Viability of Holiday Rental Investments on the Costa Del Sol

Spanish Property Insight Forums Spanish Property Forums Real Estate Topics, News & Discussion​ Viability of Holiday Rental Investments on the Costa Del Sol

This topic contains 11 replies, has 9 voices, and was last updated by  AntIv 1 year, 7 months ago.

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  • #195498

    mscholder
    Participant

    I am trying to evaluate the viability of Holiday Rental Investments in Costa del Sol. Some articles suggest a shortage of high quality holiday rental property.

    • Is the summer rental market strong in the premier locations in the Malaga to Estepona corridor?
    • Are holiday rental rates attractive?
    • One property manager on the Costa del Sol stated that good holiday rental properties averaged 10 weeks per year for apartments and 20 weeks per year for villas with pools. Is that a credible estimate for an investor to use?
    • Can good property be purchased to produce a decent rate of return?
    • Do holidays rentals avoid the issue of evicting non-paying tenants or are there significant cases of “vacationers” refusing to leave and pay?

    Answers to any or all of these questions will be greatly appreciated.

  • #195778

    Lesley
    Participant

    I have owned (outright) a smart townhouse in Nerja for the last 10 years, it is a very popular town summer and winter.  My minimum occupancy over this period has been 10 months of the year (I spend one month there, so only one month unrented.  The revenue is around £15k pa.  Its a no brainer really!

  • #195779

    Lesley
    Participant

    Sorry, just read some of your questions, guests do not arrive until they have paid the full rental plus returnable damage deposit. Holiday makers never overstay – they have flights to catch! I suggest you look on the holiday rental websites to get more information on locations, rental rates etc. All online for each advertised property.

  • #195789

    Gadi Wolff
    Participant

    As a villa owner I get about 105 days a year,  using Airbnb to get the guests. Never had problems  (families and mix groups are fine, a group of young man only is not a good idea. )

    Return on investment is between 6 and 8 %

    Close to marbella is upper market and prices are better.

    Villas are easier then apartments.  Same amount of work 3 times the money.

    The key is to buy cheap, good location, and if possible modern design.

    Good luck,

     

    Gadi

     

    • #198875

      bc1050
      Participant

      Hello Gadi – could I ask you another question about the rental returns on the costa del sol?

      Is the 6 to 8% gross return and if so what would be the net return after all direct costs and before any taxes?  What would be the main direct costs?

       

      I too am considering an investment in rental property and would be doing most of the work myself except cleaning, etc

      Thanks again

    • #198924

      athecan
      Participant

      Hi Gadi and Ulf,

      Have you guys had any issues with the update to holiday rental regulations (licencing, fixed ac/heaters, etc)?

      Kind regards,

      Alex

  • #198908

    Ulf Norberg
    Participant

    Hi,

    I have both a townhouse and an apartment, both in good locations in a very popular city on CDS.

    The apartment gives GROSS 6,5% on the ACTUAL market price!

    I purchased it some years ago, and I have invested some EUROS also, so better to use the actual market value, since this is what a purchaser today will have to pay.

    The house is large, and is divided into two separated accomodations, one large and one smaller. This is much better than ONE large house if you just look on the rental point of view!

    The house gives: 9% return…on the today market value GROSS!

    What the net figures will be, is very mush up to:

    How much work do you hire and how much do YOU make yourself.

    What are the costs for running the property? The cost to the urbanisations can vary a lot amd so on..

    I do rent them both out very well for short term, one week and up to six month in the winter time!

    In average 45 weeks per year, and I do use some weeks of it myself when there is some need for it.

    So…as an PURE investment…there are much easier and better investments, if you ask me!

    But how to “calculate” to be at Costa Del Sol several weeks per year with free accomodations?

    For me…an apartment is easier to handle, since a house can makes more trouble that can cost you a lot.

    One or two bed rooms is the best, from a rental point of view!

    The key to buy cheap and in a very good location is correct, but that WAS possible around 2011-2014 but not now!

  • #198925

    Ulf Norberg
    Participant

    Athecan…Alreday before the new holiday rental law, I had most of the issues!

    I am not looking for low price clients, so my properties has AC in all rooms, and than heating in the wintertime!

    WiFi is included, as well as IPTV and so on…

    The only issue that still is a “problem” is the LFO..Licence Of First Occupation, but this is up to the Town hall to prepare some document that is needed to fulfill the licence. However, I do have the licences already!

    So for some letters, that did not invest anything in their accomodations, well to fullfill the new law, needs some investments like fixed AC / heat in all rooms, blinders for all windows etc…

    Some will invest, and others will sell, while some just stop letting it out.

    You can always let it out for LONGER than two months, since the new law is for two months and shorter times! Than you do not need to fulfill the new rental law!

  • #200109

    mscholder
    Participant

    Is there much credibility in the articles in Idealista? For example, the real estate rental returns:   https://www.idealista.com/news/inmobiliario/vivienda/2017/04/25/746215-la-rentabilidad-de-la-vivienda-crece-hasta-el-7-1-pero-sigue-por-detras-de-locales-y#xts=352991&xtor=EPR-76-%5Bboletin_29042017%5D-29042017-%5Bw-01-leermas-node_746215%5D-

    The work looks thorough and professional but the comments dispute the ability to make profits, which might be accurate or just venting by unsuccessful investors with bad investment timing.

     

     

  • #200137

    Mark Stücklin
    Keymaster

    I don’t believe the returns they claim in the article.

    • #200742

      Robin
      Participant

      Are the returns better in Murcia and are the rules relating to letting property applied less stringently there?

  • #202010

    AntIv
    Participant

    Hi,

    The southern region of Spain is occupied by Brits now but the wave will dwindle. Prices are still not in peak as in Barcelona though the climate there is much softer. The average prices for sq.m. 1000 -2000 euros vs. 4000-7000 euros in Barna (numbers from this article https://tranio.com/traniopedia/tips/costa_del_sol_resorts_best_places_to_buy_a_holiday_home/). Nevertheless, growing capital of Catalonia drags buyers off from Andalusia and Malaga.

     

    Also I disagree with Gadi’s statement that return on investment is between 6 and 8 %. It can happen only beforу the crisis. The normal yield is 2-4%, if you want stability.

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