Advice on buying an investment property costa blanca

Spanish Property Insight Forums Spanish Property Forums Property Questions & Answers Advice on buying an investment property costa blanca

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    • #188682
      treetops
      Participant

      Hi all,

      Is it a good time/bad time, good or bad idea to contemplate purchasing an investment property in costa blanca.  It would be mainly investment but would intend to use for holidays also ourselves.  I am familar with south costa blanca had a property there for 7 years previously but it was purchased for private use rather than for renting out – we sold property in 2012.  I would be grateful for views and it would be rented out for holiday lets rather than long term lets, we wouldn’t require a mortgage, any advice would be appreciated on return for investment.

    • #188795
      Mark Stücklin
      Keymaster

      Treetops,

      It looks like Spanish property prices are somewhere near the bottom of the curve right now, having declined for seven years, but that doesn’t necessarily mean they are going to go up from here. However, further declines in sought after areas are unlikely I would say.

      I would like at it from a rental yield point of view, with potential upside on capital gains in the long run. You need to research the area you are thinking of buying. What are the going rates on holiday rentals in the area, and assuming reasonable occupancy rates, what annual income does that give? Then you have to decide what your target rental yield is (say 7%), and work out how much can you afford to pay given that hurdle.

      You also need to bear in mind high transaction costs of at least 12% in the Valencian Region (10% VAT / ITP and another 2% for other costs like notary, registry). High transaction costs can eat into returns.

      Where / what are you thinking of buying?

    • #189168
      treetops
      Participant

      Hi Mark,

      Sorry for late reply, only saw your reply now.  I take on board what you say.  We previously owned a property in south costa Blanca and because we know the area would like to return there and also proximity to two airports is a plus.  We are currently doing the research, are looking for 3 bed 2 bath villa they seem to rent out best beachside but not frontline.   Looking at availability calenders to get a good idea of rentability in few different areas. Realistically I think 5% rental yield is most we would get but with Capital gain over the years we would be happy, we hope to do this without a mortgage.

      Thanks for advice so far.

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