February 23, 2017 at 9:37 pm #195498
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.
February 26, 2017 at 1:52 pm #195778
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!
February 26, 2017 at 2:00 pm #195779
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.
February 26, 2017 at 3:53 pm #195789
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.
April 14, 2017 at 7:56 pm #198875
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
April 17, 2017 at 11:05 pm #198924
Hi Gadi and Ulf,
Have you guys had any issues with the update to holiday rental regulations (licencing, fixed ac/heaters, etc)?
April 16, 2017 at 7:57 pm #198908
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!
April 18, 2017 at 9:16 am #198925
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!
April 30, 2017 at 12:36 pm #200109
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.
May 1, 2017 at 9:25 pm #200137
I don’t believe the returns they claim in the article.
May 16, 2017 at 11:42 pm #202010
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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