April 30, 2006 at 8:57 am #51764
I have read many previous posts on the cons of buying solely as an investment with the general feel seeming to be don’t risk it or believe what agents tell you.
However, I would like to know experiences from anyone who actually DOES manage to rent out their property what % of the year they manage to achieve. I’ve been to several exhibitions and they all tell you renting is no problem with wildly varying estimates of how many weeks a year we’d be able to rent. One company said 30 weeks would be no problem, whilst another told us to bank on 12 with anything over and above a bonus, whilst another told us yesterday that 98% during June/July/August was their record. (see final note in this post)
We would like return from our investment, not necessarily covering all costs but my maths says I can have a 160k euro mortgage costing me £500 per month IO. If I am able to recoup a good percentage (£4k)of the £6k PA costs then I would be happy. Is this really/easily achievable.
The area we have been looking in is around Guadamar/Santa Pola south of Alicante as there seems to be the best mix of golf access and beaches with agents all pushing 3 bed 2 bath townhouses as the way to go to achieve maximum return.
Any information would be greatly appreciated.
I have a further story of an exhibition experience , but I’ll post that seperate to save confusing the original question.
April 30, 2006 at 10:12 am #61933
There are lots of other people who I am sure will jump in with advice for you.
However, one thing you didn’t mention was the tax situation. If you are a non resident you pay tax on the rental income at, I think, 35%. Also you cannot, as a non resident, claim any expenses back.
I would not recommend anyone to invest at the moment in an off plan purchase, and would not believe anything an agent/promotor told me about potential rental income. You only have to look at all the empty houses and apartments along the coast. If you are buying it with a view to living in it, or using it for holidays yourself, and are not having to pay for most of it with a mortgage, then it may be an opportunity for you. Don’t rely on rental income to cover your mortgage, you could catch cold.
If you succumb to an inspection trip, please bear in mind that the people taking you around the developments are working purely for commission. They pay all their petrol expenses themselves, have the job of picking you up from the airport and taking you back again, and only get paid if they make a sale. So there is always a hard sell situation.
I have some German neighbours who rent their small villa out themselves, but only for about 12 weeks of the year, not necessarily in the high season. The villa is inland and has no pool, and prices vary from 280 to 400 euros a week, depending on time of year. They also have to pay someone to clean the villa when the visitors leave and to do the laundry.
Good luck with your venture.
April 30, 2006 at 10:34 pm #61938
The tax you pay on rental income is 25%. On top of this you pay a wealth tax and an income tax whether you rent it or not. If you have a spanish mortgage you can set it off against the amount of tax you pay for these taxes. There is a page about all these taxes if you look up the index on the general forum. If you have a mortgage in england or where ever you reside you cannot set this off against these taxes. With regards to rental income – I did a good bit of research last year before buying my property. Look up costa blanca rentals on your search engine, ask them some questions. In my own opinion, I was going to rent out but after a long hard look at it all between ware and tear and how many weeks of the year you would rent out and paying your 25% on the rental – I wasn’t convinced. But that’s not to say if you rented it directly yourself to people you know, did your own advertising – well you wouldn’t have to pay this 25%. There are a lot of resales out there for good value.
I hope this is of some value to you.
May 1, 2006 at 2:24 pm #61943
I bought my 4 bedroom detached villa in Cosat De La Luz from a Bristol estate agent and one of their smooth talking salesmen virtually guaranteed I would get 40 weeks per year rental income and make at least 16,000 euros a year. It has been standing empty for 10 months and it is in the hands of a rental management company and I advertise it myself. DO NOT believe all these agents tell you, most of them,as soon as they have your money will drop you like a hot potato.
May 2, 2006 at 9:26 am #61948
try hacienda del alamo in murcia barwell leisure doing the renting 12000 euros minimum from them over 12 weeks
May 2, 2006 at 10:34 am #61950
Whilst I cannot comment on the situation in the “mainland”, times are certainly tough in the Canaries for those looking for rental return.
I have seen many posts on here which look like people are out to make some easy money…but you are a couple of years too late, as another poster has pointed out.
To buy off-plan with a view to selling on (and making a profit) before completion just ain’t happening.
But…who to blame?
Of course, unscrupulous agents will tell you what they want to tell you – but at the end of the day, the purchaser must shoulder some of the blame as it was they who were looking to make some easy money, and greed definitely plays a part on both sides.
In the old days, property was never a get-rich-quick scheme and was always considered a safe bet for a medium to long-term investment.
Now that the crazy times are over, maybe the old way of thinking should be brought into play again.
“If it sounds too good to be true, then it is”. How true.
However, if anyone is looking for a guaranteed investment – 1 bed apt, 3 year guaranteed return etc. please PM me and I will give you details.
Even here, I would not say that you will make a significant profit if you look to sell in 3 years time, but at least you will have a guaranteed return every month for the next 36 months, during which time, capital appreciation should start to show a return of sorts.
Once again, property should be a medium to long-term plan for making money.
May 9, 2006 at 10:55 am #62057
A poster called ‘Spain’ wrote in this thread…..
“try hacienda del alamo in murcia barwell leisure doing the renting 12000 euros minimum from them over 12 weeks”
Are you sure about this? Where did you get this information from – I was sitting in Barwells office 4 weeks ago, and they admitted that rentals are few and far between, and a 2 bed villa will only fetch 400 Euors/week.
Also, they did not have guaranteed rentals in place.
The same applied to STV – the other rentals business based at Hacienda.
I’d love to hear more about the Hacienda del Alamo resort, as I am involved in property purchase there.
May 9, 2006 at 1:11 pm #62060
Guaranteed rentals aren’t worth the paper they are written on. They may work out the first year but this is because the cost of this has been built into the purchase price. Ask yourself who they are going to rent all these apartments to? there are literally thousands of properties available to rent even though they have dropped their rates. Most of the urbanisations are like ghost towns outside July/August.
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