we are looking to be in Spain long term and at our age we don’t want to retire in 20 years time and have to rent, we are also thinking of pensions and the like.
    also there are very few bars with accomodation

    Chilly 8)

    Chilly,

    Listen to yourself!! You are thinking about 100% mortgages and you are looking to retire in 20 years – ish time and you are thinking about opening a bar in Spain.
    As my kids would say…..DUH!!
    Seriously, you have to be one lucky person to get a bar which makes money. One which makes money enough for you to retire etc. is very, very rare.
    I have a client who has relocated to Lanzarote and she was looking to buy a bar. She got stung for 10 grand by a big agent and we, along with local lawyer, are trying to get that back for her.
    She has the money in her pocket RIGHT NOW to buy a bar but we are not selling her one.
    I’ll say that again…..she has the money in her pocket right now to buy a bar and we are not selling her one! Work it out!
    She has come to live here for an easier life.
    We are trying to turn her to the idea of buying a couple of small apartments – with or without guaranteed income, up to her. At least that way, you know what is coming in and going out every month.
    Situation regarding 1 and 2 bed apartments for long-term let here is very different from the Costas, I appreciate it. There is still a very good market for long-lets here.
    Anyway, if you haven’t got the money in your pocket, don’t go and borrow it.
    Do your homework.
    Anyone can pull a pint….why not try to fill a gap in the market?
    What job are you doing now….what job could you do…what skills do you have etc.
    If still in doubt….ask your kids what it means when someone says “DUH!” to them.
    Be careful!

  • #63379
    Profile photo of Anonymous
    Anonymous
    Participant

    Hi Chilly

    you cant officially get a 100% mortgage – especially as a non resident. What happens is the bank values a property and will give you 80% of the valuation. So in order to get a 100% mortgage you need to find something that is at least 20% below value – and how easy do you think that is going to be to find.

    Also be very careful. There are companies out there who offer “Guaranteed” 100% mortgages. It is nothing short of a scam. What they do is charge you a fee of around 1500 euros which supposedly includes the valuation. You sign a contract with them but the small print (written of course in Spanish) says that the mortgage is subject to usual approvals.

    In order to get a mortgage in Spain the banks will now only lend you 40% of your provable monthly income. So if you earn 2000 euros per month you can pay back 800 euros which amounts to about 170,000.

    I don’t know many freehold places available that will go for that. So if you loo at the reality of the situation you will need to pay around 500,000 for a half decent place (maybe even more) which is valued at 600,000, which will cost you 2500 per month which means you need to be able to show an income of 6,250 per month.

    There’s your reality – now try paying for it with a bar that is competing with probably hundreds of others for the same customers.

    Add to this the cost of rates etc and other costs and you can probably add 25% at least to that figure – before you buy a single barrel of beer. So now you have a monthly outgoing of around 3125 Euros per month.

    Operating at a 50% margin this means you need to turnover 6250 per month to break even – before you take a wage. At an average 1.50 a beer that means you need to sell 4167 beers per month. Assuming that each customer drinks 4 beers per time that is 1,000 visits per month.

    Now you have to go out and find that many people – which will take advertising and marketing – add some more cost to your business and now you need to find an extra 300 people per month to cover this cost.

    You will probably have to work 18+ hours per day, have little or no holidays and if you are married it will put a great strain on your marriage.

    Being a bar owner is the same as any business – If you don’t have a plan don’t even consider doing it. You should have an idea of what your total outgoings are going to be, what your fixed and variable costs are, how many customers you need to attract to make it worthwhile and then – and only then should you consider the premises and whether this will be able to support your plans.

    Bear in mind also that none of the above assumes you will be taking an income out of the business.
    People don’t plan to fail – they merely fail to plan.

  • #63381
    Profile photo of katy
    katy
    Spectator

    I agree with Vbtudor 100%. Also in tourist areas it is necessary to provide entertainers.

  • #63384
    Profile photo of Melosine
    Melosine
    Participant

    Don’t know if this has been mentioned but as in UK you will also have to sit a multiple question test in basic hygiene and food preparations. Don’t know if the UK equivilent is acceptable.

  • #63402
    Profile photo of Anonymous
    Anonymous
    Participant

    VBTUDOR,
    thanks for your comments, however, what we are looking for is a leasehold bar and an appartment, the mortgage aspect of the question refers to the appartment, not the bar

    is it possible to get a 100% mort on an appartment? bearing in mind by this time we will be living in spain (having NIE and residencia)

    i understand fully what everyone is saying and trust me i’m not coming to spain to throw my money away but i want to gain as much info as possible so as to make a qualified decision and i feel you guys are the best to ask “been there, done that”
    so i hope you don’t tire of me, possibly my questions(and your answers) will help someone else

    chilly 8)

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